Gold - The Weekly Global Perspective
Week beginning the 13th June, 2005

Julian D.W. Phillips
Gold-Authentic Money
Jun 18, 2005

HIGHLIGHTS in "Global Watch - The Gold Forecaster"
Silver - EDR.V, SSRI, PAAS, SIL, HL, CDE / Platinum
SHARES: HUI, NEM, FCX, GFI, HMY, DROOY NG, AEM, VGZ, CAU, MMRSF, CRCUF

Features Below: -
- The separation of Gold from the €/$
- O.P.E.C. raises quotas?
- Prospects for the U.S.$ - DJIA - 10-Year Bond - CRB - Gold : Oil Ratio - 7.5! - Gold : Silver Ratio.
- Tech. Analysis of the Gold Price: Long/Short term in the U.S. $
- The present Gold Price Drivers.
- International Gold Markets
- Silver - Platinum

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Excepts from the "Global Watch - The Gold Forecaster": -

The Global view is the only professional approach!

This last week has seen the € price of gold show more life than it has done in the last few years. It has broken up and out of its € price ceiling and has clearly broken away from the €. This prompts the folowing questions: -

• Are Europeans a more currency sensitive people and one who are very quick to turn to gold?
• Has Gold risen in U.S.$, or has the U.S.$ fallen in terms of gold as is the case with the €?
• Is the rise a reflection of the change in the pricing of gold?
• Is Gold to now be seen as a 'measure' of currencies themselves?
• Are we seeing a significant structural change in the gold market?
• Or is the present gold price rise a consequence of demand and supply?
• Is Gold is an effective counter to swings in all currencies [not just the $]".

We answer these questions below, through our global view of gold, where we explain the gold price in different gold-important currencies from both a fundamental and a Technical point of view.

The separation of gold from the €/$!

We have stated in the past that the gold 'bull' market had to become independent of currencies before it could rise into a dynamic 'bull' market. It appears to be in the process of doing so now.

The automatic linking of the gold price to the Euro has definitely broken down now. As the € tumbled gold rose, in both the $ and the €. Gold broke through the all time high in € of 355 and was free. Free of what? With hindsight, the link was an unreasonable one as there are no common denominators in the € as a currency with gold. As gold is mainly dealt in, in the U.S.$, it commenced its Technically linked performance in that currency, which it is doing at the moment. As has been described by the President of Germany's Bundesbank, Gold is a good counter to the U.S. $. The big difference between a falling € and a falling $ is that the Europeans will turn to gold far quicker than U.S. citizens will turn from the $. After all not far off 300 million people, of whom only 10 million have passports have only ever know the $ and have always trusted it. It has never been replaced or debauched in their eyes. Europe has had 25 currencies in its 25 member states, and in some these currencies have been changed and debauched, during and between wars, so the inherent trust in paper currencies, like that of the States is just not there. [We discuss this further below in the € section]

So you may well ask, why is gold now doing so well against the $ itself with the $ so strong? To demonstrate just how Gold is now free to act as a measure of currencies, we would answer that gold is not strong, the $ is weak, but the € is weaker, giving the perception of strength to the $.

The U.S. Trade deficit well describes the state of the international value of the $. At $57 billion, the market congratulated itself on it being lower than expected, but bear in mind it is the a continuation of a stream of unacceptable deficits that are undermining the value of the $ in international markets. The Gold price is reflecting the condition of both the € & the $ now! It would be accurate to say that at this seasonally quiet time for gold the gold price is reflecting the performance of currencies, not the performance of gold as reflected in demand/supply. So it would be reasonable to describe the gold price this way:

• The price of a € is 1/360th of an ounce of Gold.
• The price of a $ is 1/436th of an ounce of Gold.

The 'de-coupling' of gold from the € is a major structural change for gold, but its ramifications are busy panning out and are still to be understood and accepted by the market. This requires more of an emotional change than an intellectual one.

It certainly validates our approach to gold [below] where we look at the gold price in the different currencies and markets, where the gold price reflects the performance of each of the currencies and so stands at relatively different levels in each currency. For example: -

• 1. The Rand gold price is too low to make gold mining profitable, because the Rand has been too strong.
• 2. In the Australian $, which looks like declining this year, the gold price should steadily rise for the Producers there.
• 3. For the last few years, the Euro price of gold has been a non-event. In the last two months it has moved more than it has in the last two years.

What is the gold price in the currency you deal in?

As you can see, the U.S.$ price of gold is only part of the picture. To have a professional approach you must look at the separate markets and factors and bring them into the total gold picture, as we attempt to do in this publication.

This topic promises to be the focal point of the gold market for the next couple of years, at least. This approach will prove to be the only professional one, from now on, or the ability to profit fully will be compromised. We hope we can be of assistance to you in this?

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Julian D.W. Phillips
Email: gold-authenticmoney@iafrica.com

Copyright ©2005 Julian D.W. Phillips, Gold-Authentic Money

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