Silver Market Morning

Gold Today –New York closed at $1,333.oo up $1.50 on the day on Friday. Asia allowed it to wallow around $1,228 but London came in with strong physical demand to lift the gold price back to Fix at $1,330.75 up $3.00 on Friday and was Fixed in the euro at €1,001.241 €3.00. Ahead of New York’s opening gold was at $1,336.90 and in the euro at €1,005.79.

Silver Today – Silver closed at $20.03 in New York. Ahead of New York’s opening it traded at $20.14.

Gold _{(very short-term)}

The gold price should continue to consolidate with a stronger bias, in New York today.

Silver _{(very short-term)}

The silver price should continue to consolidate with a stronger bias, in New York today.

Price Drivers

Gold & Silver – There were no sales from the SPDR gold ETF on Friday starting the week with the total of the SPDR gold ETF and the Gold Trust at1,106.205 with the SPDR gold ETF at 925.355 tonnes, while the Gold Trust gold holding stood at 178.85 tonnes.

At the morning Fix the gold price showed a strength we have not seen for some time. One bullion bank was a net buyer and the other four net sellers. Should the gold price continue to advance we do expect to see short covering accelerate. Certainly the gold and silver prices started the week with a solid tone. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

We believe that the main impetus behind the gold and silver prices remains the fundamental supply and demand factors, which are now overwhelming short-term factors. With supplies having fallen off at these lower prices it is clear that Chinese demand by itself is sufficient to absorb the remaining supplies.

In India, where the government has choked off imports with duties and a requirement that 20% of imported gold be re-exported [before new supplies can be imported] premiums on gold stocks already in the country are rising rapidly and should continue to rise. While the leading jewellers are supporting government calls for gold sales to be halted, we expect such displays of patriotism to wane suddenly, when turnovers drop and profits disappear. While the Indian gold and silver markets are in their quiet season of the year, there is little incentive to import gold, except the very low prices which are rising with the precious metal prices now. Once the season changes to the high season, we expect the government to have a tremendous battle to stop illegal imports from coming into the country. Rising premiums will ensure that.

Silver – The silver price is following gold higher and with good cause. Unlike the gold Exchange Treaded funds, whose levels are falling, the holdings of the main silver ETF, the Silver Trust have jumped 728 tonnes in the last month or 7.25%. This is why the silver price should outperform the gold price once prices start to rise strongly.

Regards,

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