Silver Market Morning

Gold Today –The gold price in New York rose to $1,248 before closing at $1,243.40 up $22.70 with Asia taking it down to $1,235 ahead of London’s opening. London took it to $1,233.50 ahead of the Fix, which was set at $1,234 up $15.00. In the euro it Fixed at €907.687 up €9.183. Ahead of New York’s opening the euro stood at $1.3595: €1 with gold at $1,234.40 and in the euro at €907.98.

Silver Today – Silver rose strongly with gold to close at $19.74 up 62 cents in New York. Ahead of New York’s opening, it traded at $19.47.

Gold _{(very short-term)}

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

Silver _{(very short-term)}

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

Price Drivers

Yesterday at 06.30 hrs London time the gold price was trading at around $1,222, but an hour later fell suddenly to $1,112. In New York the realization that the year was coming to an end and strong support was close under the gold price sent the gold price rising to $1,248. We expect such volatility to continue in the days to come. The dollar continues to sit at around $1.36 to the euro.

While 2.701 tonnes of gold were sold from the SPDR gold ETF yesterday and nothing from the Gold Trust, it is up to the Custodian where he sells that physical gold. If he chose Asia, that would explain the dramatic drop in the gold price there. HSBC [SPDR Custodian] has the option of how its sells and if it wants to see the gold price fall or not. The SPDR gold ETF holdings now stand at 839.705 tonnes and the Gold Trust holdings at 169.12 tonnes. [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]

We can now confirm that the People’s Bank of China Deputy Governor Yi Gang said that it is no longer in the nation’s interest to keep building up its foreign-exchange reserves, which totalled a record $3.66 trillion at the end of September. With this in mind it is clear that the Yuan is now being thrust forward as the currency with which to do trade with globally. The currency had an 8.66% share of letters of credit and collections in October, compared with 6.64% for the euro. China, Hong Kong, Singapore, Germany and Australia were the top users of Yuan in trade finance. The Yuan’s share of global trade finance was 1.89% in January 2012, while the euro’s was 7.87%. The change is at the expense of the U.S. dollar.

The start of the decline in the role of the dollar in global trade is well under way, we believe, to the detriment of the value of the dollar. As we said earlier, we are closer to a multi-currency system than thought earlier. This is extremely gold positive, longer term. But this need not be reflected in dollar exchange rates against other currencies.

Silver – The silver price continues to move at a similar pace to gold both up and down.

Regards,

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