Silver Market Morning

Gold Today – The gold price closed at $1,237.80 down $1.70 on Friday. Asia and London took it higher $1,242. The euro is weaker this morning at $1.2756. The Fix was set $1,241.00 up $3.00 and in the euro at €972.647 up €5.762, while the euro stood stronger at $1.2759. The volumes of gold traded were two seller selling 40,000 ounces and one buyer buying 20,000 ounces before the pro rata arrangement kicked in. Ahead of New York’s opening, gold was trading at $1,241.55 and in the euro at €972.09.

Silver Today – The silver price closed in New York at $17.28 down 10 cents, still marking time until it sees a bigger break-out in gold. Ahead of New York’s opening it was trading at $17.39.

Gold _{(very short-term)} This could be a big week for gold in New York and London.

Silver _{(very short-term)} Silver will continue to ‘mark time’, in New York this week.

Price Drivers

The gold price still looks robust. The current robust demand is ignoring the weaker euro this morning. There were no purchases or sales from the SPDR gold ETF on Friday and none from the Gold Trust, on Friday. The holdings of the gold ETFs stand at 760.935 tonnes in the SPDR gold ETF and at 161.40 tonnes in the Gold Trust.

We expect the volatility in equity markets to continue this week as evidence of coming deflation grows. It is extraordinary that many use the defense as disinflation, not deflation, as a tempering factor when talking of the developed world economies. The issue is far bigger than technical definitions. Let’s be clear, unless growth moves higher, convincingly [and the evidence is not there] then we are headed to a serious economic downturn, however it is described. Equity markets are telling us that the tide is changing to an ebbing tide. Is this bad for gold and silver? Initially it has always been so, before gold and silver act as a defense against deflation or drops in asset values. The ‘credit crunch’ saw gold drop 20% before recovering and reaching record highs 92% higher as the pain of the ‘crunch’ sank in. Are we past the 20% drop? Are we ahead of a substantial rises as the world’s economic and currency tides change? What we can be sure of is the hopes of the last seven years have not been fulfilled, so what lies ahead looks like a departure from historic norms!

On Thursday Diwali takes place all over the world where Hindus reside. It is a temporary peak in Indian gold demand before the ‘marriage season’ gets underway fully. To understand the thinking behind this ‘season’, we note that in India, family is the heart of their culture. The dowry represents both working capital and savings for the new family. Mothers give this to daughters always, even in bad times [when mother has to take from her stock of gold for the daughters]. In good times new wealth provides for the new family, from parents. Again this happens all over the world where devout Hindus live. This appetite for gold will last as long as Hindu family values exist and is not dependent on a gold price. [Get the bigger picture - Subscribe to www.GoldForecaster.com & www.SilverForecaster.com – to protect against confiscation and penalties -see www.Stockbridgemgmt.com ]

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

Kind Regards,

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