Silver Market Morning

Gold Today – The pm Fix in London was set at $1,426.50, which was the lowest price of the day $16 in New York on Friday. In Asia, gold recovered slightly to over $1,431 where it held until the Fix which was set at $1,429.75 down another $19.50 on Friday and in the euro at €1,102.522 down only €11.50 while the euro was much weaker at €1: $1.2968. Ahead of New York’s opening it stood at $1,433.00 and in the euro at €1,103.41.

Silver Today – Silver closed at $23.60, in New York on Friday. Ahead of New York’s opening silver stood at $23.77.

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 another 2.754 tonnes on Friday, making 23.584 tonnes sold in the week. This selling is providing the backdrop for the ongoing ‘bear raids’ in the gold market, alongside a poor Technical picture. The selling of physical gold, added to by the bullion banks and other hedge funds, allowed all of them to increase their short positions to hold 67,374 so-called short contracts on May 7, 6.4% more than a week earlier. On top of that, the net-long position dropped 10% to 49,260 futures and options.

The big dangers they face when positions rise to these levels is that they have to close these positions at what they perceive as the bottoms. This does not require buying physical gold. If they were to switch from ‘short’ to ‘long’ at the same time, then moved in to buy physical gold, they could engineer a very rapid rise in the price and make their COMEX positions extremely profitable too. This would be possible because the bulk of sellers that were going to sell are doing so now. Just as selling has been incited on the way down, this may happen on the way up. What is for sure is that the gold and silver prices are in extremely volatile territory now. With Asian and central bank demand robust, a switch to the long side would be supported by robust physical demand too.

What investors must keep their eyes on is the point at which the SPDR gold ETF stops selling. This may well not be defined by price but the completion of the closure of a huge position. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Silver – Some may feel that the supply of silver is too great for the market to bear. We have seen investment demand strong while in gold the ‘bear raids’ have distorted the investment scene. We feel that the fall in the silver price is temporary and not a reflection of fundamentals.

Regards,

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