Silver Market Morning

Gold Today –New York closed on Wednesday at $1,275.70, nearly $17 down. This morning, in Asia, rose to $1,278 before London pushed it back over the $1,280 level again. It was then Fixed at $1,279.75 down $4.50 and in the euro at €975.79 down €0.50. Ahead of New York’s opening gold was trying to go firmer trading at $1,281.15 and in the euro at €977.38.

Silver Today – Silver closed at $19.32 down 70 cents in New York. Ahead of New York’s opening it had fallen to $19.42.

Gold _{(very short-term)}

The gold price will have a stronger bias, in New York today.

Silver _{(very short-term)}

The silver price will have a stronger bias, in New York today.

Price Drivers

Gold & Silver – There were sales of 2.625 tonnes of gold from the SPDR gold ETF yesterday, leaving its total at 936.070, down 1.5 tonnes on the day while the Gold Trust gold ETF dropped 0.45 of a tonne to 178.24 tonnes, down 0.76 of a tonne leaving the total of the two funds at 1,114.31 tonnes down 2.26 tonnes on the day. We see this pair of sales as the cause of the fall in the gold price, after the market saw the picture more positively for gold. After Mr Bernanke’s announcement gold rose initially to $1,294, before the market became aware of these sales, which, while relatively small, dampened the gold price as the dollar weakened slightly.

Understandably, it did not suit Mr. Bernanke to have such a control over markets as he had, yesterday. As we forecast in our report of yesterday, Mr Bernanke did not give a timetable for interest rate increases, nor to ‘tapering’ off QE. He went further in neutralising the impact of his statements by making it clear that the Fed would respond to the data as it guided the Fed.

Markets and investors must now look to their own assessments of economic data and turn away from the Fed. This will make markets more mercurial and capricious. So we expect much greater volatility in all global financial markets from now on and possibly for the next year or more. In turn, this makes markets less certain and lose confidence. We read the initial reaction to take the gold price higher as the correct one in the light of the statement. Sellers came out in the U.S. based gold E.T.F.s in what appears to have been a reaction that was pre-determined ahead of the statement. As the information from Mr. Bernanke is digested, so we expect to see precious metal markets benefit. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com] However, we continue to watch the U.S. based gold ETF’s in the short-term as these retain the power, in the short-term, to influence gold and silver prices. As we have said before, once sales from these funds have halted for a week, we expect the underlying under-supply of gold to be overcome by Asian demand, now around 1,900 tonnes a year [China & India alone]. This is 68% of annual newly mined gold [which is, itself falling quickly].

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

Regards,

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