Silver Market Morning

Gold Today –New York closed at $1,199.10 down another $25 yesterday. Asian demand came in and lifted it to $1,205. London held it there until the Fix where it was set at $1,203.25 down $18.75 and in the euro at €921.889 down €23.60 while the dollar was slightly weaker against the euro at €1: $1.3052. Ahead of New York’s opening gold stood at $1,202.02 and in the euro at €920.19.

Silver Today – Silver closed at $18.50 down 30 cents in New York yesterday. Ahead of New York’s opening silver stood higher at $18.82 up on New York’s close.

Gold _{(very short-term)}

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

Silver _{(very short-term)}

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

Price Drivers

Gold & Silver – The fall in the holdings of the SPDR gold ETF and Gold Trust took a breather yesterday and no sales were recorded from the SPDR gold ETF, but the Technical picture continues to be poor with small sales and no buyers [except in Asia] coming in to buy at this stage. The market needs to see that the U.S. sales of gold have stopped for about a week before the market believes a bottom has been found. We are of the opinion that the gold price is almost exclusively being driven by the sales from the gold ETFs in the U.S. and buyers will not enter the market until these sales halt. The fundamental picture is being ignored but will return to dominate.

However, this leaves the gold price in the most extraordinary position. Sales from one large source over the last two months, followed by buyers standing back [and there are large ones in the wings of the market] and now prices falling on the smallest of sales.

While we continue to see Chinese demand persist on a daily basis showing itself with small gains in the gold price overnight, Indian demand is being blocked by the Indian government’s attempts to prevent imports, which have now extended to telling the large wholesalers not to sell gold to the public. This is reflected in rapidly rising premiums on the gold price inside India. This tells us that smuggling has not expanded enough to satisfy local demand even in this low season for gold. We do expect smuggling to accelerate as expanded profit margins attract smugglers. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com] With gold imports now effectively blocked, the Rupee is tumbling, showing that other factors are causing the deficit on the balance of payments at the moment not gold imports.

Silver – The silver price appears unwilling to follow gold down now as it stands today at the same price it started in New York yesterday and this while the gold price is falling. However the fall in the silver price in the last few days has been far beyond the fall in gold, so it is time for gold ‘to catch up’ to silver in the falls.

We expect precious metal markets to become lively both ways in the near future!

Regards,

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