Silver Market Morning

Gold Today – The gold price slipped back to $1,573.80 in New York, yesterday. In Asia it began to recover and rose over $1,580 and London it continued to rise before Fixing at $1,584.25 and in the euro at €1,214.822, while the euro was $1.30325 in the middle. Ahead of New York’s opening, gold was $1,583.30 and in the euro at €1,215.12.

Silver Today – Silver dropped back to $28.55 in New York on yesterday. Ahead of New York’s opening silver stood at $28.92.

Gold _{(very short-term)}

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

Silver _{(very short-term)}

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

Price Drivers

Gold & Silver – When we look at the facts that are activity related and are hitting global markets, we see a worse picture of the developed recovery than is being portrayed out there. The payroll tax increase in the U.S. did have an impact as it hit the smallest proportion of taxpayer’s money, their discretionary spending. This spending is the key to the recovery, so if this takes a hit of a much higher percentage than that amount not the total income, it will hurt the economic recovery. With 70% of the U.S. economy dependent on consumer spending the disastrous last month’s spending in Wal-Mart [where consumers go to get bargain prices] the measure of consumer spending restraint becomes very clear. We can understand why Mr Bernanke was so keen to scotch talk of an end of QE as such an event will undermine consumers and spending tremendously.

The purpose of QE is to prevent deflation from bringing on a depression in the U.S. as real growth has not only been elusive but declining over the years. Japan has publicly declared that they will use QE to turn deflation into inflation.

That’s why the last 18 months of gold’s performance is a fairly close reflection of the fall in the gold price in 2007 – 2008, when it went from $1,200 to $1,000 [thereafter to rise to $1,900+]. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com] The sell-off in the gold E.T.F.’ has halted this week from the steep falls of the last few weeks. This sell-off was the main reason for the steep fall in the gold price. We note that Asian demand this morning lifted the gold price $8.

Silver –Again we saw a remarkable rise in the quantity of silver held in the Silver Trust still rising as the silver price fell and gold ETF holdings fell. Do the professional operators in the Silver Trust know something that the rest of us don’t know?

Regards,

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