Yesterday (Friday, September 21st, 2007) the gold price for physical purchase was fixed at $737.00 per troy ounce in the London P.M. session. The gold price is fixed twice a day in London. The A.M. fixing is done from 10:30 onwards and the P.M. fixing is done from 15:00 onwards. The reason why we are looking at the P.M. fixing is that during this period the major financial markets of Europe and the United States are open so this fixing price is very representative of physical demand for gold bullion.

Prior to yesterday the second highest weekly P.M. fixing ever had been last year on May 12th when gold was fixed at $725.00. One needs to go back to January 18th, 1980 to find the highest weekly P.M. fixing ever at $835.00. It is not surprising that the second highest ever weekly fixing for gold came on the week that the Federal Reserve Board decided to slash the the Fed Funds and Discount rates by 1/2 of a percent. The Fed's aggressive rate cut came despite the fact that the Dow Industrial average is near its all time peak of 14′000, the unemployment rate is at a relatively low 4.6% and when U.S. G.D.P. growth is growing at a 4% rate according to the preliminary second quarter data reported by the U.S. government .

We think the gold price is telling us the international money market does not trust Ben Bernanke, the Federal Reserve Board chairman, to maintain the integrity of the United States' currency.

The Gold Weekly P.M. fixing chart courtesy of Bloomberg.

By Mario Innecco
ForSoundMoney.com

At ForSoundMoney we stand for a hard currency. We believe in a monetary system based on commodity money and a free-market banking system where central banks are non-existant.

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