Silver Market Morning

Gold Today – Gold closed in New York at $1,452.00 down $17.90 in New York yesterday. In Asia, gold recovered to $1,455. London held it there and it was Fixed at $1,454 down $9 on yesterday and in the euro at €1,108.739 down €10 while the euro was at €1: $1.3114.00078. Ahead of New York’s opening it stood at $1,464 and in the euro at €1,115.68.

Silver Today – Silver closed at $23.93, in New York yesterday. Ahead of New York’s opening silver stood at $23.83 again.

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 has seen sales of 8.55 tonnes so far this week. This encouraged another, a third, “bear Raid” on the gold market, which took the gold price down to $1,441 quickly and easily. While Asia and central banks are slower off the mark, we expect to see the very high demand for physical gold to continue. How strong is it? Imports to China last month were 223.5 tonnes, double the month before. We expect a similar record figure for May.

Demand in India is also robust, despite the curbs on imports imposed by the government. There, smuggling of gold will rise exponentially as the premiums there rise.

As we said in earlier “Market Mornings” these ‘bear raids’ take physical gold from the U.S. and pass it across to Asia at low prices. As we can see from the tonnages of gold held in COMEX warehouses and the remaining tonnages held in ETF’s at HSBC in New York is diminishing to a level where the ability of the banks to execute these raids is running out. But we expect them to continue to raid the gold & silver markets so long as they can for their short-term profits. This will leave the U.S. a much diminished gold market at the end of the day. That is, unless it goes into the market to buy physical gold. The confidence the U.S. financial markets have in their equities remains very high. We believe that this confidence is misplaced as the moment interest rates begin to rise, equities will tumble alongside the bond markets. The economic recovery in the U.S. is still a long, long way away from being self-sustaining in the face of rising interest rates. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com] But that aside, the gold and silver markets are being driven by demand outside of the U.S. and we believe will continue to take advantage of these lower prices to buy gold. As their actions have demonstrated, they believe that gold and silver prices are going to rise in the future.

Silver – The silver price did not pull back with gold yesterday, remaining calm as they accepted that “bear raids” pass away and prices recover. Having said that, prices remain vulnerable, short-term, in both metals.

Regards,

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