Silver Market Morning

Gold Today – The gold price closed at $1,274.00 up $2.80 on Wednesday in New York. In Asia and London prices rose to $1,281. The Fix was set at $1,282.00 up $13.00 and in the euro at €940.227 up €4.522, while the euro stood stronger at $1.3635. Ahead of the opening in New York the gold price was trading at $1,282.20 and in the euro at €940.75.

Silver Today – The silver price closed at $19.84 up 12 cents, in New York. Ahead of New York’s opening, silver was trading at $19.96.

Gold _{(very short-term)}

We expect gold to consolidate with a positive bias, in New York today.

Silver _{(very short-term)}

We expect silver to consolidate with a positive bias, in New York today.

Price Drivers

There were no sales or purchases from the SPDR gold ETF in the U.S. on Wednesday, 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 approaching the $1,300 level.

Yesterday’s announcement from the Fed, while giving a clearer picture on interest rate moves next year and after, maintains the same position as the last announcement. The $10 billion cut in QE simply lowers the financial protection for the banks, so is not really removing stimuli to the broad economy. That is being maintained through low interest rates and being hampered by the bank’s unwillingness to add risk to their balance sheets by lending where they are not comfortable. Until real, significant drops in unemployment are achieved rates will stay low. This means for many more years to come. This remains positive for gold.

But the biggest story benefit to gold today is underreported. We wondered why such an august Chinese official was visiting London this week as the Premier. We now know why. In the many small steps to the internationalization of the Yuan there has to be full convertibility of the Chinese currency. It was announced that China is to set up a clearing bank in London to clear direct Renminbi [Yuan] - Pound Sterling transactions. This direct dealing between the two currencies cuts out the U.S. dollar in these global transactions. No doubt other direct currency dealings will follow if the teething problems in these transactions are smoothed out. China will move softly on these fronts trying not to disrupt markets as it follows the road to deal direct with the currencies of all of its trading partners until the time is right to become fully convertible. To get perspective on this, take a step forward in your mind’s eye and envisage the day when a U.S. importer has to pay in Renminbi for goods it is to import. At the moment the U.S. has hardly any foreign currency in its reserves, which are mainly gold [because the dollar is used to pay for everything], so it will have to go into the market to buy the Yuan and sell dollars. [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 readying for an assault on resistance. [www.SilverForecaster.com]

Regards,

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