Silver Market Morning

Gold Today – The gold price closed at $1,260.80 up $7.80 on Tuesday in New York. In Asia and London the price held just above that level until the Fix, where it was set at $1,262.50 up $9.00 and in the euro at €932.629 up €8.014, while the euro stood weaker at $1.3537. Ahead of the opening in New York the gold price was trading at $1,263.10 and in the euro at €933.28.

Silver Today – The silver price closed at $19.23 up 18 cents, in New York. Ahead of New York’s opening, silver was trading at $19.24.

Gold _{(very short-term)}

Gold should continue to consolidate with a stronger bias, in New York today.

Silver _{(very short-term)}

Silver, should continue to consolidate with a stronger bias, in New York today.

Price Drivers

Once again, there were no sales or purchases from the gold ETFs in the U.S. yesterday while the gold price jumped $9 in the States, a price that held in Asia and London, while the euro steadied at lower levels. The holdings of the gold ETFs continue to stand at 787.076 tonnes in the SPDR gold ETF and at 162.51 tonnes in the Gold Trust.

We are seeing gold rise in all currencies, including the euro and as we forecast yesterday and do again today, we expect gold to continue to rise in the euro as it decays, as the E.C.B. wants. However, we would have thought that the euro would fall faster than this, due to the differentials in interest rates in all currencies, including the U.S. dollar.

The World Bank came out with a forecast that global growth would fall this year. We don’t quote the rate because you can’t generalize a global growth rate and transmit the correct message. It will disguise more dramatic falls in some nations while hiding solid growth in others. The message we take from this is that ‘growth measures’ in the developed world come from central banks and not governments and their economies are pointing down. The E.C.B. is desperately trying to stave off deflation as we have seen last week, but the malaise could spread. The World Bank forecast a better growth rate next year, ‘…on the assumption that conditions do not worsen’. This highlights the reality that you can take all the world’s economists and put them end to end and never reach a conclusion.

For gold investors this points to a gear shift in uncertainty, through the rest of the year and likely thereafter. Initially, deflation depresses the gold price as it is sold to cover liquidity holes in other areas, but rises thereafter. We believe we have seen that phase. Should this concept of falling growth in the world spread to a confirmation of deflation in the developed world then gold’s properties as both an asset and cash will be emphasized. [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 moving faster than gold now.[ www.SilverForecaster.com]

Regards,

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