Silver Market Morning

Gold Today – The gold price closed at $1,295.60 down $10.50 on Thursday, in New York. In Asia the price fell $3 ahead of London’s opening, but London held it there. The gold Fixing was set at $1,293.75 down $10.00 and in the euro at €943.173 down €10.588 while the euro stood at $1.3717. Ahead of New York’s opening the gold price stood at $1,294.60 and in the euro at €944.79.

Silver Today – The silver price closed at $19.48 down 29 cents on Thursday, in New York. Ahead of New York’s opening, it was trading higher at $19.40.

Gold _{(very short-term)}

The gold price will consolidate with a positive bias today, in New York.

Silver _{(very short-term)}

The silver price will consolidate with a positive bias today, in New York.

Price Drivers

There were purchases of 1.792 tonnes of gold into the SPDR gold ETF but no activity in the Gold Trust on Thursday. Their respective holdings now stand at 782.253 tonnes and 164.02 tonnes. And yet the gold price fell. We watched New York more carefully than usual yesterday and saw New York start on a strong footing only to then be knocked down rapidly, then recover and close after another fall. The downward pressure did not come from the selling of physical gold but from speculators trading on news that does not affect physical buying or selling. Higher U.S. inflation numbers may imply higher inflation but the Fed, as it has for the last seven years, is looking for real, sustainable growth at consumer level, so such figures are not going to precipitate any action. While the media has a consistent propensity to focus on the positive, there is always a danger that they lose touch with reality. In the U.S. there is a moderate slow recovery, that’s all. In the Eurozone the recovery is so fragile that deflation is a very real threat, hence our expectation of ECB stimulative action. These climates are not ones in which gold falls heavily.

Of far greater significance to gold is the election victory of Mr. Modi of the BJP party in India. The picture he paints as a result of his actions in Gujarat province is one of a seriously industrializing, urbanizing India, accelerating the growth of wealth across India. This is very positive for gold demand there. Of shorter-term concern is his policy on gold import restrictions. Being a pragmatic man, we would suggest that his path would point to India’s gold [bear in mind he heads the Hindu National Party and gold has religious connotations there] being put to greater day-to-day use, while respecting the religious aspect of gold. But we must wait until the considerable dust has settled, now that he has ousted the ruling party and holds power in his own hands without the need to compromise by sharing it in a coalition government. [For more on this, subscribe to www.GoldForecaster.com & visit www.StockbridgeMgMt.com to hold gold out of reach of potential confiscation.]

The euro is still standing around $1.3697 weaker then yesterday.

Silver – Silver investors should follow the factors that affect gold to understand the silver price! [More in the www.SilverForecaster.com]

Regards,

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