Silver Market Morning

Gold Today – The New York gold price closed at $1,296.50 up $10.20 on Friday last week the same as yesterday, in New York. Asia showed renewed vigor and lifted the gold price to $1,308 ahead of London’s opening, after their holiday, before London lifted it over $1,312.00 ahead of the Fix. The gold price was Fixed in London at $1,314.75 up $21.25. In the euro, it Fixed at €955.14 up €11.393 as the euro was weaker at $1.3766 down from $1.3706: €1. Ahead of the opening in New York gold stood at $1,311.50 and in the euro at €950.36.

Silver Today – The silver price closed at $19.88 up 4 cents on Friday’s close, in New York. Ahead of New York’s opening, it was trading higher at $20.14.

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

The pattern of New York trying to take the gold price down and Asia lifting it continues. Yesterday saw New York push the price down below $1,300 but Asia lifted it $12 after their holiday yesterday. There is a misconception building out there that the premium or discount on the gold price in Shanghai reflects Chinese demand. We know that China has increased the number of gold importers among the banks and among direct non-bank importers who import more than 10 tonnes a month. This increase in market liquidity is bound to cause premiums to drop and occasional discounts to appear and the market becomes more competitive. This will have little to do with demand and supply overall. When there were fewer licenses premiums reflected market shortages, that’s true, but these also reflected inadequate supplies, leaving importers to benefit from such premiums. The Chinese authorities want to see more efficient global markets of which China is an integral part. We see Chinese demand more accurately reflected in the price action we see in Asia such as last night, when that demand kicked the price up $12. Today saw that demand returning to the market. [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]

On Monday, we saw sales from the holdings of the SPDR gold ETF of 1.798 tonnes, but we saw no sales or purchases of gold from or into the Gold Trust. Their respective holdings now stand at 809.180 tonnes and 164.41tonnes. The gold price may have been influenced in New York by this, but Asia swallowed it without noticing it.

It seems, so far, the efforts by the E.C.B. to encourage a weaker euro are not bearing fruit as the dollar weakened to $1.3779 this morning against the euro. We have no doubt that if the exchange rate does not move down alongside rising inflation the E.C.B. will institute quantitative easing. The fall of 10-year Treasuries to 2.68% from 2.71% may have assisted the dollar to weaken as substantial sales of these continue.

Silver – The silver price was keen to move up with gold in Asia and London and is expected to continue to be so.

Regards,

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