Silver Market Morning

Gold Today – Gold closed in New York at $1,472.60 up $20 in New York yesterday. In Asia, gold remained at that level. London held it there and it was Fixed at $1,469.50 up $15.5 on yesterday and in the euro at €1,118.681 up €10 while the euro was at €1: $1.3136. Ahead of New York’s opening it stood at $1,472.55 and in the euro at €1,120.36.

Silver Today – Silver closed at $23.91 only 2 cents down, in New York yesterday. Ahead of New York’s opening silver stood at $24.12.

Gold _{(very short-term)}

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

Silver _{(very short-term)}

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

Price Drivers

Gold & Silver – The SPDR gold ETF has seen sales of 6.32 tonnes yesterday making 14.87 on the week. While sales from the SPDR gold ETF persist the gold price will be vulnerable, just as it was the day before yesterday, but Asian and central bank demand has woken up and comes in to pick up all the available gold. Just how much of this buying is by sellers of the SPDR gold ETFs wanting physical bullion, we don’t know. Because the large holders of the shares of these funds are usually institutions, we suspect that few will be doing this, choosing more likely to be buying into the equity rallies.

However, Asian demand is currently equal to the supply they are finding in the market. The difference is, the selling from the SPDR gold ETF is finite, whereas the Asian plus central bank demand is currently infinite. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com] But the gold and silver prices are susceptible to heavier sales from the gold ETF until they halt, then the picture changes dramatically.

A major facet of gold’s attraction is the fact that it is considered by most to be both an asset and cash. As we know, when interest rates rise, ‘cash is king’ as fixed interest securities fall in price. Likewise in deflation ‘cash is king’ as asset values fall. It does happen that some will sell gold in mild deflation initially, but then return to it as its cash attraction draws them back.

But let’s be clear, gold is falling because of ETF sales, nothing else. In the more complex global world we live in, gold’s supreme quality, in the minds of current buyers, is the financial security it provides savers. As Warren Buffett has said savers and bondholders are suffering a "brutal" erosion of their money as the US Federal Reserve and other central banks force yields to historic lows. We feel that gold’s ‘cash’ qualities will come into their own much sooner than yields begin to rise.

Silver – The silver price is now showing an increasing resilience as it holds above $24. The Silver Trust’s holdings have risen 8.6 tonnes so far this week, growing while gold ETFs shrink. Having said that, gold and silver prices remain vulnerable still!

Regards,

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