Silver Market Morning

Gold Today –Gold closed slightly weaker at $1,268.90 down $9.60 in New York on Tuesday. But in Asia on Thursday gold was lifted $13 before London took it down $3 ahead of the Fix where it was set at $1,383.25 up $2.25 in London, on Tuesday’s Fixing. In the euro it Fixed at €955.226 down €1.6 on Tuesday’s Fixing. Ahead of New York’s opening the euro strengthened to $1.3435: €1 with gold at $1,284.40 and in the euro at €956.08.

Silver Today – Silver fell to $20.75 down 61 cents in New York on Tuesday. Ahead of New York’s opening on Thursday, it traded at $20.80.

Gold _{(very short-term)}

The gold price should move strongly, either way, in New York, today.

Silver _{(very short-term)}

The silver price should move strongly, either way, in New York, today.

Price Drivers

The SPDR gold ETF again saw 2.705 tonnes of sales on Wednesday but none in the in the Gold Trust, leaving their holdings at 865.713 tonnes and 172.21 tonnes. After falling $10 the previous day on no sales from the SPDR gold ETF these sales occurred as the gold price hit a bottom at $1,273 ahead of Asian demand that lifted the gold price $13. The gold price has not broken support in the lower $1,270’ and the price is battling it out and finding another balance in supply and demand. This precedes a tipping of the balance one way or the other giving another short-term direction. Chinese demand remains firm, but over in India the government has stopped imports of gold, except where all imported gold is for re-export. Clearly, the obvious loopholes were being used to bring gold in. Now the only gold entering the country is from smuggling.

The remarkable situation that now persists in the gold market is that the gold price is being supported by Chinese demand and traditional seasonal demand. The World Gold Council reported that global jewellery demand of 487 tonnes is up 5% year-on-year, while Bars and Coin demand increased to 304 tonnes in Q3, up 6% year-on-year. But a modest 4% growth in mine production during the quarter was outweighed by an 11% contraction in recycling, as lower average prices failed to attract sellers. But what makes the situation remarkable is that 25% of demand for gold from India is now absent from the gold market, due to the Indian government. That demand hasn’t gone away, simply being pent up. With demand and supply now in balance without Indian demand the questions that jump up are, “When will growing Chinese demand force prices up? Will pent-up Indian demand reach the market and when?” With U.S. sales having no impact on the gold market and due to stop sometime, the structure of this market is not pointing to a lower gold price.

[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] The economic reforms, that will come out of China from the Plenum, that has just finished, point to an emphasis on growing the Chinese middle classes.

Silver – The silver price has pulled back faster than expected so now could become volatile to the upside should the silver price turn up.

Regards,

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