Silver Market Morning

Gold Today – The gold price closed at $1,232.70 up $9 on Monday. Asia took it slightly higher to $1,234 ahead of London’s opening. The euro is half a cent stronger at $1.2725.

The Fix was set $1,233.00 up $5.00 and in the euro at €974.949 up €5.807, while the euro stood weaker at $1.2647. The volumes of gold traded were three sellers selling 48,000 ounces and one buyer buying 32,000 ounces before the pro rat arrangement kicked in. Ahead of New York’s opening, gold was trading at $1,233.2 and in the euro at €974.70.

Silver Today – The silver price closed in New York at $17.45, 10 cents higher. Ahead of New York’s opening it was trading at $17.50.

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 continues to come through as you see today, not pushing prices but accepting the offer. Short covering in New York is moving the price higher too.

There were purchases of 1.794 tonnes of gold into the SPDR gold ETF, the first time for a couple of weeks, but none into the Gold Trust, on Monday. Is Asian demand overwhelming the Technical picture? We feel we have to wait for more rises before we can accept this. The holdings of the gold ETFs stand at 761.234 tonnes in the SPDR gold ETF and at 161.07 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 $4 premium on gold in Shanghai is chipping away at the gold price. We cannot see a reason why this will not continue. With a week to go to Diwali, Indian demand also remains very strong.

In a financially decaying world, we now add not only the repeated default of Argentina, but it now looks that Venezuela will default. Venezuela repatriated its gold from the world’s leading custodian central banks, ahead of Chavez’ death. It will be interesting to see if they utilize this gold as collateral and how, now that is no longer in neutral territory.

It looks more certain that while the Chinese government will not interfere in Honk Kong, its future as a gateway to the rest of the world is dimming. We would expect the Chinese government to add more emphasis to developing other regional capitals, such as Shanghai because there, the chance of social disruption is far less. This affects gold as Shanghai is now certain to be the global ‘hub’ for gold in the future. We do not see this as eclipsing London, for London is and will be considered a ‘safe’ market from a political viewpoint. What this does for gold’s future is that we will have a truly 24-hour gold market, with Asia providing pricing power, currently on the demand side.

Silver– We repeat, silver prices are still restrained but for how long? www.SilverForecaster.com

Kind Regards,

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