Silver Market Morning

Gold Today –On Friday the gold price in New York rose to close at $1,254.80 with Asia holding it around that level. The dollar is almost unchanged at $1.3664: €1 ahead of London’s opening. In London the gold price was Fixed at $1,248.75 up $2.75 on yesterday. In the euro it, Fixed at €913.0961.885 up €1.211. Ahead of the opening in New York gold stood at $1,248.30 and in the euro at €912.43. The dollar stood at $1.3683: €1

Silver Today –The silver price rose in New York 32 cents to $20.45 yesterday and held close to that at in Asian trade to $20.43 before London’s opening. Ahead of New York’s opening, it was trading at $20.27.

Gold _{(very short-term)}

The gold price should have a stronger bias today, in New York.

Silver _{(very short-term)}

The silver price should have a stronger bias today, in New York.

Price Drivers

Yesterday saw no sales from the SPDR gold ETF or the Gold Trust gold ETF, whose holdings remain at 793.121 tonnes at 161.83 tonnes respectively. Not only was this encouraging to the gold price but helped it to perform strongly in the face of overhead resistance. By strongly in moving over $1,250, we are not talking about the number of dollars it rose, but the fact that it has almost broken overhead resistance. If it breaks above $1,260 - $1,270 then we expect the bulk of resistance to have fallen, a very positive signal for the gold price.

We issue a caveat that sales from U.S. based gold ETFs may have halted for a few days, but that does not mean they are over. What we are prepared for, are for more sales, but will watch to see if they will affect the gold price going forward.

Crossing to the other side of the world we look at China, where we continue to see robust buying of gold. Chinese buying is still not seen as the dominant force in the gold market, so it is good to remind ourselves of Chinese development of the nation of 1.3 billion people. In time we expect to see 500 million middle class Chinese. These, in the main, are physical gold investors. The U.S. has around 150 million middle classes or less, the Eurozone, around 200 million or less but with only a small percentage of these gold owners [investment gold, not decorative jewelry]. Already Chinese demand is approaching the total of newly mined gold, globally. In our estimation, their current demand is somewhere south of a third of what it will eventually be. It may be that at some point the Chinese central bank will deem it has sufficient for its ‘official’ reserves and stop buying, but we doubt that. One reason they are so supportive of their citizen’s gold demand and will continue to be so in the years ahead is that at any point in time it has the ability to turn to its citizens and take their gold from them for national strategic monetary reasons. [see www.StockbridgeMgMt.com for ways to avoid this]. As of now the Chinese government is focusing economic development on developing the middle classes to ensure economic self-sufficiency for the nation, fully aware of one of the benefits being their saving and gold buying nature, as well.

Silver – The silver price continues to move in tandem with the gold price as it is doing now.

Regards,

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