Silver Market Morning

Gold Today –The New York gold price surged once more to $1,318.60 up nearly $17 at the close on Friday in New York. Asia took it higher to $1,325 ahead of London’s opening on Monday. London held it there before Fixing the gold price at $1,326.00 up $17.50. In the euro, it Fixed at €967.601 up €12.003, while the dollar stood at $1.3704, weaker again. Ahead of the opening in New York gold stood at $1,327.40 and in the euro at €965.45.

Silver Today –The silver price closed up at $21.45 up 94 cents in New York. Ahead of New York’s opening, it was trading at $21.70.

Gold _{(very short-term)}

Gold will continue to have a positive bias today, in New York.

Silver _{(very short-term)}

Silver will continue to have a positive bias today, in New York.

Price Drivers

With the structural changes in the gold market now being seen in the price, the ability of the Technical picture to point to market moves is also affected. Technical indicators are best when a market is limited to a group of investors who react to price moves, both ways. For two years now we have seen the developed world impact the gold market as Asian demand rose. Now the developed world’s investor supply out of the States drying up and Asian demand is burgeoning. Asian demand does not buy and sell according to price moves so the Technical picture will change accordingly. We do not believe that those who strictly follow Technical patterns are aware of this. We can see that in the price moves now, for the exit of U.S. supply has left the market in the hands of long-term buyers.

We saw since $1,250 how the price rise has swept resistance aside. Even at $1,300 where resistance was expected to be strong, it took one day to be overwhelmed. Today, Asia took it to $1,325 instead of doing what many expected, that is to fall back to resistance which then becomes support. The almost exuberant moves in gold, confirm the point we are making here. We can see no reason why that exuberance will not continue.

While we saw short covering out of the developed world we also saw evidence of a ‘stale bull’ sale of 5.097 tonnes of gold from the SPDR gold ETF [GLD] but none from the Gold Trust leaving their respective holdings at 801.251 tonnes and 163.63 tonnes respectively. The two U.S. actions negated each other leaving the market to Asia. As we expected last week, the usual ‘fall back to support, previously resistance’ did not happen. While we believe that essentially, U.S. sales of gold from the U.S. have dried up, we will continue to expect residual sales of gold from there. But as we saw on Friday their impact could become negligible. Major holders of gold in the U.S., such as Paulson will have their names vindicated. The question we face is, “Is Paulson holding for the long term or simply recovering his name by holding on.” It seems that if he has the objective clarity to hold on during gold’s longer term correction he will continue to have the long-term picture in his sights. This implies he will hold on for a long time to come. [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 now outperforming the gold price but will remain more volatile than gold.

Regards,

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