Silver Market Morning

Gold Today –New York closed at $1,342.4 up $8.70. London lifted it ever so slightly to $1,343.30 ahead of the Fix where it was set at $1,340.00 up $13.25 from yesterday and was Fixed in the euro at €1,012.31 up €5.20. Ahead of New York’s opening gold was holding that level and in the euro at €1,012.96.

Silver Today – Silver closed at $20.46 the same as the day before in New York. Ahead of New York’s opening it traded at $20.35.

Gold _{(very short-term)}

The gold price should continue higher, in New York today.

Silver _{(very short-term)}

The silver price should continue higher, in New York today.

Price Drivers

Gold & Silver – There were sales of 1.502 tonnes of gold from the SPDR gold ETF yesterday, leaving its total at 929.759 tonnes down from 931.261 tonnes yesterday, while the Gold Trust gold holding was unchanged at 178.24 tonnes leaving the total of the two funds at 1,107.999 tonnes. Again these sales were insufficient to restrain the gold price. With the technical picture in both gold and silver continuing to improve, those selling gold from the SPDR must be facing difficult questions as to why they are continuing to do so?

The move upwards in the gold price was on thin volumes after hours. However, premiums on the gold price remain at $15 - $17 showing demand there remains robust and likely to continue to be so as Chinese demand is not driven by the economic news in the West, but by significantly different motives. The gold markets in the West have few common denominators with the Asian markets and it is unlikely that the two will meet. It is the persistent acquisition of gold for the long-term, in line with the rise in savings of the growing middle classes there that will continue to drive demand there for the foreseeable future. After all we expect the number of middle class people in China to grow beyond the entire population of the U.S.A.

Meanwhile a gold price rise on the back of thin volumes, to us, is symptomatic of falling supply as we have pointed out repeatedly. The fall in supply shows itself to be much greater than many thought as we are in a period of low gold demand outside China. When the rest of the world’s gold season begins again in around six weeks time then the lower supplies will be felt most keenly by the gold price. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com] We watch with great interest the examination of the role of banks in commodities markets in the U.S.A. If they are forced out of these markets, then we would expect to see far less volatility and for prices to more accurately reflect the demand / supply picture of these markets.

Silver – The silver price had a quiet day after the previous day’s leap in price. As it is a much smaller market in value terms and more professionally controlled this price pattern seen yesterday should continue.

Regards,

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