Silver Market Morning

Gold Today – The gold price closed at $1,223.70 up $1.20 since yesterday. Asia held it there. London held it around that level after a small dip to $1,218. The euro a cent ahead of the Fix, which was set $1,222.25 down $5.25 and in the euro at €964.374 up €2.383, while the euro stood at $1.2674 down just short of a cent. The volumes of gold traded were one seller selling 22,000 ounces and two buyers buying 32,000 ounces before the pro rat arrangement kicked in. Ahead of New York’s opening, gold was trading at $1,222.30 and in the euro at €964.80.

Silver Today – The silver price closed in New York at $17.35 down 5 cents. Ahead of New York’s opening it was trading at $17.27.

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

Demand from China is growing and should reach ‘normal’ levels on Monday, after their ‘Golden Week’ holidays last week. In New York there were no sales from the gold ETFs while the extremely volatile equity markets fell heavily once again. 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 ]

The FOMC minutes bear mentioning again as the mention of the dollar strength and its link to both U.S. growth and global growth was a departure from the Fed’s normal wording. It is clear that they feel that stable exchange rates are critical to growth in all countries. We take from this, that more and more efforts by major trading blocs to keep mild exchange rate interventions going, will continue. Efforts by Japan and the E.C.B. to keep the Yen and euro weak, goes against this tone. The euro’s rise and the dollar’s fall were halted yesterday and held at $1.27+. We expect to see a stronger euro as the recent falls are turned back in the days to come. This is positive for gold in developed world markets, as momentum traders following the Technical picture stand back and let the gold price find its own course. It gives Asian demand a freer rein in the gold market.

In the U.S. the ‘fear’ [S & P VIX index] is up 24% and has not been this high since the credit rating of the U.S. was lowered. Alongside this the surplus oil supply has sent the Brent Crude oil price to new lows at $88, while global markets have started to factor in a global economic slowdown. This may be bad for oil company profits, but good for consumers paying less for their gas. Meanwhile equity markets are expected to show ongoing, dramatic volatility.

The IMF is warning of a 30 – 40% chance of an E.U. wide recession. We believe the odds are much higher.

Silver– When the silver price moves up with gold, it will outperform it. www.SilverForecaster.com

Kind Regards,

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