Silver Market Morning

Gold Today – The gold price closed at $1,210.60 down nearly $7 since last Monday. We missed a fall to the third bottom at below $1,180/90 during the week of our absence. But Asia followed on with the recovery rising to $1,218 in Asia and early London. This level takes it back to where it was a week ago. The euro has fallen during the week to $1.2645 only 0.0036 lower, despite efforts by the Bundesbank to hold it higher, going against E.C.B. wishes. The gold price was Fixed at $1,220 and in the euro at €963.513, while the euro stood at $1.2662. Ahead of New York’s opening, gold was trading at $1,217.60 and in the euro at €961.69.

Silver Today – The silver price closed in New York at $17.19 down 44 cents or 2.5% lower on early last week. Ahead of New York’s opening it was trading at $17.37.

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

After a restful week in what Captain Cook described as the ‘fairest cape of all’ [Capetown] we take a bigger perspective on the gold and silver markets than usual. What we now see is a clash between Asian investors and developed world investors over the gold price. Western investors, including ongoing, small, sellers of gold from the gold U.S. based gold ETFs are trying to take the gold price to new lows. Like us, Chinese investors are returning after their ‘golden week’ holiday and have injected a more robust level of demand into the market accounting for the higher prices today.

The Technical picture tells all that there could be a further, over, 10% fall in the gold price, but as the price slips below $1,200 Asia comes in to snatch bargain prices. Asia is content to do that and not push prices too much higher with their entirely different mindset to developed world, profit oriented, investors.

Over the last week there were sales of 4.79 tonnes from the SPDR gold ETF and 1.88 tonnes from the Gold Trust, over the last week. The holdings of the gold ETFs stand at 767.468 tonnes in the SPDR gold ETF and at 161.67 tonnes in the Gold Trust. [Get the bigger picture - Subscribe to www.GoldForecaster.com & www.SilverForecaster.com – to protect against confiscation and penalties -see www.Stockbridgemgmt.com ]

Meanwhile, the week away saw the economic, global skies darken a little more. In the E.U. Germany wants a steady euro and austerity while 6,000 German companies, that export to Russia, are hurting badly, Italy is not contemplating reform and sliding, as always, Spain is trying to recovery, whereas France needs structural reform. Three directions being followed by the three biggest economies, so the hope of the E.U. avoiding their third recession is dim. The E.C.B. is desperate for the governments to act, but this now appears unlikely. The I.M.F. is downgrading global growth to 3.3% from 3.4% for next year as the global recovery is ‘weak & uneven’. This leave prospects for a lower euro generating jobs and growth a policy that will annoy trading partners as they manufacture international competitiveness from policies the G-20 agreed not to follow, i.e. currency wars.

Silver– We feel the silver price is too low, if gold does not drop further.

Kind Regards,

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