Silver Market Morning

Gold Today – Gold continued to move higher, closing at $1,400 up $12 in New York on Friday. In Asia it pushed through to $1,423 London then traded it around that level ahead of the Fix. The Fix was set at $1,425 up $11 and in the euro at €1,092.54 up €12 while the euro was at €1: $1.3043. Ahead of New York’s opening it began to rise firmly to $1,437 and in the euro at €1,101.40.

Silver Today – Silver closed at $23.18 unchanged on Friday in New York. Ahead of New York’s opening silver stood at $23.65.

Gold _{(very short-term)}

The gold price will continue to recover, in New York today.

Silver _{(very short-term)}

The silver price will continue to recover, in New York today.

Price Drivers

Gold & Silver – As New York saw a recovery in the gold price on Friday, silver was virtually unchanged there. It took Asian demand to lift both higher on Monday. The price recovery was still in the face of selling from the gold ETF’s the Gold Trust and the SPDR gold ETF. Another 10.23 tonnes were sold on Friday alone. This must be a salutary warning to the “bear raiders” telling them that the market is swallowing up gold sold into the market. We are certain that if central banks are now fully awake to the limited nature of this new supply, they will be taking it into their coffer as fast as it comes to the market. We believe that the large holders selling will complete their selling programs in the near future. Once this selling stops the upward pressure of demand will be felt. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Right now gold’s relationship to the emerging market growth is important. The drop back in growth in China has been misinterpreted regarding gold, we feel. That Chinese GDP growth has softened to 7.7% from the frantic 10% is in fact positive for gold. What we watch is the rate of growth of the middle classes, the gold buyers in China. The softening of overall GDP growth allows for the middle classes to expand. China needs time for its middle classes to expand into the new capacities created by raw growth. This is happening at an accelerating rate while GDP growth slows. It is expected that China will eventually have 300 million middle class citizens in its 1.3 billion population. The Chinese per se, are savers and deem gold to be an important part of their savings. They are encouraged to think so by the government. The resulting potential demand for physical gold will overwhelm supply in time. Currently developed world views are focused myopically on suppositions about the developed world economic future.

What has not yet been accepted by market observers in the developed world is that the Swiss may well become buyers of a 1,041 tonnes of gold in the future, while the trend to repatriate gold is rising. This may well precede new demand for gold from western central banks?

Silver – We are still expecting silver to experience the ‘shunt’ effect and play catch-up soon.

Regards,

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