Silver Market Morning

Gold Today –The gold price in New York fell $32.20 to $1,219.00 on Monday. Asia tried to lift it to $1,222 but it slipped back in London to Fix at $1,219 down $18.50. In the euro it Fixed at €898.504. Ahead of New York’s opening the euro stood at $1.3570: €1 with gold at $1,222.40 and in the euro at €900.81.

Silver Today – The silver price fell heavily to close at $19.15 down by 55 cents in New York. Ahead of New York’s opening, it traded at $19.20.

Gold _{(very short-term)}

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

Silver _{(very short-term)}

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

Price Drivers

The dollar weakened by 50 cents in London’s morning to $1.3570 against the euro. But the gold price was not falling as a result of currency moves. It fell because of the Technical picture and after the release of better-than-expected US ISM data implying that the U.S. housing market is improving. But there were no sellers from the SPDR gold ETF and none from the Gold Trust once again implying thin, dealer driven trade in the gold market over the day. This left their holdings at 843.206 tonnes and 169.97 tonnes, respectively. [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]

Chinese demand as we have mentioned before is carrying the gold price in the absence of Indian demand outside of India. However, demand out of nations, east of Greece, is seeing ongoing strong demand. Countries west of Greece as seeing weak demand and on balance are small sellers. While this situation persists the gold price will consolidate with a weaker bias.

We have received reports that China intends to no longer accumulate more dollars in its foreign exchange reserves. If this is correct [and we are waiting for verification] then this is a very dramatic event and important for the gold world in its entirety. It is a major step towards the dollar hegemony being broken. It implies that we are closer to a multi-currency system than thought earlier. Because of the implications for the exchange rate of the dollar [and by extension other currencies] the impact on gold will, over time, be extremely positive. But this need not be reflected in dollar exchange rates against other currencies showing this change. After all the Chinese will not want to damage the Yuan’s exchange rate against the dollar and will act in a way that does not reflect in changing exchange rates. But in time, it will show itself in the gold price. It has been reported today that China’s Yuan overtook the euro to become the second-most used currency in global trade finance in 2013.

Silver – The Silver price dropped in percentage terms slightly more than gold did, falling 2.8% against gold’s 2.5%. We expect this type of relationship between the two metals to continue.

Regards,

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