Silver Market Morning

Gold Today –New York closed at $1,316 up $26.10 on yesterday. Asia held it there but London took it back to $1,313 ahead of the Fixing, which was set below market prices at $1,309 up $15.25. In the euro it Fixed at €961.581 up €5.6 with the dollar weakening to new recent lows. Ahead of New York’s opening gold was trading at $1,309.00 and in the euro at €961.58.

Silver Today – Silver closed at $21.70 up 52 cents yesterday. Ahead of New York’s opening it traded at $21.58.

Gold _{(very short-term)}

The gold price should again consolidate above $1,300 with a stronger bias, today in New York.

Silver _{(very short-term)}

The silver price should again consolidate with a stronger bias, today in New York.

Price Drivers

Gold & Silver – The bounce back in the gold price was quick and vigorous as prices below $1,300 proved too tempting to buyers. Work remains to be done at gold prices higher than here, before overhear resistance is broken. We remain of the opinion that a U.S. debt default remains probable. For gold and silver investors the next 14 days will see a growth of uncertainty which will favour gold and should produce a clear direction for the precious metals. Adding to the demand side of gold and silver are these factors out of Asia:

- Chinese demand is back in the market after the national holiday yesterday. It is clear that the developed world still underestimates the future impact of China on the gold world. We do expect China to be the hub of the gold world, likely well before the end of this decade.

- In India the initial estimates of imports are pitched at half the level of last year. This ignores ‘unofficial imports’. The retention of 20% of imports for exports is proving a restraint still, but we feel that demand is strong enough to put this number under upward pressure, particularly because of the low level of imports in the last two months.

On the supply side, gold production has to be cut back to profitable deposits. In addition, each mine bought by China sees that production go direct to China and by-passing the open market. [Find out more from www.GoldForecaster.com and www.SilverForecaster.com to subscribe for our newsletters and visit www.StockbridgeMgMt.com to hold gold so it can’t be seized]

Sales of 4.203 tonnes of gold came from the SPDR gold ETF and a small amount of 0.03 tonnes from the Gold Trust came from the U.S. gold ETFs yesterday. But this appears to have been met by more physical demand than that, as the price rose back towards overhead resistance at $1,330. The total of the SPDR gold ETF holdings stands at 901.787 tonnes and the holding of the Gold Trust dropped slightly by 0.03 tonnes leaving its holdings at 177.625 tonnes.

Silver – The silver price recovered its loss of the previous day, but wherever gold will go silver is sure to follow.

Regards,

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