Silver Market Morning

Gold Today – The gold price closed at $1,233.40 up $0.70 on Tuesday. Asia took it lower to $1,225.60 ahead of London’s opening. The euro is nearly a cent weaker at $1.2642.

The Fix was set $1,223.50 down $9.50 and in the euro at €967.575 down €7.373, while the euro stood weaker at $1.2645. The volumes of gold traded were three sellers selling 38,000 ounces and one buyer buying 18,000 ounces before the pro rata arrangement kicked in. Ahead of New York’s opening, gold was trading at $1,223.80 and in the euro at €967.78.

Silver Today – The silver price closed in New York at $17.40, 5 cents lower. Ahead of New York’s opening it was trading at $17.10.

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

The fall in the gold price we see today is a reflection of the weakening euro, almost a cent down on yesterday. After the U.S. made it clear they did not want to see a strong dollar the euro stopped falling, but without intervention from the Fed and Bundesbank [against, we believe E.C.B. wishes] we would expect the euro to fall further.

There were no purchases or sales to or from the SPDR gold ETF, but purchases of 0.33 of a tonne into the Gold Trust, on Tuesday. The holdings of the gold ETFs stand at 761.234 tonnes in the SPDR gold ETF and at 161.40 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 ]

Asian demand is fading above $1,230 because Asia will not chase prices, but we expect it to come back in force on the fall in the gold price. As we have noted before, the amount of gold trading that determines the gold price is the volume of gold that is outside the tonnages contracted directly between supplier and client. The percentage of gold in terms of total supply and demand that this ‘marginal’ gold volume equates to, may well be below 5%. The Fixing, particularly in the afternoon, forms the basis on which 100% of demand and supply contracts are priced. So the Fix is a critical daily action for gold. With so much gold going into China [the Chairman of the Shanghai Gold Exchange confirmed that China took in 2,000 tonnes of gold last year and we believe that India is taking in over 1,200 tonnes this year] and India, representing around 76% of total supply or just short of 10 tonnes a day, while London is trading far less than that on a daily basis. It therefore appears that there is a disjoint between London’s prices and the majority of gold transactions in the gold market. The evolution going on the gold world, in line with the shift of wealth to the east, will change this. But at the moment Asia is enjoying ongoing bargain prices on large volumes.

Silver– Silver prices are waiting for gold to lead the way. www.SilverForecaster.com

Kind Regards,

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