Silver Market Morning

Gold Today –New York closed at $1,277, down $4.80 yesterday. Asia saw it resume its fall after which it accelerated in London where it was Fixed at $1,229.00 down $56 and in the euro at €942.85 down €35.57 while the dollar was stronger against the euro at €1: $1.3035. Ahead of New York’s opening gold stood at $1,232.60 and in the euro at €946.84.

Silver Today – Silver closed at $19.59 down four cents in New York yesterday. Ahead of New York’s opening silver stood higher at $18.65, down a dollar.

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 – The fall in the holdings of the SPDR gold ETF continues now at an accelerated pace with another 16.232 tonnes sold yesterday. This makes over 30 tonnes sold in the last four trading days. With the physical supply a daily maximum of 12 tonnes a day this additional amount crushed the price in the face of lower than average demand. These sales alone account for the fall in the gold price of over $47 so far today. The gold price is directly related to these sales now. We continue to wait to see these sales cease before we see a rebound in the gold and silver prices. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]. Because of this we do not see the gold price reflecting the medium term fundamental picture until SPDR gold ETF U.S. sales do halt. More than that there now appears to be an element of panic in these sales as the volumes rise and the gold price plummets. Could the gold price go lower? Of course it could, as this panic spreads through the remaining holders of the shares of the U.S. gold ETF. But investors should be aware that once they halt demand will heavily outweigh supply with the obvious consequences. It is anybody’s guess when this will happen. But there are some very big players on the sidelines of the gold market waiting to enter the market at what they perceive as the bottom. No doubt they are poring over their charts as are we, with our own expectations of a bottom.

Initially, the reasons for the sell-off was the belief that the U.S. equity market was the place to be, but when the Fed hoped to encourage this view by warning of the tapering off of QE in the future, the market read higher interest rates were coming no matter what. This caused the deflationary expectations to be discounted, with the consequential withdrawal of ‘Carry trade’ investments in emerging markets [nearly precipitating a ‘credit crunch’ in China as well as elsewhere. All global markets were then sold off [interestingly, only in the U.S. were precious metals sold off].

Silver – The silver market continues to follow gold, despite it being driven by very different fundamentals. We expect precious metal markets to become lively both ways in the near future!

Regards,

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