Silver Market Morning

Gold Today –New York closed at $1,351.00 down $16.10 on Wednesday. Asia took the price down to $1,310 ahead of London’s opening. In London it was Fixed at $1,303.25 down $62.75 and in the euro at €986.34 down €33.32 while the dollar was slightly stronger against the euro at €1: $1.3213. Ahead of New York’s opening gold stood at $1,299.00 and in the euro at €984.39.

Silver Today – Silver closed at $21.34 down 27 cents in New York on Wednesday. Ahead of New York’s opening silver stood higher at $20.02.

Gold _{(very short-term)}

We expect the gold price to consolidate below $1,300, in New York today.

Silver _{(very short-term)}

We expect the silver price to consolidate around $20, in New York today.

Price Drivers

Gold & Silver – Yesterday saw the SPDR gold ETF sell 1.503 tonnes of gold leaving the fund holding 999.561 tonnes down 2.10 from yesterday. The Gold Trust also saw 1 tonne sold from its holdings. This was not a large amount and was not the cause of the fall in the gold price. As we said yesterday, “The market is reading that an announcement to taper QE is virtually certain. ....... If the Fed does announce a tapering of QE we will see what gold is left in short-term traders hands in the gold ETF. It may come out then with Treasuries falling and equity markets becoming exuberant......, today could see the completion of the move.” [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

What is notable is not the small amount of selling but the absence of buyers. It is this feature of the gold and silver markets that will cause ongoing volatility both ways. Certainly the fall in the prices both yesterday in New York and this morning in London are falls that were not supported by large sales of gold. This leaves the market capable of swinging back up as easily as it could continue to fall. We note that ‘you sell when the markets believe the price will rise forever and you buy when markets believe the price will not stop falling’. Where are we now?

We bought today ahead of New York’s opening.

Mr Bernanke was very cautious with his words, emphasizing that the data will guide the Fed, but that there was data confirming growth. If this persisted then QE would be lessened from $85 billion a month and could end in mid-2014 if this data continued to be positive. U.S. markets have read this that growth has gained traction and that investors, world-wide will be selling gold. At least that myth is now discounted in the price and the market will get back to the real issues driving gold. We do expect to see Asian demand and developed world physical demand to come back with vigor as happened in April.

Silver – Silver’s heavy fall was in sympathy with gold and should continue to follow gold both ways from now on.

Regards,

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