Silver Market Morning

Gold Today – The gold price closed at $1,271.70 down $5.20 on Monday in New York. In Asia and London saw the price fall to $1,264 at the opening in London. The Fix was set at $1,264.50 down $17.25 and in the euro at €932.178 down €15.161, while the euro stood stronger at $1.3565. Ahead of the opening in New York the gold price was trading at $1,266.80 and in the euro at €933.63.

Silver Today – The silver price closed at $19.63 down 7 cents, in New York. Ahead of New York’s opening, silver was trading at $19.63.

Gold _{(very short-term)}

We expect gold to consolidate today and reaffirm direction, in New York today.

Silver _{(very short-term)}

We expect silver to consolidate and reaffirm direction with gold, in New York today.

Price Drivers

There were sales of 4.192 tonnes of gold from the SPDR gold ETF in the U.S. on Monday, but there were no sales or purchases into the Gold Trust. The holdings of the gold ETFs now stand at 782.884 tonnes in the SPDR gold ETF and at 163.20 tonnes, in the Gold Trust.

This sale from the SPDR gold ETF was sufficient to pull prices back $5 overnight, but will not have an ongoing impact unless more similar sales follow on.

With the new gold demand dimension coming out of the Middle East, as we reported yesterday, it appears there are huge efforts to stabilize the oil price with even the U.S. filling the gaps potentially left by Libya and potentially Iraq, in the coming days. Saudi Arabian crude is very different from that of the U.S. oil, so together we may see oil prices capped by the two suppliers. The current threat is to the 330,000 barrels a day from Northern Iraq, with the bulk of Iraqi oil coming from the South and passing through Basra. With ISIS regrouping in the North these may not come under threat muting the impact on the oil price at the moment. What has become clear is the Iraq is back in civil war and will remain so for at least the rest of the year. It could well be longer if the sectarian divide suppurates across the south as well. We do not see the U.S. moving into Iraq again, because they would have no definable objective to achieve. To let Iran in to support the government would be to allow Iran to achieve the goal it set itself when it fought Saddam Hussein, namely to expand the Shia domination of the south of Iraq at least and add the 3.2 million barrels of oil production to its own. Any of these influences remains gold positive, as we described yesterday. How long will this take to feed through to the markets in terms of gold demand? It has already started and is likely to be an ongoing process. The “Arab Spring” has morphed into a Sunni – Shia Middle Eastern war that is spreading throughout the Middle East. This week’s events could well have confirmed this. This is new factor in global instability and uncertainty that could be with us for some years. [Subscribe www.GoldForecaster.com - see www.Stockbridgemgmt.com to protect yourself from penalties from holding your gold overseas when it is to be confiscated].

Silver – Silver is showing more pent-up strength now. [www.SilverForecaster.com]

Regards,

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