Silver Market Morning

Gold Today – The gold price closed up $30.40 in New York on Friday. It then moved down slightly to $1,172 before London’s opening. It was then Fixed at $1,172 up $27.00 and in the euro at €938.200 up €14.813, while the euro stood stronger at $1.2492. The volumes of net gold traded were three sellers selling 50,000 ounces and one buyer buying 40,000 ounces before the pro-rata process kicked in. Ahead of New York’s opening, gold was trading at $1,171.40 and in the euro at €937.91.

Silver Today – The silver price closed in New York at $15.74 up 29 cents. Ahead of New York’s opening it was trading at $15.68.

Gold _{(very short-term)} Gold may attack $1,190 or resume its fall, in New York, today.

Silver _{(very short-term)} Silver is likely to follow gold, in New York, today.

Price Drivers

In New York there were sellers of 5.68 tonnes of gold from the SPDR gold ETF but none from the Gold Trust on Friday. The holdings of the SPDR gold ETF were at 727.151 tonnes and in the Gold Trust at 160.42 tonnes. This makes last week one of the heaviest volumes of sales this year. But the gold price rallied forcefully on Friday largely as a result of short covering. Today we wait to see if the rally in New York will continue or falter. If it falters we may see heavy falls once again. We note that the euro’s fall into the $1.238 area reversed leaving the euro trading this morning at $1.2479 a cent better.

To keep our mind focused on the underlying value of gold, we look at what’s happening in Russia. The Ruble has fallen 40% this year and reached a low of 48 to the U.S. dollar last week. Currently at 45 to the $, it is and has been receiving Russian central bank intervention. But the build-up of gold reserves in Russia adds credibility to the Ruble in international trade. Russian owners of gold have benefitted too, this year despite the fall in the gold price in dollar terms. More importantly the credibility of the Ruble does not depend on the oil price [probably the main cause of the fall as well as the mass exodus of Russian wealth during the Ruble’s fall], which has fallen around 25% this year [Russia largely depends on energy exports]. With $80 billion of debt to be renewed this year, overseas the pressure is on the Russian Central Bank keep intervening to manage the Ruble’s fall. But there is a point in the intervention when this defense could involve Exchange Controls, a step that signals a defeat for the currency’s credibility, albeit a short-term one. In this situation gold reserves support the currency’s usability internationally. Without gold in the reserves there is a danger that the nation’s currency would be completely unacceptable. But in this case with oil the main export, Russia will continue to achieve a foreign cash flow despite the low price of oil making the cash flow inadequate to support Russian needs. [Get the bigger picture - Subscribe to www.GoldForecaster.com & www.SilverForecaster.com – to protect against confiscation and penalties -see www.Stockbridgemgmt.com ]

Silver– Silver will share the vigor of gold’ moves, today. www.SilverForecaster.com

Kind Regards,

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