Silver Market Morning

Gold Today –The gold price in New York rose to $1,237.6 up$11.10 on Friday. On Monday Asia and London ahead of the Fix let it slip to $1,227 ahead of the Fix, which was set at $1,229.50 $6.75. In the euro it Fixed at €892.624 up just over €1.4. Ahead of New York’s opening the dollar began to weaken again to $1.3781: €1 with gold ahead of the opening in New York at $1,230.30 and in the euro at €892.75.

Silver Today – Silver was lifted slightly to $19.70 up 18 cents on Thursday in New York. Ahead of New York’s opening, it traded at $19.50.

Gold _{(very short-term)}

The gold price should continue to consolidate, in New York, today.

Silver _{(very short-term)}

The silver price should continue to consolidate, in New York, today.

Price Drivers

There were no sales from the SPDR gold ETF and from the Gold Trust on Friday. The SPDR gold ETF holdings start the week at 827.604 tonnes and the Gold Trust holdings at 167.90 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]

This week Wednesday sees the report from the Fed on interest rates, tapering and their view of the economy. The market is now of the view that tapering will take place this week, as interest rates on 10-year Treasuries reach out to 2.9%. Economists believe tapering will take place, likely in the first quarter of the year, while 30% of economists feel that the second quarter is the time when it will happen. The Fed has made it clear that the economy must have reached a sustainable growth momentum before it acts. Many believe that QE simply supports the banking system, whereas the Fed tells us that it is directly supporting the housing market. If interest rates rise, when tapering [not interest rate hikes] starts, then the Fed will have to re-think its actions. The dollar is holding steady at last week’s levels at the start of the week at $1.3753 to one euro.

A question that keeps coming up is, Is the Fed manipulating gold prices. To ensure the dollar remains the dominant money in the world it would serve the U.S. to do so to discredit it, in favor of the dollar. Certainly the world’s central banks have in the past accelerated gold production before the end of last century by leasing gold to new mines. But this allowed the central banks to keep its gold reserves, while encouraging the gold price down. Today that cannot happen as we have already seen a ‘de-hedging’ of over 3,000 tonnes from gold miners and European central banks stop selling. If the Fed is selling its, or other central bank’s gold, then there would be extreme consequences. Firstly, the fact that the Fed misled the world on such an important issue would discredit it, to the detriment of the dollar. Secondly, as Britain was found to have far less gold than it had issued money, at the end of the Gold Standard, to the detriment of the Pound right though to the mid-seventies, so the dollar would suffer a similar battering to the benefit of the gold price and the use of gold in the monetary system. What is for sure is that if the Fed is doing that or not will become clear in time.

Silver – The silver price continues its cautious downward path but should now consolidate.

Regards,

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