Silver Market Morning

Gold Today – The gold price closed at $1,288.10 down $5.20 in New York. In Asia and early London, prices recovered to $1,292 as the euro fell back to $1.3370 from $1.3394. The gold price was Fixed at $1,288.50 down $4.25 and in the euro at €964.266 down €o.761, while the euro was weaker at $1.3362. Ahead of New York’s opening, gold was trading at $1,289.40 and in the euro at €965.37.

Silver Today – The silver price closed in New York at $19.81 down a heavy 53 cents. Ahead of New York’s opening it was trading at $19.83.

Gold _{(very short-term)} We expect gold to continue to consolidate, in New York today.

Silver _{(very short-term)} We expect silver to continue to consolidate, in New York today.

Price Drivers

There no sales or purchases of gold from the SPDR gold ETF or from or into the Gold Trust on Tuesday. The holdings of the gold ETFs stand at 800.048 tonnes in the SPDR gold ETF and at 165.93 tonnes, in the Gold Trust. [Subscribe www.GoldForecaster.com – ensure your gold will not be confiscated and you not penalized -see www.Stockbridgemgmt.com ].

In New York dealers and speculators keep trying to pull the gold price down below the 200-day moving average of gold, but each time they do the gold price pulls back above it. These moves are made by dealers and speculators as the euro continues to slip slightly every day. Arbitrageurs then buy gold in euros and sell it in dollars to take that tiny difference in prices on the two sides of the Atlantic. We expect this to be the ongoing pattern until the euro is close to its expected bottom of $1.20+. Each time the prices are changed like this, buyers come in to snatch the bargain prices and pull them back up. This evens out global prices. Because these price moves are most visible in thin markets, when even slightly higher demand comes into the market gold will move in all currencies.

With the E.C.B. meeting set for tomorrow we wonder if Draghi is still content to wait until the end of the year before taking further action to weaken the euro and stimulate the E.U. With Italy in recession again, inflation dropping more than expected and France being very vocal about the threat of deflation, he may move to act well ahead of the end of the year. The question will then be, will the gold price fall with the euro? We believe not, for then the weakness of the euro will be apparent and Europeans will see that gold could protect them from the fall. At the moment the gold price appears to be like the frog that sat in cold water which was then heated up until it was boiling and killed the frog. If the frog had been dropped into the hot water it would jump out immediately. Fortunately, investors are not frogs.

Silver– Silver fell heavily in the last day by 2.62% against gold’s almost zero moves. We attribute this and the bigger volatility of the silver price in general, to a smaller, professional market. [One ounce of silver costs 1/60 of an ounce of gold] It could turn around and rise just as quickly if the gold price rose now. If gold decides to fall we may now see a slower fall in silver, because of the size of this fall discounting gold’s further fall. [www.SilverForecaster.com]

Regards,

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