Silver Market Morning

Gold Today – Gold closed in New York at $1,470.41 in New York yesterday. In Asia, where China is still on holiday, it pulled back to $1,462. In London it jumped to $1,474 ahead of the Fix. The Fix was set at $1,472.75 just 25 cents higher and in the euro at €1,126.13 while the euro was at €1: $1.3078. Ahead of New York’s opening it slipped slightly at $1,471.90 [the same as yesterday at this time] and in the euro at €1,126.12.

Silver Today – Silver closed at $24.33 up 43 cents, in New York yesterday. Ahead of New York’s opening silver stood at $24.36.

Gold _{(very short-term)}

The gold price will continue to consolidate with a weaker bias, in New York today.

Silver _{(very short-term)}

The silver price will continue to consolidate with a weaker bias, in New York today.

Price Drivers

Gold & Silver – The SPDR gold ETF sales continue but at a slower pace. This week, so far, has seen sales of 2.41 tonnes. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com] Today the Chinese gold markets are closed still again taking an important element of demand out of the market. India is in its marriage season and is buying and wholesalers restocking. When the Chinese holiday ends we should see another boost in demand.

What has not been fully factored into the market is the waning influence of the U.S. in the gold market:

- With COMEX warehouse stocks falling heavily, either COMEX must buy physical gold or soon risk defaulting. We are not talking about futures and options, which except for 5% of transactions is just a paper market. Its influence on the gold price happens when deliveries are made [notice has to be given to the exchange if physical delivery is required, so they can attach a counter party that is capable of doing so].

- SPDR gold holdings of gold are now at 1,040 tonnes and have fallen over 500 tonnes in the last two months. Only very long-term holders will remain after the current selling stops.

If another 500 tonnes or more are sold from the fund and COMEX stock are not replenished then the U.S. will impact the gold world only insofar as its 7% of annual global demand can impact. This places the U.S. as a minor player in the gold world thereafter. The selling essentially passed U.S. gold over to Asia and is unlikely to return.

Silver – Silver continues in its cautious mode as its moves slowly up. U.S. investors in the Silver Trust remain sceptical of a price recovery and appear to feel that an economic recovery may hamper silver’s rise in the future. We believe this attitude will change.

Regards,

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