Silver Market Morning

Gold Today – In New York the gold price pulled back $10 to $1,654.90 yesterday. In Asia it tried to climb back over $1,660 again before London opened. It Fixed at $1,660.50, up $4 and in the euro at €1,235.12. The euro weakened a little to €1: $1.3430 against $1. Ahead of New York’s opening, gold was $1,662.80 and in the euro at €1,238.08.

Silver Today – Silver closed at $30.86 in New York. Ahead of New York’s opening silver stood at $31.08.

Gold _{(very short-term)}

We expect gold to continue to consolidate, in New York today.

Silver _{(very short-term)}

We expect silver to continue to consolidate, in New York today.

Price Drivers

Gold & Silver – One of the reasons being put forward as to why the gold price is falling and failing to break through the $1,700 levels is because the economic prospects of the developed world are rising. We remind investors, that while the economies of the developed world were booming, prior to August 2007, gold was climbing to new levels. We see the key reason for gold’s current struggle to climb is due to the relief that the Eurozone debt crisis has not resulted in the breakdown of the E.U. itself or the euro. That’s different from its prospects turning better. It is simply not collapsing. It is traders and speculators who are dictating the very short-term moves of the gold and silver price. They also punt reasons in the developed world for such moves. But at such times as these, a look at the fundamentals can give us a reminder of what’s really going on.

The main drivers of the gold price, central bank and Asian demand, remain intact. Despite the cut in Indian interest rates the Indian Rupee remains strong pulling Rupee gold and silver prices to lows not seen for a year or so. With inflation still at high levels there the Indian appetite for gold and silver remains unabated.

And what lies ahead? The arrival of the Yuan as a global reserve currency will create tremendous monetary uncertainty. A future rise in interest rates will do likewise as bond markets tumble. The potential for more monetary crises and uncertainty tells us that the reasons for gold’s rise since 2005 have not gone away long-term. Short-term we are seeing relief and hope, but not reasons for future confidence such as will make the gold and silver prices fall longer-term. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com].

Silver – We are not seeing a sell-off in the shares of the silver E.T.F. as the silver price falls again. However, the buying we saw in the last fortnight is not there today. Have prospects for silver changed in the last day? We can see no causes for such. We see consolidation right now and watch those shares in the Silver Trust [SLV] to see what longer term investors feel?

Regards,

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