Silver Market Morning

Gold Today – The gold price closed at $1,222.50 up $11.90 since yesterday. Asia followed through on the rise to take it up to $1,227 once again. London held it at higher levels. The euro continued to recover and stood at $1.2760, up a full cent on yesterday. The gold price was Fixed at $1,227.50 up $7.50 and in the euro at €961.991 down €1.522, while the euro stood at $1.2760. Ahead of New York’s opening, gold was trading at $1,227.60 and in the euro at €962.14.

Silver Today – The silver price closed in New York at $17.40 up 21 cents. Ahead of New York’s opening it was trading at $17.65.

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

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

Price Drivers

Gold in New York did not do what we expected it to do. It was pushed back to $1,207 by momentum traders in thin trade. The Technical picture will always dominate New York’s trading, but the thinness of trade there against a strong higher Fix in London, implies that New York is losing some of its pricing power and physical volume. London still has it, as we have seen in the last two days where Asian demand was clearly present. In New York the gold traders will continue to try to press the gold price lower. With the support of holders of gold through the gold ETFs they will have some success, but the sheer size of Asian demand, which continues to grow, will overwhelm traders. This was demonstrated in the last day as much gold sold from the gold ETFs in the last week, was sold yesterday, explaining the fall in New York, but the $20 recovery in Asia and London overwhelmed New York. Yesterday there were sales of 5.383 tonnes from the SPDR gold ETF but none from the Gold Trust. The holdings of the gold ETFs stand at 762.085 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 ]

Yesterday saw China overtaking the U.S. as the largest economy in the world for the first time. Please note that China has a desire to be fully independent of the U.S. and the developed world and no doubt wants to ‘lead the way’. What this means for gold is that the Chinese love of gold and their growing accumulation of it has a bright future too. With China being an accumulator of gold and never a seller, we now have a disjointed global gold market, where falls in the gold price, making for a two-way market in the developed world, is met by a market that is a buyer at certain, often indefinable levels [such as $1,200] at which point buying defeats the Technical picture. Until arbitrageurs are more effective at smoothing out the differences this disjoint will continue.

The FOMC minutes showed concern over the rising dollar and its affect on both U.S. and global growth. This is a signal that the dollar’s rise may be close to halting, which is good for gold. The volatility in U.S. equity and other markets on the slightest and known news will continue.

Silver– The silver price is set to outperform gold on the rise. www.SilverForecaster.com

Kind Regards,

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