Silver Market Morning

Gold Today –Gold closed stronger at $1,353.00 up $1.50 in New York on Monday. Asia tended slightly stronger and London dropped it $6.25 ahead of the Fix, where it was set at $1,346.75 over yesterday’s Fix. In the euro it Fixed at €978.814 up €0.5 over yesterday’s Fixing as the dollar strengthened slightly. Ahead of New York’s opening gold stood at $1,344.55 and in the euro at €976.93, while the dollar stood at $1.3763: €1.

Silver Today – Silver rose to $22.47 down 5 cents in New York. Ahead of New York’s opening it traded at $22.40.

Gold _{(very short-term)}

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

Silver _{(very short-term)}

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

Price Drivers

There were no sales yesterday from the SPDR gold ETF or the Gold Trust holdings on Monday leaving their holdings at 872.020 tonnes and 171.88 tonnes, respectively.

The gold price moved only slightly higher but the Technical picture continued to improve.

‘D-Day - 79’.................... Today sees the start of the 2-day Fed meeting, which is likely to conclude that interest rates should remain on hold and ‘tapering’ postponed. Most expect the words, ‘until next year’ but we would be very surprised if any date were specified. Such a result would remain gold positive as the dollar would remain dependent on confidence not earning power. The signal for other nations would be to follow the same interest rate posture.

This will be true for most nations, except for those like India, which is headed for very troubled waters. The Reserve Bank of India raised interest rates by ¼% today, but a great deal more needs to be done if India is to get a grip of its crisis. With GDP growth down to 5% annually, the nation is beset with awful inflation. At food level [affecting 800m of the 1.2 billion people there] inflation hit 18% in September and overall inflation 9%. The Rupee’s depreciation can be blamed for imported goods such as fuel but not for food inflation. India has an economic crisis which appears set to fester. Consequently, demand for gold remains very strong at this ‘auspicious’ time of the year for gold ahead of Diwali, as inflation and the falling Rupee confirms the value of gold in Indian investor’s hands. Steady premiums on the gold price, tells us that gold smuggling is thriving. [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] Some are led to believe that silver is replacing gold in Indian investor’s hands. In part silver is the Indian, ‘poor-man’s gold’, but a big use of silver is its ability to outperform the Rupee as a means of exchange. Consequently smugglers find gold sellers accept silver more readily than Rupees, not just because they can exchange it better, but the Rupee has to be fed back into Indian banks, making the transactions visible. So no wonder silver imports are at record highs!

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

Regards,

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