Silver Market Morning

Gold Today –New York closed at $1,362.90 up $27.90. Asia took it to $1,366.00. London then pulled it back to $1,360 before it Fixed in London at $1,360.75 up $21.25 and in the euro at €1,020.558 up nearly €12.50. Ahead of New York’s opening gold was at $1,362.15 and in the euro at €1,020.95.

Silver Today – Silver closed at $22.93 up $1.09 in New York yesterday. Ahead of New York’s opening it traded at $22.90.

Gold _{(very short-term)}

The gold price should remain positive, today in New York.

Silver _{(very short-term)}

The silver price will continue to be robust, in New York today.

Price Drivers

Gold & Silver – Yesterday saw sales of 0.314 tonnes of gold from the SPDR gold ETF. At first this worried the gold market in New York, which fell back to $1,323, but with no follow through and a much better Technical picture the gold price then took off. The total of the SPDR gold ETF now stands at 912.919 tonnes and the holdings of the Gold Trust stand at 177.60 tonnes, together totalling 1,090.519 tonnes. We believe that short-covering was a strong factor and expect it to continue today.

In addition, as we mentioned yesterday the short-term judgements on fund managers forced many hedge funds to sell gold, particularly after the April ‘bear-raid’ on the gold price right up until this week. But by the same judgement factors, now that the Technical picture has changed, we expect to see the same fund managers begin buying to improve their performance [in the short-term]. After all no fund manager can afford to let emotion interfere with his performance. Gold is not now a “black beast” because it did not yield profits earlier in the year. If you bought gold at $1,200 you are already up 10% in the last month. Indeed you would be reinforcing your own investment failure if having lost on gold you did not recover the losses on the rise? So we do expect to see the U.S. hedge funds become buyers of gold again. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

The Indian Rupee continues to slide down now standing at Rs.61.90 to the U.S. dollar. For India to stem the outflow of capital from the country, they must either expect an acceleration of the slide down or must bring in more stringent Capital Control on foreign investments and very soon. Weekends are ideal times to do this. Our concept of the monetary world being like a tree with the U.S. dollar the trunk and all other currencies branches, is aptly demonstrated now by the “carry trade’s” withdrawal of ‘hot money’ as interest rates begin to rise in the U.S. forcing such traders to close the loan position against which they invested into the Rupee for the higher interest rate. There could be no better reason for an Indian in India to own gold than as a hedge against the falling currency.

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

Regards,

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