Silver Market Morning

Gold Today –New York closed at $1,319.90 down $22.50. London pulled it back further to Fix it at $1,312.00 down $28 on yesterday and was Fixed in the euro at €994.92 down €17.39. Ahead of New York’s opening gold was at $1,312.50 and in the euro at €995.60.

Silver Today – Silver closed at $20.16 down 30 cents on yesterday in New York. Ahead of New York’s opening it traded at $19.86.

Gold _{(very short-term)}

The gold price should consolidate around these levels, in New York today.

Silver _{(very short-term)}

The silver price should consolidate around these levels, in New York today.

Price Drivers

Gold & Silver – There were no sales from the SPDR gold ETF yesterday, keeping its total at 929.759 tonnes, while the Gold Trust gold holding rose by a small amount to 178.85, up 0.61 of a tonne leaving the total of the two funds at 1,108.609 tonnes. This is the first rise in these totals we have seen in three months. While the volumes traded in the gold markets yesterday were thin, the fall back in the price reflected a need to pause in the rise of the gold and silver prices. Against a backdrop of a slightly stronger dollar the market needs to accept that the gold price will hold above $1,300 now, before reaffirming the new direction. However, if the sales from the SPDR gold ETF halt for the next week, there will be little to restrain the rise thereafter. The Technical picture remains much better than we have seen for some months. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

There are signs that the Eurozone, as a whole, is coming out of recession, but overall the global economy needs to show stronger data to convince markets that global growth has gained traction. At the moment markets in the developed world have been reading that an economic recovery is bad for gold and silver. Certainly in the U.S. as we have seen in the gold ETF’s, institutions have switched from gold to equities, but if the sales of SPDR gold ETF gold holdings really is coming to an end, this phase of downward pressure is also complete. Thereafter the gold market will return to discounting monetary changes that lie ahead. We are of the opinion that gold has risen for so long because of the state of the global monetary system and the changes that lie ahead of it. A financially healthier world will provide a greater buying power for precious metal investors.

By way of confirmation of our view of falling supplies of gold the WGC estimates a fall of up to 25% in the supply of scrap gold to the market [400 tonnes] Add to this that 60% of South African mines are now unprofitable [with the feeling that this may well apply to other gold producing nation’s mines] and we have evidence that gold supplies are falling heavily.

Silver – The silver price is not falling faster than gold, as it did in the past. It is showing a more conservative pattern as we see in the moves in the last day, rising strongly with gold but pulling back less than gold. This reflects the ongoing build up in the holdings of the Silver Trust in the U.S.

Regards,

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