Silver Market Morning

Gold Today –The gold price in New York fell to $1,218.50, but Asia lifted it a couple of dollars. The dollar rose nearly a full cent to $1.3660: €1. But London let it fall to $1,202 ahead of the Fix, which was set at $1,205.25. In the euro it Fixed at €881.160 down €15.81. Ahead of New York’s opening the dollar was stronger at $1.3682 with gold, ahead of the opening in New York, at $1,205.85 and in the euro at €881.34.

Silver Today – Silver fell only slightly to close at $19.79 in New York. Ahead of New York’s opening, it traded at $19.37.

Gold _{(very short-term)}

The gold price is looking for a new floor in a volatile market today, in New York.

Silver _{(very short-term)}

The silver price is soon looking for a new floor in a volatile market today, in New York.

Price Drivers

For a very long time we have said that the gold price is not an inverse measure of the U.S. economy. Institutional Investors in the U.S. have sold gold on the basis that it is. Now that ‘tapering’ is underway [$10 billion a month] will we see Treasury yields start to rise? Maybe not, as the Fed want interest rates to stay down. If so, we may not see much more U.S. selling of gold? Yesterday, another 4.2 tonnes were sold from the SPDR gold ETF, making 14.985 tonnes sold in the last four days. There were no sales from the Gold Trust yesterday. This left the SPDR gold ETF holdings at 812.619 tonnes and the Gold Trust holdings at 166.81 tonnes. We would have expected bigger sales from the SPDR gold ETF on the news from the Fed, but they were not that large.

All financial markets were affected by the Fed’s tapering; a stronger dollar, higher equities and weaker precious metals. But so much of these expectations were already discounted in the price. So after these initial moves leaving these expectations spent, what’s next? There is a remarkable Technical picture on the short-term gold chart, which points to fascinating potential moves. [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]

Of significant importance to the global gold price is the news that the Reserve Bank of India said it would favor easing curbs to the gold trade once the country’s current account deficit is at a more manageable level. The Governor of the Reserve Bank of India, Raghuram Rajan said gold restrictions could be unwound once the current account deficit, currently at 1.8%, show signs of stabilization. The RBI needs to sustain its current account deficit at these levels without the added distortions, such as the 10% import duty on gold, which incentivizes bullion smuggling, said Mr. Rajan. With elections in May, we expect that, at the latest, early next year this duty will be lowered and gold import regulations eased, bringing back a substantial amount of gold demand excluded from the global market in the second half of 2013.

Silver – The silver price will follow gold with more volatility now.

Regards,

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