Silver Market Morning

Gold Today –The New York gold price closed higher at $1,257.80 up $12.90 at the close on Monday. Asia lifted it to $1,259.40 ahead of London’s opening. London had a quick Fix, setting the gold price at $1,253.00, $6.50 up on Monday. In the euro, it Fixed at €927.187 up €4.605 while the dollar stood at $1.3514. Ahead of the opening in New York gold stood at $1,254.00 and in the euro at €927.69.

Silver Today –The silver price closed up at $19.35 up 29 cents in New York. Ahead of New York’s opening, it was trading at $19.35.

Gold _{(very short-term)}

Today could see an important direction-deciding day of consolidation in gold, in New York.

Silver _{(very short-term)}

Today could see an important direction-deciding day of consolidation in silver, in New York.

Price Drivers

Monday saw no sales or purchases in the SPDR gold ETF [GLD] or Gold Trust gold ETF leaving their respective holdings at 793.155 tonnes and 161.86 tonnes. The day saw a strong recovery of the gold price back to overhead resistance.

Hong Kong has opened after the Chinese Lunar New Year celebration, but China itself remains on holiday for the rest of the week. Hence Asian demand remains muted. It was surprising to see the jump in the gold price in this situation. Investors should understand why this happened. Yesterday we mentioned the changing supply structure of the gold market. This silent almost unseen change will have a dynamic impact on the gold price as we said. However, today will see just how strong this impact will be. From next week on its impact will strengthen, but in the absence of Chinese demand we will see its impact on traditional markets alone. If we see a price over $1,270 then the changed dynamic of this structural change will have arrived with force.

An old wound is reappearing in the U.S. We have expected it for a long time but markets have become complacent about it. Treasury Secretary Lew has warned that it the ‘debt ceiling’ is not increased by Friday the U.S. will default on its debt then. This will have severe consequences for the credit rating of the U.S. and send worry ripples throughout global currency markets to the detriment of the dollar. The dollar has been strengthening in the last week as the cheap money era appears to be ending [despite reassurances to the contrary by the Fed]. Most feel that the U.S. Congress and Senate are responsible enough to raise the limit, but again the political opportunity may be put ahead of common sense. These non-gold currents will affect the developed world’s actions on gold this week too.

The U.S. dollar is slightly weaker today at $1.3532, so gold-neutral, today. The deep dive of equity markets across the world is more a reflection of hope being replaced by the reality that growth is not about to sprint but remains at a steady walk. We reiterate that the gold price is soon to reflect gold fundamentals and not U.S. economic news. [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]

Silver – The silver price is telling us it is positive short-term.

Regards,

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