Silver Market Morning

Gold Today – The gold closed in New York at $1,614.40 yesterday. In Asia and London it slipped $2 until it Fixed at $1,611.50 and in the euro at €1,246.616, while the euro was $1.2906. Ahead of New York’s opening, gold was $1,609.00 and in the euro at €1,242.42.

Silver Today – Silver closed at $29.14 in New York, yesterday. Ahead of New York’s opening silver stood at $29.05.

Gold _{(very short-term)}

Gold is expected to continue to consolidate, in New York today, but with a firm bias.

Silver _{(very short-term)}

Silver is expected to continue to consolidate, in New York today, but with a firm bias.

Price Drivers

Gold & Silver – Sellers of gold from the SPDR gold Exchange Traded Fund turned buyers this week, halting the additional supply of gold to the market. This explains why gold has shown an important strength above $1,600 this week. The strength of Chinese demand for gold, strong enough to compensate for the lack of demand from India, is proving an important feature of demand. If this level of demand continues and we believe it will, then the gold price will find additional strength that will carry on in the days and years to come. With the ‘dishoarding from Exchange Traded Funds of gold now dissipating the gold price looks as though it has found a ‘floor’ again at this level. If Indian demand does resuscitate, they will see this and feel confident that if they buy the price won’t fall. This has an important psychological impact on Indian gold investors. Thereafter prices will rise as the two compete for available supply.

Such conditions persuade short sellers of gold to change direction. An important question for the gold market speculators and traders is, as always, which direction will their actions make the gold price go? At the moment the long side looks the most profitable short-term

The topic of the day is once again Cyprus. Will the Cypriot Parliament succumb to the threats from the E.U. and E.C.B. and vote for the clauses that they overwhelmingly voted against last week, if the threat to depositors with deposits below €100,000 disappears? In these extreme days, will Russia change its mind and come charging in to establish a strong Mediterranean foothold taking control of its banking, energy and perhaps military presence and take Cyprus out of the Eurozone? Ridiculous? Well we would have thought of a ridiculous the proposal to just take percentages of deposits from banks, until it was proposed last week. But here we are redefining deposits as unsecured loans in banks! [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Silver – Silver started to show the ‘shunt’ effect yesterday as it moved from $28.88 to $29.15 before pulling back today. Certainly, if gold continues to climb we do expect to see the full extent of the ‘shunt’ effect in higher silver prices.

Regards,

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