Silver Market Morning

Gold Today –New York closed at $1,270.20 down $17.20 on Friday. Asia lifted gold $6 ahead of London’s opening. At the Fix, gold was set at $1,276.75. In the euro it Fixed at €941.491. Ahead of New York’s opening gold stood at $1,277.80 and in the euro at €942.12.

Silver Today – Silver closed at $21.29 down 30 cents on Friday. Ahead of New York’s opening it traded at $21.42.

Gold _{(very short-term)}

The gold price should be volatile both ways this week in New York.

Silver _{(very short-term)}

The silver price should be volatile both ways this week in New York.

Price Drivers

Gold & Silver – 3 days left before ‘D-Day’....................

This is the week when either one side or the other in U.S. politics, or the entire financial world faces turmoil as the U.S. defaults on debt. Sceptics say there was always an agreement on the table, but theatrical politics required the drama to go to the edge. Others feel that the Republicans would lose too much if they backed off now and that the Democrats feel they would look weak if they backed down. Therefore, a default is needed politically to break the gridlock in power politics. Neither side feels responsible to the collateral damage outside U.S. borders. It may not happen with an explosion, but any short-term palliative will only lessen the initial strain not soften the crisis. The unthinkable? – Let’s see!

Last week we mentioned that Goldman Sachs ‘cocky’ statement that gold was a ‘slam dunk’ sell on a resolution. On Friday there were large sales in the physical gold market accompanied by short sales in the futures market at the start of U.S. trading that interrupted trading for a short while. Coincidence? We think not! Another piece of engineered attacks took place it seems right when gold was sitting on support limits.

Later we saw large sales from the SPDR gold ETF holdings which stood at 890.978 tonnes, down 5.404 tonnes last Friday and the holdings of the Gold Trust dropped by 0.61 tonnes leaving its holdings to 175.41 tonnes. Their totals are now 1,066.388 tonnes. It seems the sales were triggered by the massive bear raid on the gold. We do expect to see a strong recovery, if purchases by Asia are allowed unfettered.

Asia is a strong buyer, but slow supplies from the bullion banks, who are also speculators, has allowed premiums to build up dramatically [$17 - $40], a direct consequence of efforts to slow the rise in the gold price. China wants more gold imported and is encouraging more non-bank importers, so there is no good reason for such premiums in China.

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The gold and silver prices have seen damage done last week, with U.S. sales contributing to the fall on Friday. Will Asian demand be allowed to express itself receiving adequate supplies this week? Asian premiums will show us. The week will be volatile until such issues are resolved.

Silver – The silver price will also be very volatile this week.

Regards,

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