Silver Market Morning

Gold Today –New York closed at $1,322.4 up $11.80 on yesterday. Asia took gold $5 higher ahead of London’s opening. At the Fix, gold was set at $1,321 up $10 on yesterday. In the euro it Fixed at €973.184 up over €8.0. Ahead of New York’s opening gold was trading at $1,323.30 and in the euro at €975.27.

Silver Today – Silver closed at $22.33 up 65 cents on yesterday. Ahead of New York’s opening it traded at $22.35.

Gold _{(very short-term)}

The gold price should be steady to slightly stronger, today in New York.

Silver _{(very short-term)}

The silver price should be steady to slightly stronger, today in New York.

Price Drivers

Gold & Silver – 9 days left before the ‘debt ceiling’ issue reaches default day and tensions are rising.

For the first time we are hearing from China warning the U.S. to get its fiscal house in order before the ‘debt ceiling’ deadline. With $1.3 trillion of U.S. debt, China is worried that a default, higher interest rates and a downgrading of the U.S. in credit markets will severely damage their investments there. It’s a strong warning signal to the Chinese too, that to have so many eggs in this big basket may not be wise and requires adjustment. After all with coming Yuan convertibility what’s happening now is small in comparison with what can happen in the future. Other nations are also taking note of the vulnerability of their U.S. investments. Even if there is no default, investors will see that the U.S. has simply ducked a crisis without resolving the crisis. It will likely happen again. Talk of raising the ‘ceiling’ for a shorter than a year by the White House will reinforce failure, because this drama will then play out for a third time!

From the noise levels we are now hearing, the Republicans are now on the back foot, but still remain strong and intransigent. Investors need to see just how important their cries are to the U.S. who remain self-absorbed, putting internal issues above the international impact. This is structural and if a default does happen, it could easily signal a fracture in the hold of the U.S. over the globe’s monetary system.

So far we see little to no ‘default premium’ in the gold price, yet. The demand out of Asia keeps pushing early prices a little higher because of other factors not U.S. political issues.

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There were no sales from the SPDR or the Gold Trust gold ETFs on Monday. The total of the SPDR gold ETF holdings stands at 899.985 tonnes and the holding of the Gold Trust dropped by 0.795 tonnes leaving its holdings at 176.83 tonnes at the start of a noisy U.S. week.

Silver – The silver price is keen to rise ahead of gold.

Regards,

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