Silver Market Morning

Gold Today –Asia again lifted the market up to $1,336 after New York closed at $1,333.70 up another $16 on London. London pulled it lower ahead of the Fix where it was set at $1,326.75 up $13 from yesterday but down $10 on the start of the day and was Fixed in the euro at €1,007.10 up nearly €9.00. Ahead of New York’s opening gold was going firmer at $1,329.55 and in the euro at €1,008.84.

Silver Today – Silver closed at $20.46 up almost a dollar in New York. Ahead of New York’s opening it traded at $20.24.

Gold _{(very short-term)}

The gold price may slow its pace but continue higher, in New York today.

Silver _{(very short-term)}

The silver price may slow its pace but continue higher, in New York today.

Price Drivers

Gold & Silver – There were sales of 1.201 tonnes of gold from the SPDR gold ETF yesterday, leaving its total at 931.261 down from 932.462 yesterday, while the Gold Trust gold holding was unchanged at 178.24 tonnes leaving the total of the two funds at 1,109.501 tonnes.

While we are seeing short covering on COMEX now as the Technical positions of gold & silver continue to improve, only when a contract stipulates it is taking delivery of gold does it actually affect the gold price! Simply closing a short position with a long where physical gold is not involved has no effect on the gold price. Where an institution with a physical short position goes into the market to buy physical gold does their action result in a boost for the gold price. We are not yet seeing this in the market place. It may be happening at the Fixing in London where 90% of all physical deals are taking place, but we believe the greatest influence is found in the fall off in supply to the market from both mining and scrap sales of gold. We see this shortage remaining until the gold price has recovered to the price from whence it fell!

We were puzzled at the news a fortnight ago, from Goldman Sachs that they were selling their gold warehousing business, but as we now see, the moves to look into banks commodity point to the possibility of banks being pushed out of the commodity markets. This is why the sale was proposed it seems! If this is what’s going to happen to the commodity markets, we expect to see a structural change to volatility of the gold price [unless they move their operation to another part of the world? [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Silver – The silver price is catching up ground at twice the pace gold is, with the jump of $1 yesterday. Much as it seems reasonable to, silver fundamentals are not dominating the moves of the silver price. Gold is the dominant factor here. If the banks are pushed out of trading directly in commodities, then this will change too!

Regards,

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