Silver Market Morning

Gold Today – The gold price closed at $1,215.30 down $2.30 on Monday in New York. In Asia and London, gold prices rose to $1,218. The gold price was Fixed at $1,225.00 up $11.00 and in the euro at €951.013 up €6.266, while the euro was stronger at $1.2881. Ahead of New York’s opening, gold was trading at $1,226.20 and in the euro at €951.10.

Silver Today – The silver price closed in New York at $17.81 down 9 cents. Ahead of New York’s opening it was trading at $17.90.

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

Silver _{(very short-term)} Silver should consolidate with a positive bias, in New York today.

Price Drivers

There sales of 1.795 tonnes from the SPDR gold ETF but none from the Gold Trust, on Monday. The holdings of the gold ETFs stand at 774.645 tonnes in the SPDR gold ETF and at 164.72 tonnes in the Gold Trust. We are now of the opinion that this is Technical selling possibly triggered by ‘stop loss’ selling. [To find out who we think it is - Subscribe to www.GoldForecaster.com & www.SilverForecaster.com – to protect against confiscation and penalties -see www.Stockbridgemgmt.com ]

The Technical picture for gold still remains weak, but is now starting to bounce off support above $1,200. This appears to tell us that support below $1,200 is very strong.

Like you, we keep hearing reports that indicate China’s GDP is slowing but the report out today on Chinese manufacturing was positive, taking much of the steam out of that story. This is positive for gold demand. Reports from Shanghai are that gold demand is on the increase as it is in India. This reinforces our belief that both supply and demand are turning to Shanghai’s Gold Exchange from the developed world markets, where the Technical picture continues to have a dominant impact.

Many have expected that central banks would rush in to push prices up, but it is not in their nature to chase prices. Only tactics that buy ounces that come onto the market will be followed. In other words, dealers approach the central bank with a solid offer. The People’s Bank of China is opaque on this. China uses an agency to buy gold for its reserves, but this agency does not hand over the gold to the PB of C until it is instructed to. So the PB of C, ‘officially’ has not increased its reserves until it is on their books. This will only happens when it is in the nation’s interests for it to do so.

Russia on the other hand continues to build reserves. This does raise the question of where the additions to its reserves come from. It appears this is from the international market as it produces more than double this amount locally. So it is possible that it is taking in local production as well as the addition to reserves bought outside the country? Does the 9.3 tonnes it added to its reserves last month come from the international market?

Silver– Silver price is stabilizing at lower levels and hopefully has seen the worst of its fall. It looks thoroughly oversold to us. - www.SilverForecaster.com]

Kind Regards,

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