Silver Market Morning

Gold Today – The gold price rose to $1,583.40 in New York, yesterday, up $10. In Asia and London it held steady before Fixing at $1,580.50 and in the euro at €1,213.249, while the euro was $1.3027. The Bullion Banks were neither buyers nor sellers matching both sides in-house. Ahead of New York’s opening, gold was $1,581.40 and in the euro at €1,214.73.

Silver Today – Silver rose to $29.05 in New York yesterday. Ahead of New York’s opening silver stood at $28.93.

Gold _{(very short-term)}

Gold is preparing for a strong move soon, either way, which we may see, in New York, today or tomorrow.

Silver _{(very short-term)}

We expect silver to move higher ahead of a move in gold today or tomorrow, in New York.

Price Drivers

Gold & Silver – And the Dow hit a record level yesterday. Unsurprisingly, many commentators are saying, “Yes, but why?” One of the first areas to benefit from exuberant money printing will be asset values, because low yields on Fixed interest securities allows for higher-yielding, higher-risk investments.

But this disguises an obvious reality. If you cheapen money, in time, this will be reflected in higher prices for assets etc, because money is being cheapened. Simply put, unless prices are rising as a consequence of robust demand, in a growing economy [which allows growing money supply to be absorbed by economic growth] then such rising prices reflect monetary inflation, which, without growth, will turn toxic. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com] Price stability should reflect money supply matching the economic requirements of an economy whether it is growing or shrinking. If you issue more money than needed in a relatively static economy then prices must rise reflecting this oversupply. This is acceptable if it really does produce growth, absorbing the extra supply. If it doesn’t, then at some point this extra supply must be withdrawn. If this happens before growth is well on the way to absorbing it, then you will see the economy shrinking again and a growing need to withdraw more money from the system in an ongoing deflationary pattern. If you don’t then you get runaway inflation. We are very close to the point where another deep monetary crisis will begin unless we see robust growth. That’s why the Fed is worried, the media is pushing optimism and the current market exuberance is pushing equities higher, but where is growth going to come from? Angel Merkel and, we guess many other leaders, don’t know.

Silver –Silver is showing signs that it will outperform gold soon. It is over $29.00 today in London and could well reflect the rising demand from professional investors while the silver price was falling, this time as prices rise. U.S. investors are happy to invest on rising prices, but to see them buy as prices fall, gives confidence in the coming price of silver.

Regards,

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