Silver Market Morning

Gold Today –New York’s closed at $1,394.80 up nearly $14 after which Asia and London lifted it further through the $1,400 barrier to $1,408 in London’s morning. It Fixed at $1.406.25 up $22.00 and in the euro at €1,083.90 in London up €10 while the euro was €1: $1.2891. Ahead of New York’s opening gold rose again to stand at $1,400.65 and in the euro at €1,078.79.

Silver Today – Silver closed at $22.46 in New York yesterday. Ahead of New York’s opening silver stood at $22.70.

Gold _{(very short-term)}

We will see a continuation of the strong move today, in New York.

Silver _{(very short-term)}

The silver price will follow gold strongly, in New York today.

Price Drivers

Gold & Silver – The most significant piece of news for the gold price was that the gold held by the SPDR gold ETF rose 0.542 tonnes! This is the first rise we have seen in over two months! As we have repeatedly said in both our newsletter and in this daily report, once the sales from the SPDR gold ETF ceased, the weight of Asian demand would turn the gold price around. If there are no more sales to come, then the record short position on COMEX will prove a driving force to send the gold price higher as these shorts are closed and as the major banks and hedge funds go into the market to buy their gold back. But will it be there? The premiums, over the gold price, that we see in Shanghai are between $21 and $25 for the tenth day [above $20]. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

While the economic news out of the U.S. continues to improve, more evidence is growing that deflationary pressures are growing and could overwhelm the best efforts of the Fed. Even exuberant markets such as the U.S. equity market are aware that it is QE that is driving markets up, but that this has not yet translated into a self-sustaining recovery. If interest rates were to rise, even Mr. Bernanke acknowledged, that the recovery would be threatened. The 5% fall just before the Nikkei closed today shows how nervous and uncertain developed world markets are and just how much they are aware that deflation is just over their shoulders. With the 18-month consolidation and the fall in the gold price we seem to be back at the point in 2008 when gold had retreated from $1,200 an ounce to below $1,000 an ounce before it turned around. But this time Asian demand is large and more robust. The developed world turned to gold then and should turn to it now.

We will need to see more confirmation that SPDR gold sales have ceased before we can conclude it has ceased, but as we said a fortnight ago, we are at a watershed point for the gold and silver prices.

Silver – We believe that silver will respond quickly to the rise in the gold price as it is doing now.

Regards,

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