Silver Market Morning

Gold Today – After last week saw a rise to $1,675 before being driven down to $1,662 at New York’s close on Friday, gold was taken higher ahead of London’s opening to $1,669.45 in Asia. The prime cause of the move was not the euro because gold fell in euro terms while it entered recent new territory at over €1: $1.33 on Friday. It opened today at €1: $1.3360 in London. Does one see the euro gold price steady and gold moving with the euro now, or will it continue to move separately? Gold Fixed this morning, at $1,667.75. In the euro it was Fixed at €1,246.823, while the euro was at €1: $1.3376. Ahead of New York’s opening, gold was $1,669.20 and in the euro at €1,249.40.

Silver Today – Silver stood at $30.71 at the opening in London today after refusing to slide in Friday with gold. Ahead of New York’s opening silver stood at $30.77.

Gold _{(very short-term)}

Gold continues to consolidate but is expected to have a positive bias today, in New York.

Silver _{(very short-term)}

Silver is showing solidness and should show a positive bias, in New York today.

Price Drivers

Gold & Silver – Speculators and traders are focusing on the downside picture given by Technical Analysis still. Again picking the weakest time in gold’s day, after the p.m. Fixing, speculators came in to knock $13 off the gold price on Friday. But ahead of London’s close Asia lifted the price back almost to $1,670 before London’s opening. This well describes current underlying Asian demand which appears strong enough to override speculative interests. The question is, will U.S. based professional speculators continue to push the gold price down or give in to physical demand pressures and go long?

In the Eurozone and I.M.F. leaders are sending out the message that the ‘worst is over’ in the Eurozone debt crisis. We should not confuse the several issues here. The message they are sending out is that the banking crisis has seen its worst. This need not imply a recovery in the Eurozone, because the numbers just don’t support this. The E.U. remains in a deepening recession evidenced by the continuation of rising unemployment. This will continue to pull the solvency picture of the weaker E.U. members further down. If this does continue, confidence in the E.U. monetary scene will worsen, benefitting gold. Looking through the myriad of words intended to reassure investors, we continue to see ‘solutions’ that give a superficial, not fundamental, repair to the banking system. The E.U. will see a worsening crisis if the E.U. economies continue to degenerate economically. It is the need for confidence amongst financial professionals that is pulling gold back to a more fundamental role in the future. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com].

It appears that gold has not been lifted to a Level I asset for reserves purposes on bank balance sheets. Nevertheless, we continue to expect it sometime between 1 January 2013 and 1 January 2015.

Silver – Silver has been more robust than gold in the last week. It should continue!

Regards,

Julian D.W. Phillips for the Gold & Silver Forecasters