Silver Market Morning

Gold Today – The gold price closed at $1,425.4 down $6 in New York yesterday. In Asia, gold weakened to $1,413 then in London it Fixed at $1,412.25 down $24.25 on yesterday and in the euro at €1,094.513 down €9, while the euro was much weaker at €1: $1.2903. It then quickly fell to €1: $1.2883. Ahead of New York’s opening it stood at $1,411.55 and in the euro at €1,095.67.

Silver Today – Silver closed at $23.36, in New York yesterday down 24 cents. Ahead of New York’s opening silver stood at $23.00 down 43 cents.

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 no further sales yesterday after the 0.37 of a tonnes the day before. If this continues, those traders driving gold and silver prices lower will find themselves the only sellers in the market place.

No doubt when you read the business news you get a constant spin that economies are recovering, Q.E. is going to end sooner rather than later, even after Mr. Bernanke says it will not. Indeed, all is, really, coming right, so it seems. But the reality is somewhat different. QE still has not produced significant results, but it has fended off a depression. Deflation is underway in the developed world, despite the U.S. experiencing a lackluster growth picture. It appears that QE is doing this. So the numbers, if you take away deflation from the picture, reflect monetary inflation, giving rise to the record, rising stock markets and this positive spin. At the important consumer level, financial conditions remain tight. In Europe with France now entering another recession and Germany seeing growth decline to 0.1%, deflation is more visible. If official forecasts of recovery don’t pan out then we have dangerous ‘stagflation’. Worse still, this will be after official efforts to create a real recovery have failed for five years. Governments and the banking system cannot afford to fail as this will lead to social unrest alongside tremendous monetary inflation. This will then be an intractable formula. In this environment gold will hold its value, reflecting the falling value of currencies. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com] This is a longer term view. Right now we are waiting for the impact of SPDR gold ETF share selling cessation which is positive for the gold price and to see if the halting of gold imports to India is effective, which is negative for the gold price. We are watching to see the rate of rise of gold price premiums there. This will tell us if the Indian government moves are successful or not.

Silver – Silver is continuing to ride the coattails of gold, driven by professional investors in the Silver Trust. We see gold and silver prices at a watershed that will become apparent in the next fortnight, we feel.

Regards,

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