Silver Market Morning

Gold Today –New York closed on Tuesday at $1,285.40 up $34.30. This morning in Asia pulled back to $1,280 then as London started it slipped back to $1,275 and was Fixed at $1,275.00 down $5.75 on yesterday’s Fix and in the euro at €976.787, down €5.0 showing gold yesterday moved down in both currencies as the dollar recovered. Ahead of New York’s opening gold was trading at $1,276.95 and in the euro at €978.81.

Silver Today – Silver traded at $20.18 up $1.03 in New York. Ahead of New York’s opening it had fallen to $19.83.

Gold _{(very short-term)}

The gold price will consolidate with a weaker bias, in New York today.

Silver _{(very short-term)}

The silver price continue to consolidate with a weaker bias, in New York.

Price Drivers

Gold & Silver – Sales from the SPDR gold ETF continued with another 1.05 tonnes sold yesterday making the sales for this week to date at 27.72 of a tonnes. And yet the gold price rose once more.

The question now is, “Are the institutions that are holding SPDR gold ETF shares selling to move into equities, or will the implied prospect by Mr. Ben Bernanke that interest rates are not going to go higher for a long time going to persuade them to continue to hold gold?” The answer to this will tell us when these sales are going to halt. We must just wait and see!

But the big difference we are seeing this week now is that demand, primarily from China, continues to overwhelm supplies, including the sales from the SPDR gold ETF!

But it isn’t demand alone that is lifting gold prices. It’s falling supply that is also not being measured on a day to day basis.

Direct interference by the Indian Government alongside leading Indian jewellers have decided to voluntarily ban gold coin, bar sales for the next six months. 8-10% of the gold imported is purchased as coins or bars for investment. The All India Gems and Jewellery Trade Federation, has said that over 85% of its members have agreed to the ban. The rest are expected to join over the weekend. Of course, this doesn’t stop them selling gold in other forms, so we need to be able to gauge this. The result in finite terms is that other efforts to halt gold imports by the Indian government and the Reserve Bank of India caused India's gold and silver imports to decline by 70% to around $2.5 billion. In May, bullion imports into India totalled $8.4 billion. In June, Gold imports are estimated to have fallen to around 35 to 40 tonnes, less than a quarter of the purchases in May. But we are in the quiet season in India after the end of the wedding season, which lasts until September and after the harvests are in. So we do not read too much into this. By then smugglers will be fully organized too. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Silver – The silver price is catching gold up now confirming it will move with gold still.

Regards,

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