Silver Market Morning

Gold Today –New York closed at $1,396.30 up $21.70 on Friday. Asia held it there and at the time of writing the gold price stood at $1,394.20. London is closed today.

Silver Today – Silver closed at $23.98 up 92 cents in New York on Friday. Ahead of New York’s opening it traded at $24.02.

Gold _{(very short-term)}

The gold price should continue to consolidate with a stronger bias, today in New York.

Silver _{(very short-term)}

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

Price Drivers

Gold & Silver – The gold price continues to exhibit a steady strength, consolidating then moving up again. Yesterday saw no purchases or sales of the shares of the SPDR and Gold Trust gold ETF. The total of the SPDR gold ETF rose a substantial 6.61 tonnes on Friday lifting its total to 920.129 tonnes and the holdings of the Gold Trust stand unchanged at 178.2 tonnes, together totalling 1,098.329 tonnes. Six tonnes of gold purchased shows that there has been a turn in the U.S. gold market.

A question now being raised quite reasonably is, “When the U.S. closes its short positions and seasonal demand arrives next month where will the supply come from?”[We cover that in our weekly newsletter. Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

The Indian Rupee is falling again and is now moving down through Rs.64.55 again. There is a considerable amount of foreign investment in India that will come out should the Fed announce that ‘tapering’ is shortly to start. The Fed has now made it clear that their actions cater only to the interests of the U.S. and that other nations from which the ‘hot money’ is now being withdrawn must sort out their own problems. This not only states the future position of nations like India but tell us that the fall in the Rupee has some way to go still. Will they try to prevent these funds from flowing away from the country? If the government does allow this they will allow inflation [particularly that consequential on higher Rupee oil prices] to take off. The same applies to other oil importing nations in the emerging world, with the exception of China.

The Indian government may well force another cutback in the imports of gold, as well as an extension of Capital Controls, if this happens.

It must be said that if the Fed does ‘taper’ shortly, they may well not be able to restrain rapidly rising interest rates as the market discounts the future. If ‘tapering’ commences, higher interest rates will damage the global economy by pulling back ‘exported’ dollars. The U.S. is focused on the question of whether it will damage the, still fragile, U.S. economy.

Silver – The silver price will run up far faster than the gold price now.

Regards,

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