Silver Market Morning

Gold Today –New York closed at $1,321.70 down $14.20 after rising $23.30 the day before. Asia held it there before London pulled it back up to trade at $1,324 ahead of the Fix. It then Fixed in London at $1,323.25 down $1.50 and in the euro at €999.056 up nearly €2.00. Ahead of New York’s opening gold was at $1,325.90 and in the euro at €1,000.83.

Silver Today – Silver closed at $21.45 in New York yesterday. Ahead of New York’s opening it traded at $21.57.

Gold _{(very short-term)}

The gold price should show a positive bias today, in New York.

Silver _{(very short-term)}

The silver price will continue to follow gold favoring the upside, in New York today.

Price Drivers

Gold & Silver – Yesterday saw no sales or purchases of gold from or to the SPDR gold ETF. The holdings of the SPDR gold ETF are at 911.130 tonnes and the Gold Trust still at 177.60 totalling 1,088.73 tonnes. Consequently there was no downward pressure on the gold price in the last two days. Instead, the ongoing demand in Asia allowed the gold price to move up and confirm a stronger Technical picture above $1,310.

Some slightly better economic news is being put out in Europe. However, it is far too small to be read as a turnaround in the economic direction of Europe. That news together with better news in the U.S. and China alongside the improved gold Technical picture is validating our comment that growth can be positive for gold too. They do not act as a counter one against the other. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com] France is showing growth as is Germany now, but the recovery remains tenuous. We would need to see more of this type of data over a longer period before we were convinced that a turnaround was happening.

India is now facing an economic crisis that is benefitting the local Rupee price of gold. This is despite one of the best monsoons and agricultural seasons ever seen. But the Indian Rupee continues to fall. It is now tumbling through the Rs.61: $1 level. Local inflation is now hitting 9.84%. The fact that the government is now attacking the symptoms and not the cause of the problem tells us that the two pictures will worsen. Among their measures is the virtual halting of gold imports through the measure to demand that 20% of imports must be exported. Yes, some importers will do that then re-import the exported gold to allow imports, but in the main the bulk of importers do not have the organisation to do this [yet]. So the premium on the gold price inside India has now passed 40% and looks to rise further. This should stop visible imports and incite further smuggling. For Indians who have gold already, the rising Rupee price more than justifies its retention in portfolios. So in India, gold is demonstrating how it is a counter to the economy and the currency.

We would emphasise that this validates the long-term holding of gold, particularly in nations where the government’s performance on the economic and monetary front is suspect.

Silver – The silver price continues to follow gold, cautiously.

Regards,

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