28th August 2013

Gold continues to strengthen but Silver the big mover!

Gold has continued to strengthen now for 8 consecutive weeks. From a low of US$1,192 at the end of June Gold has increased by over 18% during this time while Silver at a low of US$18.86 has increased by over 28%.

Macro economic data out of the US continues to be questionable of recent times. The break-through of US$1,400 once again important and is supported by numerous factors, including:

1. US Government debt is spiralling. On Monday Treasury Secretary Jacob Lew stated that the US Government will hit its debt ceiling and be unable to borrow money to pay its bills by mid October unless Congress votes to lift the ceiling.
2. Doubts now about how quickly the Federal Reserve will start it's promised tapering of Quantitative Easing. Most are questioning whether they will actually start in September.
3. US appears poised to take military action against Syria.
4. Continuing tensions in the Middle East.
5. Even the recent attempts by India to curb Gold imports by increasing taxes as in many respects confirmed the sense of urgency to buy. The weakness in the value of the Rupee appears to be panicking some buyers and increasing demand.

And a quote from Edward Meir of INTL. FCStone, 'We see prices on track to hit the mid to high US$1,400 mark over the course of September and Silver could easily reach US$25.'

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