Silver Market Morning

Gold Today - The gold price closed at $1,243.70 down $2.60 on Wednesday in New York. In Asia and London the price remained the same. It was then set at $1,244.75 down $1.25 and in the euro at €914.450 down €1.39, while the euro stood at $1.3612. Ahead of the opening in New York the gold price was trading at $1,244.60 and in the euro at €917.17.

Silver Today – The silver price closed at $18.81 down 3 cents, in New York. Ahead of New York, silver was trading at $18.80.

Gold _{(very short-term)}

The gold price will rise in the euro and will hold or fall in the dollar, in New York today.

Silver _{(very short-term)}

The silver price will follow gold, in New York today.

Price Drivers

All eyes on the E.C.B. today and for press briefing later! We now see negative interest rates for banks depositing with the E.C.B. We wait for the announcement of other easing later as New York opens. Mario Draghi is focused on the exchange rate and its weakening and not directly on growth. Growth, it is hoped will be spurred by a cheaper euro. The hard reality is that measures that make bank balance sheets sound, don’t promote growth. The shrinking of bank balance sheets and added regulation shrinks lending, damaging the economy and crippling growth. This is the lesson of the last seven years. The governments in the developed world have not stimulated growth, relying almost entirely on the banking system to do it. That’s why the economies are struggling after all this time still. The economies are reacting, heading to moderate deflation in Europe. Once it arrives it will be a far more destructive process than moderate inflation could ever be. It will be a far harder problem to solve than inflation, a problem that looks as though it is too much for the governments and banking system already. Longer-term gold will benefit from the dilemma!

The gold price has barely moved since yesterday but the euro is starting to fall again. We ask, why is the E.C.B.’s statements so important to the world economy that all markets are now in a state of suspense? It’s because the actions of the E.C.B. will give direction to developed world markets either in the direction of deflation if too little is done or growth/inflation if it is felt enough has been done. If all that happens is for interest rates to be lowered not enough will have been done.

There were no purchases or sales of gold into or from the SPDR gold ETF yesterday but 0.9 of a tonne of gold was sold from the Gold Trust. This left their holdings at 787.076 tonnes in the SPDR gold ETF and 162.51 tonnes in the Gold Trust. This did not affect the gold price.

While the gold price is essentially being driven by a solid huge current of Asian demand, added demand from the western world will spur higher gold and silver prices. [For more on this subscribe to www.GoldForecaster.com and visit www.Stockbridgemgmt.com to protect yourself from penalties from holding your gold overseas when it is to be confiscated].

Silver – The silver price is marking time with gold.[More in the www.SilverForecaster.com].

Regards,

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