Silver Market Morning

Gold Today – The gold price closed at $1,308.80 up $12.30 on Tuesday, in New York. The gold price was Fixed in London at $1,309.75 down $5.00. In the euro, it Fixed at €949.920 down €5.22 as the euro was weaker at $1.3788 down from $1.3766: €1. Ahead of the opening in New York gold stood at $1,309.15 and in the euro at €948.45.

Silver Today – The silver price closed at $20.01 up 13 cents on Tuesday’s close, in New York. Ahead of New York’s opening, it was trading higher at $19.93.

Gold _{(very short-term)}

We expect the gold price to consolidate again, in New York.

Silver _{(very short-term)}

We expect the silver price to consolidate again, in New York.

Price Drivers

On Tuesday, we saw more sales from the holdings of the SPDR gold ETF of 2.697 tonnes, but we saw no sales or purchases of gold from or into the Gold Trust. Their respective holdings now stand at 806.483 tonnes and 164.41tonnes. Again the gold price may have been influenced in New York by this. So today will continue to see consolidation in this area. Nevertheless, Chinese demand remains robust and is expected to be the strong undercurrent behind the gold price for the foreseeable future.

In India, the premiums on gold prices are coming down from $50 as gold becomes more freely available. With 20% of imported gold forced to be exported, this is strange, because genuine export markets could not take the sort of volumes that would allow pent-up demand to be satisfied in this way. With more banks being licensed as importers of gold and no capacity to export gold, the only reasonable conclusion that can be drawn is that such rules are being ignored [or is 20% of the gold exported only to be re-imported with the next batch of gold]? After all, how can banks obey these imports rules? The only reason the authorities would ignore these restrictions is that they have been told they are about to be lifted?

It must be alarming the E.C.B. to see the euro getting stronger today as it crosses the $1.38: €1 line this morning. If this persists then the E.C.B. will have to cut its interest rates further as well as introduce quantitative easing. Today also saw another warning from the International Monetary Fund that unless inflation was stoked, economic growth would be damaged. Global economic growth is targeted at 3.6% with the U.S. and U.K. leading the way in the developed world with 2.8%. The I.M.F. is right to issue such warnings, particularly under the threat of deflation [which is deemed a small risk??]. We are approaching that point where ‘official’ intervention in financial markets could have a mercurial impact and monetary authorities lose their control over values. Should this happen, instability will add to current uncertainty with gold being sought as an anchor in those storms. [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]

Silver – The silver price is keen to rise and hesitant to fall at the moment.

Regards,

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