Silver Market Morning

Gold Today – The gold price closed at $1,316.20 down $3.10 on Thursday in New York. In Asia prices rose to $1,317.40. In London, the Fix was set at $1,315.25 up $3.75 and in the euro at €966.314 up €3.321, while the euro stood slightly weaker at $1.3611. Ahead of the opening in New York the gold price was trading at $1,315.80 and in the euro at €966.47.

Silver Today – The silver price closed at $21.08 up 5 cents, in New York. Ahead of New York’s opening, silver was trading at $21.07.

Gold _{(very short-term)}

Gold should 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 purchases of gold into the SPDR gold ETF or into the Gold Trust in the U.S. on Wednesday. The holdings of the gold ETFs stand at 785.016 tonnes in the SPDR gold ETF and at 163.62 tonnes, in the Gold Trust. The trading range is narrowing again ahead of gold’s busiest day of the week. However, the fundamental and Technical picture for gold remains positive. The currency markets remain quietly stable with no solid moves. The dollar is tending weaker but barely so against the euro. The failure of the euro to fall, points to the E.U. equivalent of QE coming from the E.C.B. by year’s end. However other geo-political events may well have caused brutal moves in currencies before then.

In India the monsoon is 40% weaker than usual pointing to a lower demand from Indian farmers [in the past responsible for 70% of India’s gold demand, now with urbanization, much less]. Normally this would have hurt prices from September onwards, but with the restrictions on gold still in place and high import duties restricting gold imports, we do not see lower demand hurting gold prices internationally. But lower prices may not come, because lower agricultural yields lead to higher prices, which may well compensate for the yield and raise profits. Nevertheless, the Indian demand could be 1,200 tonnes [a record] without restrictions. With them we are looking at 750 tonnes including 250 of this from smuggling. Irrespective of the monsoon, we expect prices of gold internationally to rise on the easing of gold import restrictions and duties.

The fraudulent gold and copper deals uncovered in China and published yesterday involve up to 360 tonnes of gold. But these should not impact the gold price. It sounds very dramatic and could have been were it not for some important facets of them. We explain this in our next issue of the newsletters [see below]. [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 slightly more robust than gold at the moment, a positive sign. [www.SilverForecaster.com]

Regards,

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