Silver Market Morning

Gold Today - The gold price closed at $1,253.10 up $9.4 on Thursday in New York. In Asia and London the price lifted to $1,255. It was then set at $1,254.00 up $9.25 and in the euro at €919.962 up 4.450, while the euro stood at $1.3631. Ahead of the opening in New York the gold price was trading at $1,253.70 and in the euro at €919.91.

Silver Today – The silver price closed at $19.03 up 22 cents, in New York. Ahead of New York, silver was trading at $19.07.

Gold _{(very short-term)}

The gold price will consolidate as E.C.B. moves are digested, in New York today.

Silver _{(very short-term)}

The silver price will follow gold as it leads the way, in New York today.

Price Drivers

While the moves by the E.C.B. to move key rates to -0.15% and provide incentives to banks to lend to small and medium businesses with the promise of more to come, a weaker euro exchange rate, which was a key target of the E.C.B. happened before the announcement but rose strongly after it. What does this tell us? Overall it is too early to reach a definitive conclusion on these moves because the ‘carry trade” [where funds will be borrowed in Europe to lend to high interest paying countries] needs time to react, but we expect it will. This should take the euro lower against the dollar. After all, such cheap money can flow to Asia to boost them as well as into Stock Exchanges globally. But will this cause banks to lend to the ground floor of the E.U. economy, particularly the weak southern nations? If it doesn’t then the attack on deflation, the overall main aim of the moves, will have been badly blunted. The next moves by the E.C.B. are not expected for another six months, giving it time to see the impact of these moves. With shrinking balance sheets and greater regulation hampering banks as well as the risks of lending to struggling businesses more lending may well not be what the E.C.B. gets? This would make deflation a continuing danger.

Gold jumped $10 straight after the announcements as it broke away from the euro’s downward path. Then the euro recovered all it had lost yesterday. Gold is not moving with the euro and held its gains though to today. The next week should see the world’s financial markets fully react to the E.C.B. moves. We feel that uncertainty levels have not been brought down, as reflected by the euro exchange rate so far. [For more on this subscribe to www.GoldForecaster.com and visit www.Stockbridgemgmt.com]

There were no purchases or sales of gold into or from the SPDR gold ETF yesterday but 0.04 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 162.47 tonnes in the Gold Trust. This did not affect the gold price.

Silver – The silver price is rising faster than gold. [More in the www.SilverForecaster.com]

Regards,

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