Silver Market Morning

Gold Today – The gold price tumbled again in Asia after New York selling pushed the gold price down to $1,392.70 down $33 from New York ahead of London’s opening today. In London it Fixed at $1,377.00 down $45.25 on yesterday and in the euro at €1,070.01 down €24.5, while the euro was much weaker at €1: $1.2869. Ahead of New York’s opening it stood at $1,376.20 and in the euro at €1,068.93.

Silver Today – Silver closed at $22.53, in New York yesterday down 83 cents. Ahead of New York’s opening silver stood at $22.35 up 8 cents.

Gold _{(very short-term)}

The gold price will continue to search for support lower down, in New York today.

Silver _{(very short-term)}

The silver price will continue to search for support lower down, in New York today.

Price Drivers

Gold & Silver – While the SPDR gold ETF has seen tiny sales yesterday of 0.37 of a tonnes until now, yesterday saw the selling resume and 8.48 tonnes were sold from the funds [including 0.46 from the Gold Trust]. This accounted for the drop in the gold price. Bear in mind that the short positions on COMEX alongside very low long positions stands to profit 4 times the loss made on selling the gold to drive the price lower. For every 10 tonnes of gold sold COMEX speculators make profits on shorting 40 tonnes of gold. That’s why the selling physical gold in this seemingly panicky fall in the gold price is handled so clumsily. We see it as a continuation of the ‘bear raids’ on the gold market. It seems we were right that the selling has come from large holders of shares in the SPDR fund.

Soros Fund Management LLC lowered its investment in the SPDR Gold Trust, in the three months to March 31 another 12% to 530,900 shares as did Blackrock Inc. Gold demand sank 13% to 963 metric tons in the first quarter as ETP sales outweighed buying from China and India. These huge funds have sufficient resources to continue to do this until their positions are exhausted. At that point it makes profitable sense for them to repeat the process on the long side and buy physical against new [x 4] long positions. After all this is how George Soros made his money in the first place.

At these prices scrap sales are drying up. Scrap sales account for 35% of market supply. Gold mines at these prices are getting uncomfortably close to break-even point on their mining, so have to move away from low grade ore to high grade ore [of which there is considerably less. So it will not take physical gold buying to send prices higher but a combination of that with falling supplies. The huge hedge funds will decide at what point the gold and silver price turns. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Silver – Silver is following gold on the way down, despite there being no sales from the silver Exchange Traded Fund.

Regards,

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