Julian Phillips’ latest views on what is happening on the global currency and gold scene
A look at the performance of the Swiss Franc shows that it is being weakened by the Swiss National Bank and now stands at 0.9212 against the dollar a fall from its peak of last week of 0.85. This is why you are watching the gold price rise in the Swiss Franc while it is falling in the dollar.
In its FOMC meeting minutes, the U.S. Fed stated that the recovery in the U.S. was now solid, but remains worried about declining inflation and the economic turbulence outside the U.S. There is a great tendency to take the daily detail we see reported and allow ourselves to redefine the ‘big’ picture based on these. While a trader may deal on the back of the very short-term picture, the professional investor, always takes the daily detail and pops it into the long-term picture to keep his perspective and slot detail into context. Standing back we see that the trend in gold and silver has changed for the better and that an economically strong U.S. will not change the world, but the world can change the U.S. The Fed’s sober line is to be respected.
After all, the gold and silver price is not about economic strength or the exchange rate of one currency against another. It is about confidence in the monetary system to fulfill the function it is supposed to serve, that of measuring value as well as being a means of exchange. Right now it functions well as a means of exchange, but has failed to measure true value. We are now at the point where its role as a measure of value is being abandoned in favor of other interests of the nation, leaving a crying need for a measure of value that will remain no matter what. We see this as a long-term path for gold and silver now. It also explains the change in direction of the precious metals.