The Daily Nugget: September Doesn’t Disappoint

The gold price is now well and truly above $1,700, set to make gains towards $1,800 by the end of the week Goodness, this month is shaping up to be an exciting one, which is good news after the dull month of August.

Last week we had a fairly cautious speech from Draghi and nonfarm payroll data from the US which gave both gold and silver a significant boost over $1,734 and $£31 where they remain this morning.

Analysts are expecting to see gold above $1800 by the end of this week should the FOMC decide to go on another money printing exercise. Unlike our own Monetary Policy Committee here in the UK, the FOMC has two remits – to maintain price stability and to keep unemployment levels low.

So far, they’re not doing a great job, as reiterated by Friday’s data which showed US nonfarm payrolls had only risen by 96,000, rather than the predicted 130,000. As a result, gold and silver began to climb upon speculation that the FOMC will implement QE3 later this week.

German court ruling
This Wednesday the eurozone will be watching for the crucial ruling from Germany’s Constitutional Court which will decide if it will allow an EU bailout fund and budget pact. The decision will have global ramifications, but it is expected that the court will allow Germany to sign up to the ESM fund and the fiscal pact which gives Brussels authority over member states’ deficits.

This is ultimately an issue of democracy within the single currency union. If the courts allow this to go ahead there will be undemocratic implications.

According to surveys, Germans believe the court will do the right thing; many predict the court will rule the fund and pact as constitutional, but will set limits. Ultimately this is still a step further to handing the country’s autonomy over to the Troika.

Speaking of democracy, the country where it all began, is seeing their own system go quickly down the pan. Greek officials are due to meet with creditors today in order to meet with set further austerity measures. Considering the Greeks haven’t been brilliant so far at the whole scrimp-and-save approach, we’re not keeping our hopes up.

China’s gold investment
Whilst, in the West we all run around like headless chicken waiting for central banks, lawmakers and government to tell us how high to jump, the East just get on with it. Over here we’re all in denial and think the economy can be fixed, whilst in the East they know no one can print money and get away with it. That’s why China is now set to be the biggest gold importer this year and why gold shipments from Hong Kong to china are reported to have nearly doubled on the year.

This month will be an exciting one, because we will continue to be treated to examples of central bankers digging themselves deeper into the pool of financial slurry. September has frequently been a good month to invest in gold and it looks like it’s going to get even better.