Gold sideways

The gold price in yesterday’s New York trading improved from $1,458 to $1,462/oz. This morning the price of gold in Shanghai and Hong Kong fell slightly and is currently trading at $1,460/oz, $1/oz above the previous day’s level. Gold mining stocks are stable worldwide.

 

Chancellor Angela Merkel warns at the Internet Governance Forum of the United Nations against a fragmentation of the Internet. This is the fault of national governments that want to misuse the Internet for their power politics. Merkel criticises the attempts of “non-democratic states” to seal themselves off from the global Internet. China, for example, operates a digital firewall to keep politically undesirable content away from Chinese citizens. In the EU, the basic data protection regulation, EU copyright law and the network enforcement law are used to keep unwanted content away from European citizens. This is justified under the pretext of wanting to protect the privacy of users.

 

The precious metal markets

On a euro basis, the price of gold falls when the dollar weakens (current price 42,387 Euro/kg, previous day 42,576 Euro/kg). On 18.07.11 the gold price exceeded the provisional target mark of 1,600 $/oz after a ten-year bull market and was thus fairly valued again for the first time in more than 20 years. Price increases and the expansion of the credit volume have meanwhile increased the fair value for the gold price to $1,800/oz. The continuing volatility on the financial markets justifies a price range of between $1,700 and $1,900/oz based on current purchasing power. Below $1,700/oz the gold price remains undervalued, above $1,900/oz (based on current purchasing power) a relative overvaluation begins. With a gold price in excess of $1,800/oz, many gold producers can grow profitably and increase overall gold production over the longer term. With a gold price below $1,700/oz, gold production will fall in the medium term. Due to the lack of investment alternatives, it is advisable to remain fully invested in gold, silver and precious metal stocks even at the beginning of an anticipated exaggerated phase. With the negative reporting between 2011 and 2015 over several years, the weak hands were driven out of the gold market, so that a longer-term stable and friendly price development can be expected after the multiple sell-offs. In the coming inflation phase (crack-up boom, description in the magazine “Smart-Investor”, April 2009 issue (http://www.smartinvestor.de/pdf/Smart-Investor-4-2009-S-44-49.pdf), the target price of gold will have to be raised significantly.