Silver Market Morning

Gold Today –New York saw gold jump to $1,262 from $1,237 before closing at $1,259. Asia held it slightly higher ahead of the opening in London. The dollar traded at $1.3686 somewhat weaker than yesterday. London traded it up until the Fixing, which was set at $1,259.25 up $15.00 on Thursday. In the euro, it Fixed at €920.437 up €7.561 reflecting a weaker dollar which stood at $1.3730, down a cent. The Fix was set higher than the market was trading showing strong demand. Ahead of the opening in New York gold stood at $1,271.10 and in the euro at €925.78.

Silver Today –The silver price held around $20 at the close in New York and Asia before London’s opening. Ahead of New York’s opening, it was trading at $20.22.

Gold _{(very short-term)}

We expect gold to have a very firm bias today, in New York.

Silver _{(very short-term)}

We expect silver to have a very firm bias today, in New York.

Price Drivers

Yesterday saw 5.438 tonnes of gold sold from the SPDR gold ETF [GLD] but none sold from the Gold Trust gold ETFs leaving their respective holdings at 790.456 tonnes and 161.37 tonnes. These sales were large but did not restrain the gold price from rising which broke through some overhead resistance to rise into the $1,260 area. There remains overhead resistance at these levels and higher, but yesterday’s showing demonstrated the underlying strength in gold. Today’s Fixing saw much of overhead resistance break down. Short covering is in evidence. With today being Friday, the most active day of the week, we wait with baited breath for the action in New York. This time last week saw nearly 8 tonnes of gold bought there. This week has seen 6.6 tonnes of gold sold from there. The difference is that this week saw sales from the SPDR gold ETF [GLD] swallowed without being chewed. [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] Today could be a decisive day!

We have been expecting the current easing of restrictions on gold imports and duties on gold into India for some time, as you know. Elections are due in May there so the issue is being picked up by politicians there. This tells us how important to the Indian voters this subject is. The Finance Ministry has requested it of the government, the government has stated that it will happen ‘soon’ and now other politicians are using it in their campaigns. This announcement must be imminent! If we take average imports into India in 2012 at 1000 [this figure is not exact but close] we get 83 tonnes imports a month, on average, or 20 tonnes a week. With the restrictions, this dropped to around 10% of previous levels or 2 tonnes a week. If the restrictions are lifted back to 2012 levels we could expect a jump in Indian demand to rise as high as 20 tonnes a week or an increase in current levels of 18 tonnes a week. Even if this was as little as 10 tonnes a week extra, current prices would have to change considerably for the market to accommodate this.

Silver – $19.50 to $20 is now a support level for silver, which will now follow gold up.

Regards,

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