Silver Market Morning

Gold Today –New York closed on Tuesday at $1,251.10 up nearly $3. This morning in Asia it lifted to over $1,290 but as London started its day it was pulled back to $1,287 and then Fixed at $1,280.75 up $27.75 on yesterday’s Fix and in the euro at €981.87 up €4.0 showing gold yesterday moved with the euro again as the dollar fell. Ahead of New York’s opening gold was trading at $1,282.85 and in the euro at €982.42.

Silver Today – Silver traded at $19.15 down 1 cent in New York. Ahead of New York’s opening it had risen to $19.83.

Gold _{(very short-term)}

The gold price will continue to give direction, in New York today.

Silver _{(very short-term)}

The silver price confirming gold’s new direction and will, in New York.

Price Drivers

Gold & Silver – Sales from the SPDR gold ETF dropped back to 0.672 of a tonne. As we pointed out earlier this week, once these sales stop demand for gold will overwhelm supply. That’s what happened yesterday. Chinese demand continued on the path it has previously established as a long term trend, as its middle classes grow and invest in gold not just once, but they continuously build on present holdings.

As you can see in the price rising strongly [over $30] after New York’s close in Asia the price testified to this fact as well as a drop in the dollar against the euro. We do believe that Mr Bernanke’s remarks could have stemmed the selling of gold in the U.S. yesterday, but we need, as we said before, to see these sales terminate before we see confirmation of the direction of the gold price for the rest of this year.

Put bluntly, the U.S. is running out of gold to sell. This is the gold they have invested for the short to medium term. This will lower their influence over the gold price, unless they come back in to re-buy the gold they have sold. This will be nothing more than basic demand overwhelming supply, irrespective of the U.S. or global economy’s condition or prospects.

Asian, particularly Chinese demand, which is dominant over the gold price, will grow because of Asian factors not U.S. factors. To ignore this will lead to wrong investment decisions. A point we have brought out in our articles in the Gold Forecaster and Silver Forecaster has been that the global cash flow in the past was 80% to the developed world and 20% to the emerging world. By the second half of this decade, it will change to 35% to the developed world and 65% to the emerging world. The same shift in influence over the gold price is happening but much faster. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com] We will see the gold price reflect this year, we believe.

Silver – The silver price is confirming the change of direction by the gold price.

Regards,

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