Silver Market Morning

Gold Today – Gold closed in New York at $1,469.20 up $2.20 in New York on Friday. In Asia, gold rose further to $1,474. As London is closed today there is no Fixing. Ahead of New York’s opening it stood at $1,476.05 and in the euro at €1,126.41.

Silver Today – Silver closed at $24.09 up 24 cents, in New York on Friday. Ahead of New York’s opening silver stood at $24.20.

Gold _{(very short-term)}

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

Silver _{(very short-term)}

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

Price Drivers

Gold & Silver – While Technical analysis is an invaluable tool in the investor’s tool bag the gold market and by extension the silver price has influences that complicate the picture and can send out the wrong signals. Right now analysts believe the gold price is headed lower and possibly much lower, but the Asian market and central banks, neither of which considers technical analysis in buying decisions, we believe.

Central banks, buying now, have been buying continuously since 2009. Chinese and other Asian buyers are guided by the availability of disposable income, in their buying decisions far more than the technical position.

Western buyers buy when they believe the price is about to rise so they can profit in dollar terms, whereas Asian buyers buy when they believe it will fall no further and don’t look for a profit.

These different behaviors add complications to Technical analysis that can muddy the waters. So to say where it is going now requires considerably more than just looking at a chart. There is no doubt that the huge physical [coin and small bar] demand has created shortages that will persist for a month, but will these shortages result in higher prices or just demand persisting at current prices until the demand is met. After all, if the gold is not there paying more won’t bring it into shops. This represents a disjoint not just between demand and supply in the very short term but in the functioning of prices in accelerating supply. Put another way, at what price will the supply of coins and bars jump?

The Indian government is trying this tactic even now as they restrict supply except for some purposes. We known that Indian will now smuggle the shortfall into the country and defeat government, as they have in the past, but what impact will this have on the international price of gold. Its impact will be felt over time, not in the short-term. We will watch the Dubai gold souks for the answer. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Silver – The silver price is again in step with the gold price. We expect a quiet but solid week for silver.

Regards,

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