Silver Market Morning

Gold Today – The gold price closed at $1,318.00 up $6.90 on Thursday, in New York. Asia lifted it to $1,319.35 ahead of London’s opening. The gold price was Fixed in London at $1,317.25 down $4.25. In the euro, it Fixed at €948.617 down €4.571 as the euro was weaker at $1.3886 down from $1.3866: €1. Ahead of the opening in New York gold stood at $1,322.25 and in the euro at €951.53.

Silver Today – The silver price closed at $20.05 up 17 cents on Thursday’s close, in New York. Ahead of New York’s opening, it was trading higher at $20.11.

Gold _{(very short-term)}

We expect the gold price to consolidate again with a positive bias, today in New York.

Silver _{(very short-term)}

We expect the silver price to consolidate again with a positive bias, today in New York.

Price Drivers

Gold and silver prices remain well positioned for further rises today despite sales of o.262 tonnes from the holdings of the SPDR gold ETF but none from the Gold Trust. Their respective holdings stand at 806.221 tonnes and 164.41 tonnes. It takes substantial sales to hurt the gold price now. We do not expect to see more of these.

China took another cautious step forward towards the free convertibility of the Chinese Yuan yesterday when it announced the first tentative cross borders trading between Hong Kong and Shanghai in stocks listed on both exchanges to begin in 6 months time. This will give Chinese stockbrokers experience in arbitrage dealing, a fundamental practice in international dealing. After that, it is a relatively small step to widen out international dealing in a big way. We are of the opinion that a firm signal that China is on the brink of ‘free convertibility’ of the Yuan will come when they perceive it is in their interests to announce the current gold holdings of the People’s Bank of China [China’s gold reserves]. Such an announcement will confirm the solid backing of the Yuan by gold.

Strong hints that the I.M.F. is not a happy place, came from indications that 20 leading nations are contemplating leaving it. The I.M.F. is a U.S.-controlled body. As China rises in monetary power it should have had a significant role already, but the 16.8% vote of the U.S. against a requirement that 85% of votes is required before any motion is carried is going to have to be changed before that control is removed. This is unlikely!

Serious dollar weakness continues as it is looking to weaken across the $1.39: €1 line. As the realization that interest rates hikes are not going to happen for more than a year still, the dollar is falling fast. [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 remains robust.

Regards,

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