Silver Market Morning

Gold Today – The New York gold price closed at $1,323.50 20 cents lower on Friday in New York. Asia took it up to $1,329.55 ahead of London’s opening on Monday. London Fixed it at $1,333.00 up $12.25. In the euro, it Fixed higher at €968.539 just over €5.00, while the dollar stood at $1.3763 a tad weaker again. Ahead of the opening in New York gold stood at $1,332.15 and in the euro at €970.25.

Silver Today –The silver price closed at $21.81 down 2 cents in New York. Ahead of New York’s opening, it was trading higher at $22.05.

Gold _{(very short-term)}

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

Silver _{(very short-term)}

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

Price Drivers

In what we perceive as last ditch efforts to hold back the gold price in seemingly thin trading volumes the gold price barely moved in New York on Friday. Asia took the price out of that very tight trading range higher as unstoppable Asian physical demand continued. However, at the London Fix, the gold price reacted and was set above market at $1,333.00.

It is a reasonable question to ask, “Why doesn’t Asian demand have a greater impact right now?”

The answers are several. Firstly, the premiums seen in Shanghai are either the constant growth of demand is underestimated by the main gold suppliers to China which allows them to benefit from such premiums until competition takes their clients away. Secondly, it is the developed markets, primarily in London and New York where the greatest short-term influences on the gold price are felt. These are like the waves on the sea shore which ebb and flow irrespective of the underlying current. These can appear to be ignoring the tides, but over many waves show they cannot control prices in the face of the main tidal flows. Such flows become clearer when we look at the Technical picture, but even there the short-term picture can obscure the true picture.

What is for certain is that the accurate demand supply situation will overcome traders and speculators who punt the market, but have to close their positions before delivery of the gold contracted takes place. On COMEX, only 5% of all the gold contracts are delivered. Even then when delivery is to take place, notice must be given to counterparties that delivery is expected. On the Shanghai Gold Exchange, when a buyer buys forward, they over 90% of the time, take physical delivery of the contracted metal. The net result is that speculation on COMEX accounts for 95% of the contracts whereas over 90% of Shanghai’s futures trade is physical. [Get the bigger, longer picture from www.GoldForecaster.com and www.SilverForecaster.com to subscribe and visit www.StockbridgeMgMt.com to hold gold so it can’t be confiscated]

There were purchases of gold into the SPDR gold ETF [GLD] on Friday of 2.698 tonnes but none into the Gold Trust, which left their respective holdings at 798.308 tonnes and 164.24 tonnes.

Silver – The silver price is moving solidly up ahead of the gold price now.

Regards,

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