Silver Market Morning

Gold Today – The gold price closed at $1,328.50, up $12.40 on Monday in New York. In Asia prices were pulled back to $1,320.30. In London, the Fix was set at $1,325.75 up $12.75 and in the euro at €968.478 up €6.855, while the euro stood stronger at $1.3689. Ahead of the opening in New York the gold price was trading at $1,326.50 and in the euro at €968.85.

Silver Today – The silver price closed at $21.09 up 10 cents, in New York. Ahead of New York’s opening, silver was trading at $21.12.

Gold _{(very short-term)}

Gold should consolidate against resistance, in New York today.

Silver _{(very short-term)}

We feel that the silver price will wait for gold to give it direction and mark time, in New York today.

Price Drivers

There were purchases of gold into the SPDR gold ETF of 5.69 tonnes and 1.14 tonnes into the Gold Trust in the U.S. on Monday, helping gold to rise. The holdings of the gold ETFs stand at 790.704 tonnes in the SPDR gold ETF and at 164.76 in the Gold Trust. As gold sits just below another resistance level, we see U.S. buyers acting favorably towards gold in these purchases. With U.S. investors inclined to ‘buy on the rise’ we expect to see more of this. The euro is stronger against the dollar but so is sterling. With the Yen and Swiss France being restrained by their central banks and not showing rises, we watch the euro and sterling to see how the dollar behaves. From this it is clear that the dollar is weaker today, unexpectedly against the euro!

The banning of BNP Parisbas from transacting in the dollar for a year has ramifications that have not been fully understood or factored into market prices yet. But in time we believe they will be. It is a major exercise of global power by the U.S. over its monetary ‘empire’ and one that will affect the use of the dollar in the future and the pace at which the world will accommodate the Chinese Yuan in global trade. At a time when the globe transacts 80% of its transactions in the dollar this move is a statement of U.S. power, exercised without weapons, but giving politics a major new control over the globe. This was the first exercise of U.S. political power in this way dominating the bank, in their home country, but from the U.S. It is a precedence setting move which we believe will force a re-evaluation of the use of the dollar as the sole global reserve currency. As a matter of prudence, central banks, banks and other centers of wealth and financial transactions will have to analyze how to minimize the exercise of such power on themselves. This will directly affect gold investors and where they store their gold. We cannot cover this in our daily report, but do so in the next issue of our newsletters. [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 not moving alongside gold’s gyrations at the moment but will rise once silver investors see it break current overhead resistance. [www.SilverForecaster.com]

Regards,

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