Goldletter INTERNATIONAL

the international independent information and advice bulletin for gold and related investments

source: www.kitco.com

click on the chart for the current gold price

EUROPEAN GOLD FORUM
scheduled September 3 - 10, 2010
including the cities of
Frankfurt, Zurich, Geneva, Paris and London
further details to be announced in due course

2010 Goldletter Publications

ACTUAL GOLD NEWS

July 2010

Please, be advised that you can have access to my latest updated overviews as per the June 30, 2010 on recent developments on the international commodity and currency markets , with the emphasis on their impact on the gold and dollar price, as well as my monthly updated short-list of gold investment recommendations as per the June 30, 2010 (see above).

As already predicted more than a year ago, the financial turbulence in the Euro zone has moved the dollar up further against the euro, strengthening its position as the world's key currency.

At the same time, increasing attention is being paid to the strong undervaluation of the Chinese Yuan against the dollar and euro, demonstrated by China 's ongoing trade balance surpluses having pushed the country's monetary reserves to more than $ 2,500 billion and still rising.

Although the Yuan has been depegged officially from the dollar recently, the impact will be very limited and will not disturb China 's economic growth and more specifically its booming export.

Even in the case of an annual appreciation of the Yuan by up to 5%, the negative impact will be compensated for by investment income and value appreciation derived from China 's monetary reserves, including from its huge investments in US treasury bonds. These showed a market performance of 14%, which is comparable with the performance of gold.

As part of a new economic world order, with economic growth and wealth shifting from the western world to Asia , led by China , gold's monetary function is further deteriorating as is demonstrated by gold having lost its direct correlation to the dollar as the world's key currency.

With the gold price having increased by 13%, the dollar strengthened comparably as a result of the Euro crisis.

Striking is the fall of base metal prices in the first half of 2010, which expresses the fear of a double dip in economic growth in the western world and China's growth to slow down from above 10% to 8%.

However, history teaches that strong intermediate corrections of metal and mineral prices, having an economic function, offer attractive buying momentums.

Consequently, I expect the commodity markets to recover strongly in the second half of the year, with gold not having an economic value, to lag behind. Also, in my view, prices of other precious metals, including silver, platinum and palladium, offer more investment potential.

I remain bullish on the gold equity markets however, which have lagged behind significantly.

In conslusion, in the second half of 2010, in my view, investors should not buy physical gold but focus their attention to the depressed qold equity markets.

Marino G. Pieterse
Goldletter International
www.goldletterint.com
info@goldletterint.com

2009 Goldletter Publications