Silver Market Morning

Gold Today –New York closed at $1,294 on Friday. Asia took the price down to $1,281 ahead of London’s opening. In London it was Fixed at $1,283.25 down $7.25 and in the euro at €978.98 up €2.70 while the dollar was slightly stronger against the euro at €1: $1.3101. Ahead of New York’s opening gold stood at $1,283.00 and in the euro at €979.43.

Silver Today – Silver closed at $20.60 down 74 cents in New York on Friday. Ahead of New York’s opening silver stood higher at $19.70.

Gold _{(very short-term)}

We expect the gold price to consolidate with a weaker bias, in New York today.

Silver _{(very short-term)}

We expect the silver price to consolidate with a weaker bias, in New York today.

Price Drivers

Gold & Silver – Friday saw the SPDR gold ETF sell another 5.411 tonnes on top of the 4.21 tonnes of gold sold on Thursday leaving the fund holding 989.942 tonnes.

We have often pointed to newly mined gold production as falling as reserves now un-payable are removed from the balance sheets of gold miners. We are seeing this confirmed by the biggest miners, Barrick, Goldfields and Newcrest and no doubt many, many more. While accurate figures are never available for scrap sellers until well after the event we are led to believe that scrap sales are falling even faster than reserve reductions. How long will this take to feed through to the gold price while the SPDR gold ETFs are selling gold remains to be seen?

What is going to feed the belief that the world is headed towards deflation fast is the report that the Bank of International Settlements, the central bank of central bankers is warning that Banks face another global financial crisis worse than 2007-8 as a $10 trillion central bank bond mountain leaves them perilously exposed to higher interest rates. Further to the announcement from the Fed last week giving a contingent timetable on tapering off QE, global markets are continuing to discount higher interest rates. It appears that it is likely that this will be a self-fulfilling event well ahead of the timetable the Fed proposed. It is clearly causing a confidence crisis in the U.S. economic recovery, which may well be stalled shortly. The failure of governments in the developed world and in their trading satellites to stimulate growth in support of central banks efforts may well accelerate this stalling. The B.I.S. states that now, growth is not enough to fend off the crisis. Meanwhile, China is showing signs that it is moving to a potential ‘credit crunch’ of its own.

While a myopic focus on the Technical picture does describe the short-term, it ignores the series of deep structural problems in the monetary system. With hindsight we see the prices in the next week as being opportunities not an end of an era! [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Silver – The silver market continues to follow gold.

Regards,

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