The Red Roadmaster™ Gold Report

Vol. 062509 Au # 5 Copyright June 25, 2009

The Red Roadmaster™ Editor/Compiler/Analyst/Commentator

June 25, 2009 6:00 AM EDT

Dear Subscriber,

The Spot Gold price rose sharply overnight and early on Wednesday, recovering all and more of the week’s losses at US$938 oz., following closely the rise in the world stock markets, and as Crude Oil slipped for the 2nd day in a row.

US Treasury bond prices slipped, and the US Dollar Index was flat ahead of yesterday’s interest-rate announcement from the Federal Reserve that, as expected, remains committed to Quantitative Easing and Zero % interest rates.

The US$, the World’ s #1 reserve currency, rose against its main competitor, the Euro, after the European Central Bank pumped a record 442B Euro (US$618B) into the region’s banks, offering 12 month loans at the current policy rate of 1%.

French, German and Italian investors saw the Gold Price in Euros bounce sharply from its lowest level since April 6th, at 655 Euro oz

For investors now ready to buy Gold the price recovered last Friday’s close after hitting its lowest London Fix since 9 January at 560.47 GBP.

“Across all of the metals, there appears to be a battle emerging between short-term players anticipating a weaker summer period and participants willing to look at the longer-term picture and seeing value at current price levels, “ says today’s Commodities Daily from Standard Bank. Gold Bullion may have lost some of its momentum in the short term says Walter de Wet. “Should the Fed not produce any major surprises, selling Gold into rallies would be our preferred strategy.”

“The forces behind a push for higher Gold Prices are being offset by those favoring lower prices,” agrees the latest Fortis Bank Metals Monthly from VM Group in London.

“In such a scenario, the exchange-rate fluctuations account for most of the US$ price moves, a situation we expect to continue in here. It seems that when there little else going on, Gold inversely follows the US$ quite closely.”

VM”s analysts believe “the next major event in the gold market” will be the renewal in Sept. of the Central Bank Gold Agreement (CBGA), plus further details of the IMF Gold Sales effectively approved by US law-makers, thus giving their casting vote in such decisions at the International Monetary Fund. “With only a little over three months to go in the current CBGA,” they add, “it is likely the IMF will be the lynchpin of a new agreement.”

New data out last Tuesday showed that Eurozone Gold reserves shrank by 20MM Euro last week due to a sale by one member bank. Despite selling well over 2,500 tonnes of Gold since the first Central Bank Gold Agreement was signed in Sept. 1999, Europe’s central-bank Gold reserves have more than doubled in value, rising 12% per year on average from a low of 250 Euro an oz.

In a speech marking the IFO think-tank’s 60th anni last Tuesday, “An early withdrawal of monetary stimulus must be avoided,” said ECB member Axel Weber of the German Bundesbank. “We have to be ready to withdraw liquidity gradually, but today we have no need to start or even to prepare for an imminent start to that operation,” agreed fellow ECB member Christian Noyer of the Banque de France at a press conference in Paris.