Silver Market Morning

Gold Today –New York closed at $1,371.30 down $4.70. Asia took it down to $1,363 ahead of London’s opening but then London pulled it back to $1,365 before it Fixed in London at $1,360.00 down $5.75 and in the euro at €1,015.380 down nearly €5.00. Ahead of New York’s opening gold was at $1,363.5 and in the euro at €1,017.08.

Silver Today – Silver closed at $23.00 down 16 cents in New York yesterday. Ahead of New York’s opening it traded at $22.93.

Gold _{(very short-term)}

The gold price should continue to consolidate with an upward bias, today in New York.

Silver _{(very short-term)}

The silver price will continue to consolidate with an upward bias, in New York today.

Price Drivers

Gold & Silver – Monday saw purchases of the shares of the SPDR and Gold Trust gold ETF of 1.803 tonnes worth of gold. While this confirmed a more positive tone, reflecting the Technical picture in gold and silver, the market is still not free of the threat of further sales of gold from the U.S. based gold ETFs. Until these cease for a week or more, the gold and silver prices will not be given their full head by investors in Asia. The total of the SPDR gold ETF now stands at 912.318 tonnes and the holdings of the Gold Trust stand at 178.2 up 0.6 of a tonnes, together totalling 1,092.321 tonnes.

The drama in India continues with the Rupee falling another 90 cents against the dollar yesterday. The Indian Rupee now stands at Rs.64.50 down from 63.60 yesterday as foreign funds continue to leave the country. [We cover that in our weekly newsletter. Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com] While the supply of gold and silver in India is being choked off by the government with 10% duties, up-front payment for the metals and a requirement to export 20% of imported gold now, there are several reports of smuggling in full flight into the country. No one can accurately gauge the size of these imports but we believe they are substantial.

In South Africa [where gold production has fallen from the 1971 level of 1,000 tonnes of gold a year to around 160 tonnes today, further disruption of the mining industry is expected in a month’s time due to a power-play between the Unions there. The small but very aggressive AMCU is demanding around a 60% pay rise for new workers, while the mining companies are only offering 5.5%. To stop the outflow of members, the NUM [the largest mining Union] is now demanding the same. With the mining industry there now operating at a loss, overall, a strike will produce a heavy fall in the exchange rate of the Rand of around 20% [to R12 :$1], which will then lift cash flow to a ‘just profitable’ level. Last October the Rand stood at R6.80 to $1. Again, this demonstrates the value given by gold when an exchange rate falls.

Silver – The silver price continues to show its strength by its recovery yesterday.

Regards,

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