Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Currency Wars Are Driving Gold and Silver Higher

Commodities / Gold and Silver 2012 Jan 24, 2012 - 04:08 AM GMT

By: Eric_McWhinnie

Commodities

Over the weekend, talks between Greece and its private-sector creditors over debt write-downs were unsuccessful. Charles Dallara, the creditors’ lead negotiator, left Athens on Saturday as differences remained over the terms of new Greek bonds. Although a deal was not agreed upon, the market is signaling high expectations for a deal to be completed soon.


On Monday, the U.S. dollar index, which places the greenback against a basket of six foreign currencies, declined from 80.34 to 79.65. It is the first time in 2012 the dollar index declined below 80, which had been acting as support in previous months. With the euro holding 58 percent weight in the dollar index, it is responsible for much of the dollar’s decline today. The euro climbed to $1.3044 on Monday, it’s highest level since December. In a press conference Monday morning, French Finance Minister Francois Baroin said, “A voluntary restructuring of debt held by private investors seems to be taking shape. We are determined to support Greece the time necessary for it to put in place reforms and for them to produce their effects.”

The recent hopes for a Greek deal and the decline in the dollar has given a boost to precious metals. Gold is near six-week highs as it closes in on $1,680 per ounce, while silver prices have surged 15 percent this year and currently trade near $32. Furthermore, international agreements and sanctions are reminding investors of the significance of precious metals in the global financial system.

Earlier this month, Iran and Russia replaced the U.S. dollar with their national currencies in bilateral trade. This came after Iran replaced the dollar in its oil trade with India, China and Japan, reported Iran’s state-run Fars news agency. Today, European Union governments have agreed to fire back and place a ban on all new contracts to import, purchase or transport Iranian crude oil. Europe is Iran’s second-largest oil customer after China. Reuters explains, “EU countries with existing contracts for Iranian oil and petroleum products will have until July 1, 2012 to complete those contracts. The sanctions follow fresh financial measures signed into law by U.S. President Barack Obama on New Year’s Eve, and will mainly target the oil sector, which accounts for some 90 percent of Iranian exports to the EU.”

Although the oil sector is a large target, there is another important sector being targeted by the sanctions. EU governments also agreed to freeze the assets of Iran’s central bank. More importantly, it placed a ban on all trade in gold and other precious metals with Iran’s central bank and public entities. “Today’s decisions target the sources of the finance for the nuclear program, complementing already existing sanctions,” the EU explained. While the sanctions may be targeted at Iran’s nuclear financing, the move serves as a reminder to investors that precious metals are alternative reserve currencies used in the absence of the U.S. dollar. Recent data shows that Russia and China are likely to continue business with Iran outside of the U.S. dollar, which will help support gold and silver prices. In addition to trade agreements, Russia has reduced their U.S. Treasury holdings over 50 percent from October 2010, while China has reduced their holdings to the lowest level in over a year.

For more analysis on our support levels and ranges for gold and silver, consider a free 14-day trial to our acclaimed Gold & Silver Investment Newsletter.

By Eric_McWhinnie

http://wallstcheatsheet.com

Wall St. Cheat Sheet : Only days after the S&P 500 crashed to the depths of hell at 666, the Hoffman brothers launched Wall St. Cheat Sheet: one of the fastest growing financial media sites on the web. Like a samurai, our mission is to cut through the bull and bear shit with extraordinary insights, a fresh voice, and razor-sharp wit. We provide the highest quality education and information for active investors, financial professionals, and entrepreneurs.

© 2012 Copyright Eric McWhinnie - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in