Silver Market Morning

Gold Today –Asia started the week in dramatic form by lifting the gold price from New York’s close on Friday of $1,294.40 to $1,317 up $23. London then held it at $1,315 before it Fixed at $1,313.75 and in the euro at €998.214 up €17.00. Ahead of New York’s opening gold was going firmer at $1,315.45 and in the euro at €997.88.

Silver Today – Silver closed at $19.49 up 11 cents in New York. Ahead of New York’s opening it had fallen to $19.92.

Gold _{(very short-term)}

The gold price may pause ahead of moving higher, in New York today.

Silver _{(very short-term)}

The silver price may pause ahead of moving higher, in New York today.

Price Drivers

Gold & Silver – There were sales of 2.705 tonnes of gold from the SPDR gold ETF yesterday, leaving its total at 932.462 down from 935.168 on Friday, while the Gold Trust gold was unchanged at 178.24 tonnes leaving the total of the two funds at 1,110.702 tonnes.

Asian demand overwhelmed these sales and the falling supplies now coming to the market, allowing the gold price to break up through final resistance at the $1,300 level and convincingly establish itself above $1,300. We suspect that the sellers of gold from the gold ETFs will be hesitant to sell now as the price is rising, fearing they are selling too low.

Friday also saw a reduction in short positions by 59.55 tonnes down from 249.29 as it became clear that gold sales from the gold ETFs have now fallen to levels insufficient to push precious metal prices down. With this turn in the precious metal markets it is unlikely that big sellers will now come forward in another ‘bear-raid’ until the gold price has lost momentum on the upside and it has become clear that scrap sales have jumped. Even then with U.S. gold stocks so depleted the impact of a limited ‘bear-raid’ may cost the bears dear.

We would stress that the current moves in gold are only indirectly linked to the statements from the Fed last week. This may have altered the perspective for U.S. institutional investors, but Asian investors in gold are driven by very different factors as they have demonstrated over the last few months by their persistent buying. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

The silver Trust has seen buying over the last three weeks consistently despite the falling gold price.

Silver – Investors in silver have shown a more optimistic attitude to the silver price than gold investors over the last few weeks, buying when gold investors were selling. We stress that silver investors in the Silver Trust are professional and usually institutional. They appreciate that when the economy is improving demand for silver grows. When uncertainty reigns silver as an investment does well too. To the long-term investor this reduces the risks relative to gold.

Regards,

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