Silver Market Morning

Gold Today – The gold price closed at $1,289.40 down $18.40 yesterday, in New York. In Asia and London the gold price held above $1,290 as the dollar continued to weaken against all currencies ahead of the Fixing. The euro weakened to $1.3944. The gold Fixing was set at $1,291.25 down $19.75 and in the euro at €926.026 down €16.055. Ahead of New York’s opening the gold price stood at $1,290 and in the euro at €926.16.

Silver Today – The silver price closed at $19.31 down 25 cents on Wednesday, in New York. Ahead of New York’s opening, it was trading higher at $19.22.

Gold _{(very short-term)}

We expect the gold price to attempt to recover to +$1,300 at least, today in New York.

Silver _{(very short-term)}

We expect the silver price to continue to follow gold, today in New York.

Price Drivers

Today, we expect Mario Draghi of the European Central Bank, to make more statements on low inflation in the Eurozone. We do see more efforts to ‘manage’ the exchange rate against the dollar through ‘swaps’, preventing it from strengthening brutally. He will make more statements on interest rises too, as there is the potential to drop these into negative territory. With the Eurozone recovering more convincingly, Draghi may take a chance by doing nothing, but his worry, as he made clear, is the exchange rate against the dollar. Without action, the euro will strengthen. This affects markets, including gold, more directly as traders read gold strength into euro strength.

The gold price fell quickly and heavily yesterday but there no sales from the SPDR gold ETF or from the Gold Trust. Their respective holdings now stand at 782.852 tonnes and 164.02 tonnes. So the move down was technically driven, but not based on solid sales. The move is within the recent trading range of $1,280 and $1,320. [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] As we said yesterday, “If no sales continue during this week, then the upward pressure on the gold price may prevail. New sales from the SPDR gold ETF would have to be substantial to impact the gold price now.” That’s why we expect the next move of both the gold and silver price is likely to be upwards, at least to $1,300.

One fundamental fact that needs to be understood by gold investors is that around 30% of gold miners are unprofitable and will, in the future be cutting production if the gold price does not rise strongly.

Silver – The silver price pulled back sharply with gold, but remained above its recent lows. Silver investors accept that while silver fundamentals are completely different to gold’s, the silver price will continue to move with gold, dropping and rising further and faster than the gold price. The reason continues to be that silver, at the end of the day, remains a monetary metal, despite its very heavy industrial applications.

Regards,

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