Silver Market Morning

Gold Today –The gold price in New York rose to $1,198.50 and Asia lifted it to $1,200. The dollar held around yesterday’s levels at $1.3677: €1. Then London held it there in quiet festive season trade throughout the morning ahead of New York’s opening. The dollar was weaker at $1.3682 with gold, ahead of the opening in New York, at $1,200.00 and in the euro at €877.06.

Silver Today – Silver rose to close at $19.44 up 23 cents in New York. Ahead of New York’s opening, it was trading the same as Friday at $19.37.

Gold _{(very short-term)}

The gold price will consolidate around $1,200 with a weaker bias today, in New York.

Silver _{(very short-term)}

The silver price will consolidate around $19.40 with a weaker bias today, in New York.

Price Drivers

At this time of the year the market is quiet and volatile with prices moved by dealers and speculators capable of having a disproportionate impact on the gold price. We expect institutions who are shareholders of the SPDR gold ETF to favor the sell side as they continue to see U.S. equity markets rise. On Friday/Monday there were sales of 3.0 tonnes of gold. There were sales of 1.45 tonnes from the Gold Trust between Friday and yesterday. This left the SPDR gold ETF holdings at 805.718 tonnes and the Gold Trust holdings at 165.36 tonnes. Now could be an opportunity for an aggressive seller to knock the price back to $1,180 in the festive season in the developed world gold markets, but at that level, sellers would be extremely cautious, because of the dramatic Technical position that appears there. Certainly at those levels Asia could become rapacious, once more, for more gold. [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]

You may well ask why Asian buyers don’t have an immediate impact on the gold price. It’s because the bullion banks ship gold to the markets there. When demand is high premiums appear on the gold price, only to be unwound when more gold arrives in the market place. Until China can by-pass these importers and import gold directly from suppliers this ‘shunt effect’ will continue. It will allow developed world markets to dominate prices.

We believe we are on the brink of an announcement from the Finance Ministry of India to both ease gold import restrictions and to lower duties on gold imports. The head of the Reserve Bank of India Raghuram Rajan said that gold smuggling into India is likely to increase if the import curbs, set in place earlier this year, continue for too long. India's commerce ministry officially asked the finance ministry to ease the restrictions on the import of gold, imposed by the Reserve Bank of India. Between the two, we see it as unlikely that the Finance Ministry will oppose this.

Silver – The silver price could have a volatile festive season.

Regards,

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