Silver Market Morning

Gold Today – The gold price closed at $1,271.20 down $0.50 on Tuesday in New York. In Asia and London saw the price fall to $1,269 at the opening in London. The Fix was set at $1,269.00 up $4.50 and in the euro at €935.705 up €3.5271, while the euro stood stronger at $1.3565. Ahead of the opening in New York the gold price was trading at $1,271.00 and in the euro at €936.83.

Silver Today – The silver price closed at $19.72 up 9 cents, in New York. Ahead of New York’s opening, silver was trading at $19.72.

Gold _{(very short-term)}

We expect gold to consolidate today, in New York today.

Silver _{(very short-term)}

We expect silver to consolidate, in New York today.

Price Drivers

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

Again we see the gold price ‘drift higher’ today on thin trade. We see markets trying to calm down in the face of the changed picture in Iraq. And we believe the change is medium to long term, not just short-term. New Middle East demand will come through over time, not in a rush, we expect. Eyes are on the South of Iraq and the Basra oil terminal. However, if they get close enough to cause foreign workers to leave there [as they have at Baiji] then the oil price could run up to $140 irrespective of extra supplies from the U.S. or Saudi Arabia. At that point we expect Iran to send troops north to prevent the Sunnis grabbing that oil, but as we said yesterday, this will place that oil under their control. Then the gold and silver prices will charge up as oil prices create inflation and deflation simultaneously. The economic condition of the developed world might well find that such a new crisis will be just too much for it. It appears that U.S. talking, or that of anybody at this point, will be useless. It is a matter of who is taking action.

Eyes are on the Fed once more. This time, with a ‘new normal’ in the developed world, we expect the words from Ms. Yellen to reaffirm the low interest environment and could indicate future, further stimuli to the U.S. economy. This is gold positive.

Such a stance will also affect the other side of the Atlantic as developed world lack of growth will be affected alongside the growing threat of deflation. We have reached the point where either inflation or deflation will have a gold positive impact, as the economic state of the world becomes more and more fragile. [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 should move up faster than gold still. [www.SilverForecaster.com]

Regards,

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