Silver Market Morning

Gold Today –New York closed on Tuesday at $1,285.00 up $0.50. This morning, in Asia, it held the same level, then, in London it took on a slightly firmer tone as the dollar weakened to be Fixed at $1,286.00, up $4.75 on Friday’s Fix and in the euro at €983.03 almost the same as yesterday. Ahead of New York’s opening gold was trying to go firmer trading at $1,286.90 and in the euro at €981.13.

Silver Today – Silver closed at $19.96 up 7 cents in New York. Ahead of New York’s opening it had fallen to $19.88.

Gold _{(very short-term)}

The gold price will shortly make a strong move either way, in New York.

Silver _{(very short-term)}

The silver price will shortly make a strong move either way, in New York.

Price Drivers

Gold & Silver – There were no sales from the SPDR gold ETF yesterday once more and the market is showing buoyancy, as a result. For two days now the gold and silver price is hovering with buyers and sellers almost in balance. This always precedes a strong move one way or the other. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

All eyes will be focused once more on the Chairman of the Fed, Mr Ben Bernanke as he gives his semi-annual testimony on the economy and monetary policy to Congress the next two days. This will be sufficient to trigger a move in gold, the dollar and nearly every global financial market that there is. His power over markets is pertinent to gold because it will influence the institutional owners of gold shares in the SPDR gold ETF.

If they deem that the picture Bernanke paints warrants continuing to hold onto their gold, then the absence of those sales will allow Asian demand to dominate. However, if the reverse is true, then large sales from the SPDR gold ETF, greater than 25+ tonnes, may dampen the gold price yet again. Having said that, if the precious metal markets perceive that the sales are coming to an end, then we will see the situation we saw last week, where such sales did not hold the gold price back.

Bear in mind that the potential for a very large “short squeeze” sits in the market as these positions on COMEX are at record levels and growing day by day.

The impact of the Eurozone crisis on the euro exchange rate is minimal, currently. As civil servants go on strike in Greece, where unemployment stands at 27% already, the euro is worth $1.3114 stronger than yesterday against the dollar, which is also weaker against most currencies. We do not believe that the exchange rates of the $ and the € reflect either the internal economic situation of the nations they represent or the true Balance of Payments of those nations. We do believe that the rates are “assisted” by central bank intervention by the Fed and the E.C.B. and the swap arrangements they have.

Silver – The silver price continues in step with the gold price.

Regards,

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