Silver Market Morning

Gold Today – After Gold hit a bottom of $1,321 in a vertical fall from $1,580 it bounced back to $1,373 in New York yesterday. The bounce continued in Asia and London today with the morning Fix being set at $1,397 and in the euro at €1,070.17 while the euro was at €1: $1.3063. Ahead of New York’s opening it began to slip at $1,394.35 and in the euro at €1,067.49.

Silver Today – Silver closed at $23.23 barely changed on yesterday in New York yesterday. Ahead of New York’s opening silver stood at $23.47.

Gold _{(very short-term)}

The gold price is subject to the continuation or cessation of SPDR gold ETF sales, in New York today but may be tempered by rising physical demand.

Silver _{(very short-term)}

The silver price is subject to the continuation or cessation of SPDR gold ETF sales, in New York today, but the market is thin and may also see rising demand.

Price Drivers

Gold & Silver – Since last Friday 56.37 tonnes of gold has been sold from gold ETF’s mainly from the SPDR gold ETF [45.37 tonnes] and the Gold Trust [11 tonnes]. This source of supply will weigh on the gold price until it ceases. However, physical demand for gold has sprung up in Asia as well as for coins and bars and we believe from Central banks. The gold price action tells us that the weight of demand has now risen to absorb the extra supply. However, we do not rule out another ‘bear raid’ from U.S. banks and their clients [mainly from hedge funds]. The market remains shocked and emotional waiting to see if the ‘bear raid’ is over or is now completed. Only the holders of shares in the SPDR gold ETF know that. Traders and speculators will continue to be as active as never before. The massive volumes of short positions on COMEX have been successful, but these speculators know that prices do stop falling and usually bounce strongly. In turn, speculators are happy to go with the flow even upwards to accelerate either a rise or a fall. So, extreme volatility is still expected.

This is when gold and silver investors should review the global gold scene. Only U.S. hedge funds were sellers of gold. The SPDR fund is the largest in the world. However, the fall in the gold price was an event that will stop at some point. Until then the size of the sales can overwhelm the market. Scrap sales are falling away, which represent 40% of supply. Mines will lower reserves and production so reducing this supply. Essentially the fall in the gold price came from one source other global buyers are seeing this as a buying opportunity. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Silver – Silver has not been the victim of heavy selling, but remains a thin market. It has more potential to bounce than gold at the moment.

Regards,

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