Silver Market Morning

Gold Today – The gold eased slightly to $1,593.30 in New York, yesterday. In Asia and London it held onto those gains before Fixing at $1,591.50 and in the euro at €1,221.975, while the euro was $1.3024. Ahead of New York’s opening, gold was $1,593.70 and in the euro at €1,226.62.

Silver Today – Silver rose slightly to close at $29.15 in New York yesterday. Ahead of New York’s opening silver stood at $29.12.

Gold _{(very short-term)}

Gold is deciding whether to attack $1,600 or consolidate again at current levels and will do so in New York, today. This move may confirm a long-term change of direction?

Silver _{(very short-term)}

Silver is going to do the same as gold in New York, today, or sometime this week.

Price Drivers

Gold & Silver – There was a good move upwards in gold and silver yesterday, but this is not what we were referring to yesterday when we indicated that the next moves would signal a longer term direction for gold. We have an indication of the way forward, but this needs to be confirmed still.

Looking outside the markets to the macro-economic picture we see global trends that we believe will enhance the upside potential for gold. The U.S. is seeking a free trade pact with the nations on the other side of the Atlantic. We now see Japan contemplating joining an 11-nation Pacific pact for free trade. China has been franticly busy securing global resources to continue its steady high growth in the future. This is in line with our forecasts that the world will polarize into strong trading blocs to protect their international trade competitiveness and economic ‘independence from other trading blocs. Under the title of protecting its internal economy, nations continue to make moves to weaken their currencies in line with this. The words ‘protectionism’ and ‘currency wars’ return to our screens when we contemplate this. We agree that these are not the initial intentions of the nations involved but they are the consequences. As such we see these as unstoppable forces that will define ‘tomorrow’. The uncertainty that this future will bring about will be greater than we have seen since the last World War. In such conditions, called by Alan Greenspan ‘in extremis’, gold comes to the fore. This view is supported by the latest OMFIF report sponsored by the World Gold Council. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Silver – As we mentioned yesterday silver has a good future on both the industrial and investment front. The only factor to temper that future is the large amount of silver that will come to the markets through scrap sales and from new silver mines caused by higher silver prices. The decision investors must make, is at what price will the supplies come to the market?

Regards,

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