Silver Market Morning

Gold Today – Gold closed in New York at $1,558.30 down $17 on yesterday, making $40 in two days. In Asia and London it traded lower down to $1,543 ahead of the Fix in London which was set at $1,545.25 down $23 and in the euro at €1,207.415, down €22 while the euro was at €1: $1.2798. Ahead of New York’s opening it traded at $1,546.00 and in the euro at €1,205.32.

Silver Today – Silver closed at $26.97 in New York. Ahead of New York’s opening silver stood at $26.85.

Gold _{(very short-term)}

Gold will consolidate lower just above long-term support, in New York today.

Silver _{(very short-term)}

Silver will consolidate on long-term support at $27, in New York today.

Price Drivers

Gold & Silver – Another 2.57 tonnes of gold was sold out of the SPDR gold Exchange Traded Fund yesterday in a thin market with adding to the day before’s sale of 13.78 tonnes of gold sold from the fund. Again it was a day where traders and speculators were successful in their attack on the gold price causing the gold price to fall through support. The fall is now $60 in two days. It is clear that if these sales continue, the gold price will keep falling until they stop. Being U.S. investors they are likely aware that they are selling into a heavy fall, so may well hold off or cease selling soon. Today and tomorrow will see where the next support stands. The market in both gold and silver looks heavily oversold. But it may get even more so before it turns.

You may well ask, “Why are shareholders in the SPDR gold ETF selling now?” Some postulate that such sellers may switch to gold bullion itself and away from the riskier, bank-held, unallocated gold in the Exchange Traded Funds. That may well be true.

Previously some commentators expressed the view that it was to invest in equities as the market hit new highs, but a look at the latest data on the U.S. economy was not encouraging. Real growth continues to be absent even though the U.S. economy is not weakening. In the Eurozone and the rest of the developed world the same scene persists. In Japan a huge round or stimulation is starting in the hopes that it halts deflation.

In the developed world, shades of 2007 are appearing, implying that we are looking at far more than a short-term picture for all financial markets not just precious metals. Certainly, if developed world quantitative easing fails to breed growth then it is in for an awful shock, taking markets further down. Precious metals in 2007 did fall 20% but then turned around to rise 90% thereafter. Is that what lies ahead? [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Silver – Silver continues to remain sensitive to the downside.

Regards,

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