Silver Market Morning

Gold Today –New York closed at $1,319.40 down $3.00 on yesterday. Asia took gold $2 lower ahead of London’s opening. At the Fix, gold was set at $1,309 down $12 on yesterday. In the euro it Fixed at €968.279 down €4.9. Ahead of New York’s opening gold was trading at $1,310.30 and in the euro at €968.91.

Silver Today – Silver closed at $22.30 down 3 cents on yesterday. Ahead of New York’s opening it traded at $22.10.

Gold _{(very short-term)}

The gold price should consolidate with a weaker bias, today in New York.

Silver _{(very short-term)}

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

Price Drivers

Gold & Silver – 8 days left before the ‘debt ceiling’ issue reaches default day and talk of raising the ceiling for up to six weeks is coming out of government in the U.S.

One gets the sense that the politicians involved have placed foreign reactions at a low priority, favoring partisan issues above all else. As we mentioned yesterday this ignores the reality that the U.S. has become dependent on foreign funding. It appears to have assumed that this funding will come no matter what. With the U.S. as the tree trunk of the currency world and other currencies the branches, dependent on the trunk for their survival, this appears to be true. However, Asia has long since moved away from the idea that they will simply be another branch on that tree. They are making themselves an entirely separate sapling. Go forward some years and you will see that because of the dangers in relying on the U.S. bond market and the dollar, they will ensure that they have the flexibility to move away from dollar investments. Prudence demands it. This new sapling will for sure splice the other branches on the dollar-tree to itself if it is in its interests to do so. This will favour gold!

Until the sapling is strong enough to survive by itself [and we may be closer to that, than you think] it will be vulnerable to the political/monetary games of the U.S.

What is clear to Asia, if not to the U.S. is that gold is needed in the transition period, at least.

Meanwhile, a short-term raising of the debt ceiling will exacerbate the political and monetary tensions and stretch them over a longer period, inflicting more damage to the U.S. abroad. [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]

There were 1.801 tonnes of gold sold from the SPDR or the Gold Trust gold ETFs yesterday. The total of the SPDR gold ETF holdings stands at 898.184 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 will follow gold down today.

Regards,

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