Silver Market Morning

Gold Today – The gold price closed at $1,217.20 down $5.70 on Wednesday in New York. In Asia and London, gold prices fell to $1,2o8.6 as the euro buckled more than a cent lower to $1.2724. The gold price was Fixed at $1,210.50 down $13.50 and in the euro at €950.605 down €2.221, while the euro was much weaker at $1.2734. Ahead of New York’s opening, gold was trading at $1,209.60 and in the euro at €950.83.

Silver Today – The silver price closed in New York at $17.70 down 10 cents. Ahead of New York’s opening it was trading at $17.50.

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

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

Price Drivers

There were no sales from the SPDR gold ETF but a sale of 0.54 tonnes from the Gold Trust, on Wednesday. The holdings of the gold ETFs stand at 773.449 tonnes in the SPDR gold ETF and at 164.18 tonnes in the Gold Trust. The fall in the gold price in London today was entirely due to the fall in the euro. While the markets are now lowering their views on the future level of the euro against the dollar to $1.10 the reality of gold demand is that it is rising at these levels.

In India, ahead of the ‘festival of lights’ [Diwali] on the 23^rd October, importers are shipping in gold through ‘official’ routes estimated to reach 80 tonnes this month, ahead of retail demand and at what they consider cheap levels. It is reported by Indian newspapers that 50 tonnes of gold has been smuggled in the last 10 days over the Indian borders. There is no way an accurate figure can be given for smuggling, but we are in the high season for gold there. The ‘marriage’ season starts in November and lasts through to May next year. What is evident now is that gold demand in India is now at record levels and will rise if gold drops through $1,200. Likewise, Chinese premiums are rising and will rise further if gold goes lower. [Get the bigger picture - Subscribe to www.GoldForecaster.com & www.SilverForecaster.com – to protect against confiscation and penalties -see www.Stockbridgemgmt.com ] As we have mentioned in our weekly newsletter, gold supplies may be falling to the London market as they find their way directly to Asian markets. Likewise Asian demand may well be being routed through other markets rather than London. So the impact of the strong dollar on gold prices may not be the real driver of gold demand or supply, except for the diminishing demand and supply that reaches markets in London and New York. As noted here many times, Asian demand comes in on the fall in prices, while in the developed world it comes in on the rise. The result is that Asia is getting the ounces out there, which is what they want. Let the developed markets chase profits they say!

Silver– The fall in the silver price continues to fall with gold but now at the same pace. As we pointed out yesterday there remains a disconnect between the silver price and silver fundamentals. - www.SilverForecaster.com

Kind Regards,

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