Silver Market Morning

Gold Today –Gold closed stronger at $1,351.50 up $6.10 in New York on Friday. Asia held it there and London dropped it $4 ahead of the Fix, where it was set at $1,351.00 up $9.25 over Friday’s Fix. In the euro it Fixed at €978.28 up €6.25 over Friday’s Fixing. Ahead of New York’s opening gold stood at $1,351.5 and in the euro at €979.77, while the dollar stood at $1.3794: €1.

Silver Today – Silver rose to $22.52 down 15 cents in New York. Ahead of New York’s opening it traded at $22.57.

Gold _{(very short-term)}

The gold price should show a stronger bias in New York, today.

Silver _{(very short-term)}

The silver price should show a stronger bias today, in New York.

Price Drivers

There were sales yesterday from the SPDR gold ETF holdings of 4.503 tonnes on Friday leaving its holdings at 872.020 tonnes and no sales from the holdings of the Gold Trust which again left them at 171.88 tonnes. But these sales had no effect on the gold price as it rose except to slow its rise slightly at $1,350. Without this additional supply to the gold market the gold price would have been higher. We are seeing and becoming convinced that U.S. gold sales, which in the past caused the gold price to fall, are now failing to do so even though they have risen to high levels. It seems dubious that these sales are from Paulson’s fund, implying that such sales are running out of stock in the near future.

‘D-Day - 80’.................... The dollar holds at weak levels over +$1.38: €1. With Janet Yellen the next head of the Fed in the U.S. wanting higher inflation, which she believes helps and economy when it is weak, we are getting additional expectations that more stimuli is on the way and that the Fed fears deflation more than any threat high inflation could impose. This is very positive for gold.

But the big question is, does the Fed really have the power to control both inflation and deflation? They have not shown the needed power to control convincing growth in the last 5 years.

When an economy threatens deflation, monetary inflation has, in the past fuelled deflation as assets reflected the cheapening of money, with prices of everything, including gold and silver, except money, rising to compensate. Remarkably this can create a liquidity shortage needing more and more money creation to prevent rising deflation. So can the Fed wield the needed firm but delicate, quick hand to control what could be a mercurial monetary scene?

In such a monetary environment gold will value money pretty accurately! [Find out more from www.GoldForecaster.com and www.SilverForecaster.com to subscribe to our newsletters and visit www.StockbridgeMgMt.com to hold gold so it can’t be seized]

Silver – The silver is cautious now waiting for gold to show more strength.

Regards,

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