Silver Market Morning

Gold Today –The New York gold price saw gold pause at $1,318 with Asia holding it there before London took it down steadily to $1,314 In London it Fixed at $1,314 down $12.00. In the euro, it Fixed at €957.586 down just over €10.00, while the dollar stood at $1.3722, weaker again. Ahead of the opening in New York gold stood at $1,313.75 and in the euro at €956.57.

Silver Today –The silver price closed up at $21.54 up 9 cents in New York. Ahead of New York’s opening, it was trading at $21.40.

Gold _{(very short-term)}

Gold will consolidate today, in New York.

Silver _{(very short-term)}

Silver will consolidate today, in New York.

Price Drivers

After a strong rise since $1,250 the gold price now well over $1.300 is taking a well-earned breather. But don’t be misled, in China there remains a $7 premium on the gold price in Shanghai. Why, you may well ask is there usually a premium on China’s gold price. After all China has been responsible for importing around 2,000 tonnes in 2013, with 1,176 tonnes of that through Hong Kong [the only port of entry to report imports]? With such persistent rising demand there should be no premium, unless the importing banks have a policy of not quite meeting demand. Or demand keeps running ahead of rising supplies. In January, there were reports of 250 tonnes being delivered by the Shanghai Gold Exchange [annualized at 3,000 tonnes]. What is of great importance to gold investors is that China’s growing middle classes buy for the long-term and rarely sell their holdings. It means financial security to them, not a source of profit. With the Chinese government now focused on expanding their middle classes [capable of growing to somewhere north of 500 million] such type of demand is generational as families buy for their heirs as well as to protect themselves, in this uncertain world. Such gold will not return to the market.

The current jump in the gold price has broken the downtrend and has moved out of its corrective phase back to the uptrend. This has only been recognized by a few commentators. When we saw the double bottom at $1,190 and then the break through at $1,250 this was adequate confirmation for us that the change in price patterns had taken place. As we said yesterday with long-term buyers dominating the gold price now, the time it takes for consolidations and corrections to stabilize the market will be shorter and less dramatic, giving investors less time to ‘buy the dips’.

There were no sales of gold from the SPDR gold ETF [GLD] or from the Gold Trust leaving their respective holdings at 801.251 tonnes and 163.63 tonnes respectively. Every day there are no sales from this U.S. source is a day confirming that U.S. sales of gold are down to a trickle, if they have not already dried up.

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Silver – The silver price will be follow gold but will be volatile.

Regards,

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