Silver Market Morning

Gold Today – The gold price closed at $1,319.70 10 cents higher than Tuesday in New York. In Asia, prices rose to $1,323.00 ahead of the London’ opening. London held the gold price around that level then the Fix was set at $1,322.50 up $4.25 and in the euro at €971.712 up €2.482, while the euro was slightly stronger at $1.3610. Ahead of New York’s opening, gold was trading at $1,323.80 and in the euro at €972.56.

Silver Today – The silver price closed in New York at $21.04 up 1 cent. Ahead of New York’s opening it was trading at $21.12.

Gold _{(very short-term)}

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

Silver _{(very short-term)}

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

Price Drivers

There were purchases of 2.096 tonnes of gold into the SPDR gold ETF but none into the Gold Trust on Wednesday. The holdings of the gold ETFs stand at 800.284 tonnes in the SPDR gold ETF and at 164.28 tonnes in the Gold Trust. Gold and silver still remain in consolidation mode, with a tendency to drift higher. Now we see a tightening trading range we expect a strong move shortly. Meanwhile, the Technical picture for gold continues to be positive alongside its global fundamentals.

With news on Commerzbank being fined $500 million, we are waiting to see if their use of the U.S. dollar will be curtailed for a time. The willingness of Europe and the U.K. to deal directly with China is growing. It will be necessary for the E.U. to lift restrictions on this, but the arguments against this are fading fast. While the media do not seem to be covering this much, governments in Europe will react strongly if German or other member states banks are restricted from using the dollar. An independent fully trusted money, not under political influence is needed for global trade. The I.M.F.’ Special Depository Right is also under U.S. political influence and will not qualify. Gold as a facilitating element in such transactions does.

If Iran gets to the point it controls the bulk of Iraqi oil, that oil will be priced in currencies other than the U.S. dollar. The CEO of energy giant Total said he believes "there is no reason to pay for oil in dollars". If that happens, then we have arrived at the watershed for the dollar.

In China, total imports of gold through Hong Kong are 391 tonnes, so far this year, against 392 tonnes this time last year. Chinese demand will jump if the gold price falls substantially, but if not it will continue steadily to reflect the growth in wealth and numbers of the Chinese middle classes. [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 expected to jump higher then gold should it move up through $1,330+. [www.SilverForecaster.com]

Regards,

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