Silver Market Morning

Gold Today –New York closed at $1,335.00 up $13.30. Asia took it to $1,339.00. It then Fixed in London at $1,339.50 up $16.25 and in the euro at €1,008.052 up nearly €9.00. Ahead of New York’s opening gold was at $1,338.90 and in the euro at €1,007.90.

Silver Today – Silver closed at $21.84 in New York yesterday. Ahead of New York’s opening it traded at $22.07.

Gold _{(very short-term)}

The gold price should have a decisive day, today in New York. We expect it to be positive.

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 purchases of 2.1 tonnes of gold into the SPDR gold ETF. The holdings of the SPDR gold ETF are now at 913.233 tonnes and the Gold Trust still at 177.60 totalling 1,090.83 tonnes. That’s why we saw upward pressure on the gold price overnight. Asian upward pressure on the gold price will remain robust, but we can now add to that two more demand factors. The first is more demand for SPDR gold ETF shares and secondly short covering in the physical gold market. It is clear that the ‘mood’ around gold, in the U.S. is changing.

In the second quarter of this year and likely thereafter, we saw the big U.S. funds selling gold persistently from the SPDR gold ETF. We now have reports of where they came from. George Soros who sold the 15 tonnes he had left, Loeb 5 tonnes, but Paulson sold around 318 tonnes slightly more than half his holdings in the SPDR gold ETF. Paulson has not changed his stance it seems, because as recently as July 17 he was advocating buying gold. One has to appreciate that fund managers there, are constantly measured on their short-term performance, so someone like Paulson, handling other people’s money too, will be judged poorly by gold’s performance in 2013. His views are long-term positive for gold, but his sale of half his holdings will be seen as ‘cutting losses’. We hope that he judges the turn in the gold price as well. If so, we could see a steady stream of purchases into the SPDR gold ETF once more. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

India is now imposing Capital Controls in an attempt to curb the outflow of funds from there. At the moment they are only being imposed on Indians themselves, but we do expect them to apply to foreigners as the decay in the Indian B of P continues. There has be a strong outflow of “carry trade” investments from India and other emerging nations, as U.S. interest rates begin to climb. The fact that Capital Controls are now being imposed could well see a rapid acceleration of outflows of capital that are foreign owned, for fear of them being prevented from exiting. Premiums on gold there continue to rise towards $50.00. Duties on gold have been lifted, once more, from 8% to 10% and from 6% to 10% on silver.

Silver – The silver price continues to follow gold vigorously upwards now.

Regards,

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