We discuss today how gold and silver prices in sterling terms may now actually be cheap or close to the bottom. Boris johnson's stance on brexit has caused sterling to fall in US dollar terms and his strong arm approach may weaken it further at least until the final details of brexit have been finally put to bed. Stack Silver Get Gold:
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Today is Wednesday 18th December 2019 and yesterday we produced a video entitled:
Gold & Silver Range bound But May Break Shortly
And the day before 2 videos entitled:
Equities Rise – So Does Gold & Silver
Brexit, Elections, Democracy and the Media
For some time we predicted that once the outcome of Brexit became clear we would see sterling rise in value, especially against the Euro and the US dollar thereby causing gold and silver prices to fall in sterling terms and up to and including Boris Johnson’s Conservative Party election victory last week, this is exactly what has happened. We have seen sterling rise from just under $1.20 a couple of months ago to as high as $1.35 and gold and silver falling back some 12% and almost 20% since their peaks in early September to today.
However. This may all begin to change as far as the sterling price of gold and silver is concerned. We mentioned in yesterday’s video, that gold and silver are both, at a technical pivot point where, in US dollar terms, the price could fall back or rise. at almost equal levels of probability in the very short term – i.e. during the next few weeks. However, in sterling terms the position could be very different.
Firstly, let’s read to you an article published by Bloomberg this morning:
So, certainly as far as the authors of this article are concerned and the traders with who they have spoken, sterling is not looking at all that healthy. Especially while the prospect of a hard or near hard Brexit from the Eu is still a possibility and it may be, as already mentioned another 12 months before all of the fine print has been signed, and sealed.
Now this could still all be a negotiating stance by Boris Johnson to exact the best deal and a hard nosed Brexit where the UK simply walks away and utilises WTO terms may never come about, but while that uncertainty persists, sterling will undoubtedly be under pressure.
On Thursday the Bank’s nine-member monetary policy committee, which is responsible for setting the interest rate, will announce its decision on interest rates. It is expected to hold rates at 0.75 per cent, despite pressure from some quarters for a further quarter-point cut.
If it cuts rates then clearly it will be sending a warning and if it doesn’t markets will expect it to do so quite soon.
Now we have often stated on this channel that we were in favour of BREXIT but fully appreciated that economically it will prove difficult for the UK in the short term and it looks like this is what is going to happen.
The point we are making in this podcast though is that a weakening of sterling will prove beneficial for gold and silver prices which currently stand at £1,128 and £12.99. having already received a 12% and 20% drop from recent highs, if sterling does fall back to $1.20 then we should not be surprised at all to see gold add another £160 to its current price and silver £3 almost regardless of what happens in US dollar terms.
That at least is our position on the situation that we are very bullish gold and silver in sterling terms taking the next 12 months into account almost regardless of their dollar price.
We appreciate that the majority of our subscribers come from the US and that the sterling value of gold and silver is less important to them than it is for our UK subscribers. However it is important for all parties to be aware of what is happening to each countries’ relevant currencies and a weakening of sterling on the international markets and especially against the dollar can mean and often does mean, that funds flow out of sterling into the dollar making it even stronger and thereby potentially pushing gold and silver prices down in US dollar terms, so these effects are important.
Stack Silver Get Gold:
- (UK)
- (US & Overseas)
Bullion Vault – Buy Gold & Silver
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