Silver Market Morning

Gold Today –New York closed at $1,322.80 down $3.50 on yesterday. Asia let it slip $3 and London held it there until the Fix which set it higher at $1,323.75 down $7.75 and in the euro at €999.207 down only €3.49. Ahead of New York’s opening gold was at $1,324.35 and in the euro at €1.000.64.

Silver Today – Silver closed at $19.82 up 10 cents in New York yesterday. Ahead of New York’s opening it traded at $19.75.

Gold _{(very short-term)}

The gold price will consolidate with a stronger bias, in New York today.

Silver _{(very short-term)}

The silver price will consolidate with a stronger bias, in New York today.

Price Drivers

Gold & Silver – There have been no sales from the SPDR gold ETF so far this week leaving the total of the SPDR gold ETF and the Gold Trust at 1,106.205 with the SPDR gold ETF at 927.355 tonnes, while the Gold Trust gold holding stood at 178.85 tonnes. If we see no more sales for the rest of this week, we will take it that they have halted except in exceptional circumstances. This will be very positive for the gold price.

As it is, the pullback of $19 in New York, at one point yesterday, was the work of traders pushing their luck, for by the close of business in New York, the gold price rebounded $15. It appears that traders felt that the markets would read more recovery into the Fed’s statements, but this did not happen. In fact indications that a lot more needs to be done before tapering can be considered in the bond buying program by the Fed. Again, the U.S. will read this as gold positive.

Meanwhile the real driving force in the gold market continues to be China whose demand remains robust. All of the other gold markets are seeing thin trading volumes in the gold ‘doldrums’. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Investors, looking ahead, have become keenly aware that the monetary aspect of gold is kicking in more and more in a growing number of countries. For instance, in South Africa, in the last nine months the exchange rate against the U.S. Dollar has fallen from R6.80 to R9.9 which translates into a 46% rise in income to the mines there, against a fall in the gold price of 24%.

Cross to India where the gold price 2 years ago was Rs.71,350 when the Rupee cost Rs.44.08 and the dollar price of gold was 22% higher than today at $1,618.65. Today, with gold now lower at $1,324.35, in the Rupee it is now Rs.80,136 12.3% higher and the Indian Rupee at Rs.60.375 against the U.S. dollar. Gold is therefore proving an excellent hedge against local currency depreciation even with a falling gold price!

Silver – The silver price was restrained yesterday, but indications are that it is ready to rise faster than gold now.

Regards,

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