Silver Market Morning

Gold Today – In New York the gold price fell to $1,649.70, yesterday. In Asia and in London it traded just below that level and then Fixed at $1,641.75 in London, and in the euro at €1,225.28, while the euro was $1.3399. Ahead of New York’s opening, gold was $1,645.50 and in the euro at €1,223.98.

Silver Today – Silver closed at $30.98, yesterday. Ahead of New York’s opening silver stood at $30.80.

Gold _{(very short-term)}

We expect gold to rest on support before consolidating, in New York shortly.

Silver _{(very short-term)}

We expect silver to rest on support before consolidating, in New York shortly.

Price Drivers

Gold & Silver –

Gold made the expected strong move to the downside in New York. Our worry that with the Chinese now on holiday for their Chinese New Year, Chinese retail buying is absent from the market for the holiday. We do expect to see Central Bank demand to rise now, simply because the volumes of gold available from the dealers are such that central bankers will buy.

The lower retail demand currently, should prove short-term as once the Chinese return from holiday the powerful underlying growth there should continue to fuel the growth of the middle classes. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]. Do we believe that the Indian government is succeeding in halting the inflow of gold to India? No we do not! In the latest figures out of the All India Gems and Jewellery Trade Federation, India imported 950 tonnes in 2012. Of this, 250 tonnes came into the country through the illegal channels. In 2011, India imported over 900 tonnes of gold and none of it came through smuggling. The rise in duties has not stopped the import of gold into the country it only changed the route it comes in. Smugglers earn a profit of around $3,719 (Rs 200,000) on every kilogram of gold smuggled into the country. So smuggling is now more profitable. Gold prices in India are 5.7% higher than in Dubai. Typically, gold is smuggled into India from neighbouring Dubai and Thailand. With every individual smuggling in an average of 5 kilo of gold per trip, the return on investment for each smuggler in one year amounts to almost 200%. We expect the price differences to encourage smuggling even more, over time!

Silver –Silver is locked solidly to the gold price moves even on the downside moved by dealers in the market and hesitant U.S. investors, who like to buy as silver is rising.

Regards,

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