Silver Market Morning

Gold Today – The gold closed in New York on Friday at $1,605.30. In Asia and London it pulled back slightly as it gets used to the view over $1,600. It then Fixed at $1,602.50 and in the euro at €1,238.408, while the euro was $1.29.40. Ahead of New York’s opening, gold was $1,602.95 and in the euro at €1,237.85.

Silver Today – Silver closed at $28.89 in New York yesterday. Ahead of New York’s opening silver stood at $28.78.

Gold _{(very short-term)}

Gold is pausing as if to wait for confirmation it is going up. The events in Cyprus could now influence its direction in New York today.

Silver _{(very short-term)}

Silver is pausing as if to wait for confirmation it is going up. The events in Cyprus could now influence its direction in New York today.

Price Drivers

Gold & Silver – The E.U. required that the first €100,000 be included in the levy, so as to reach the target. Cyprus has until Thursday to agree the terms [which the E.U. has refused to budge on. It appears that the International Monetary Fund, during the negotiations, had even gone so far as to suggest a 40% cut on certain deposits or to freeze deposits for up to five to 10 years. Few people in the world believed that the monetary authorities had the power to impact depositors this way. Confiscation of deposits has set a precedent that will be the death knell for an E.U. Common Deposit Guarantee scheme. It intended that depositors would be the first to be repaid in an insolvency. If the Cyprus Parliament does not oppose any measures to put this so-called tax on depositors under €100,000 euros it calls into question everything the EU has been trying to do to protect ordinary depositors and taxpayers from bank failures for the past five years. Of far greater consequence will be the blow to confidence in the entire monetary system. If it can be done in Europe in extreme times it can be done anywhere. Prudent investors will be reviewing how to protect their assets on a broad front, not just in gold and silver. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com] It will also change the reaction of depositors in nations where doubts rise over the soundness of banks. “Runs” on bank will now happen immediately the spectre of crisis appears. Creditors and depositors will be reviewing their lending on a broad front to protect against such eventualities in the future.

We see these actions as being very gold and silver positive. It took one shot from a gun to start World War 1. If Cyprus’ Parliament [where the voting base looks like it will be difficult to get agreement anyway] fails to agree these measures 1% of the E.U.’s banking system could start contagion that reaches to the core of the E.U. with ripples reaching far and wide!

Silver – Silver did not rise as much as we expected yesterday and is cautiously higher now. Perhaps it still needs to be convinced that gold has broken upwards?

Regards,

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