Silver Market Morning

Gold Today – The gold price closed at $1,288.70 down only $0.50 on Friday, in New York. In Asia and London the gold price hovered around $1,289 and $1,290. The gold Fixing was set at $1,292.75 up $3.75 and in the euro at €938.953 up €5.707 while the euro stood at $1.3768 weaker by half a cent. Ahead of New York’s opening the gold price stood at $1,294.65 and in the euro at €940.96.

Silver Today – The silver price closed at $19.15 on Friday, in New York. Ahead of New York’s opening, it was trading higher at $19.42.

Gold _{(very short-term)}

The gold price will be in a very tight range ahead of a strong move either way, in New York, today.

Silver _{(very short-term)}

The gold price will be in a very tight range ahead of a strong move either way, in New York, today.

Price Drivers

There were no sales from the SPDR gold ETF or from the Gold Trust on Friday. Their respective holdings still stand at 782.852 tonnes and 164.02 tonnes. Without such sales Asian demand exerts an upward pressure on the gold and silver price. The prices of both metals has, for the last few business days, narrowed into a very tight trading range, despite traders attempts to bring volatility to these markets. Such tightness precedes a strong move either way, making the market far more volatile than we have seen for a fortnight. The Technical picture points down, the fundamentals point up. But we expect the SPDR gold ETF has the power to influence the direction of both gold and silver in the very short-term. [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]

Bloomberg conducted a poll of investors in Europe on the prospects for inflation or deflation. While we take these polls as peripheral information, in this case around 75% of them fear deflation over inflation. Of course inflation is not a threat until it is so high it becomes destructive. At 0.7% this is not the case, but the fear of deflation is something else. It is becoming more likely after 7 years of attempts to resuscitate an economic recovery, with the results disappointing. Yes, there is a recovery, but it has a very long way to go before it is sustainable. It can easily tip over to deflation if attempts to lift inflation are not successful. In the Eurozone deflation will be far more pernicious that in other trading bloc, because of the nature of the Eurozone’s structure. The focus of attention on this front is the exchange rate of the euro. Such a focus will make markets volatile as this rate moves either way.

In India the last day of voting is underway and a new government may rule on easing restrictions on gold imports shortly.

Silver – The silver price is marking time ahead of a strong move either way.

Regards,

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