Silver Market Morning

Gold Today –

The New York gold price closed at $1,335.10 down $16.30 on Tuesday in New York. Asia held it at that level ahead of London’s opening. The gold price was Fixed in London at $1,333.50 down $6.00. In the euro, it Fixed at €971.939 down €1.96, barely changed, as the dollar stood at $1.3720, slightly stronger. Ahead of the opening in New York gold stood at $1,333.75 and in the euro at €972.22.

Silver Today

–The silver price closed at $21.19 down 24 cents in New York. Ahead of New York’s opening, it was trading higher at $21.25.

Gold

(very short-term)

Gold will continue to consolidate, today in New York.

Silver

(very short-term)

Silver will continue to consolidate, today in New York.

Price Drivers

The most important story of the day for gold was the annual conference of the leaders in China outlining the economic policies for the next year in China. The aims of this conference are to have a balanced balance of payments, an unemployment rate around 4.6% and to continue to encourage the development of the middle classes in a market oriented economy, with growth targeting 7.5%. How does this impact gold? The Chinese are savers and while they aim to save up to 40% of their disposable income dedicate up to 7% of this to gold. They are still a developing economy so their investment options are considerably narrower. They have not developed the trust developed world investors have in equity and other market and prefer the simpler direct physical investment in gold as history shows that will weather the worst of storms. And that’s what they see as a key purpose of savings. With a potential 500 million plus middle classes in the future and incomes rising rapidly for these people, gold demand from China will continue to grow, as it did last year. That demand in 2013 virtually doubled from 2012. The conference confirms that such growth will continue in 2014 taking gold prices up with it.

In India the elections will begin from 7

th April onwards. We are of the opinion that the Indian government will try to garner votes by easing restrictions on gold imports. We expect an announcement on or before the 31st March when the government reveals the budget. If they don’t, we do not expect a lowering of duties because the smuggling of gold into India is allowing that demand to be largely satisfied, while the costs to the economy remain off the ‘official’ figures, allowing a better than true picture to be painted on the Current Account Deficit. Such is politics!

There were no purchases of gold into the SPDR gold ETF [GLD] on Monday but a small sale of gold of 0.03 of a tonne from the Gold Trust, which left their respective holdings at 803.704 tonnes and 164.57 tonnes. We expect to see either no sales, except for small amounts from time to time from these ETFs, but do expect to see more and more purchases as the year wears on.

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Silver –

The silver price continues to quietly follow gold.

Regards,