Silver Market Morning

Gold Today – The New York gold price closed at $1,292 up $7.50 on Wednesday, in New York. Asia held the price there on Thursday morning. London took it down $5. The gold price was Fixed in London at $1,287.25 up $3.25. In the euro, it Fixed at €935.094 up €4.187 as the dollar stood at $1.3766 up from $1.3793: €1. Ahead of the opening in New York gold stood at $1,286.65 and in the euro at €934.79.

Silver Today – The silver price closed at $19.95 up 14 cents on Wednesday’s close, in New York. Ahead of New York’s opening, it was trading at $19.86, unchanged on yesterday.

Gold _{(very short-term)}

We expect the gold price to consolidate with a stronger bias, in New York.

Silver _{(very short-term)}

We expect the silver price to consolidate with a stronger bias, in New York.

Price Drivers

New York, again tried to push the price down after it moved up nearly $10 but pushed it back only $3. As you know we expected this. And this was while the dollar was a tad stronger.

In the U.S., a member of the FOMC has warned that tapering could be restrained if inflation falls further. The I.M.F. has warned that we could be facing many years of sub-par growth unless ‘brave action’ [what?] is taken by governments. Overall the picture of threatening deflation is growing. Will gold rise in such a climate? [For more on this, subscribe to www.GoldForecaster.com and www.SilverForecaster.com and visit www.StockbridgeMgMt.com to hold gold out of reach of potential confiscation]

We have watched government action since 2007/8 fail to produce dynamic growth, except in China. China has sucked out the wealth and power from the West, yet government and central bank policies have focused on monetary policy to re-kindle growth. Governments per se, have not contributed any significant efforts to achieving that, so the question must be asked, can governments really stimulate growth or are they almost entirely dependent on their people’s efforts to do so. Is government a driver of the economic train or a passenger?

We ask these questions because gold’s performance is at its best when uncertainty prevails.

Today sees the E.C.B. making statements that are the equivalent of the Fed’s FOMC statement. If the E.C.B. embarks on asset purchases, now with Germany’s OK, it will be gold positive. We do expect this if not today, sometime in the future as the deflation ogre grows.

China has taken a far stronger stimulative action on their economy yesterday, raising investments in infrastructure in the West and Central parts of China, particularly in railways and construction. This stimulates the economy short and long-term and is considerably more vigorous than simply adjusting monetary considerations.

On Monday, we no sales of purchases from the holdings of the SPDR gold ETF, but we did see a sale of 0.03 of a tonne from the Gold Trust. Their respective holdings stand at 810.978 tonnes and 165.17 tonnes. This helped the gold price to recover in New York. We now see a rising gold price acting as a deterrent to further sales from these funds in the short-term.

Silver – Silver remains robust in the vacillating precious metals markets.

Regards,

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