Silver Market Morning

Gold Today –New York and Asia took the gold price down to $1,151 before Asia and London took it way back above New York’s close of $1,167 to $1,183, ahead of London’s Fixing. Gold was then Fixed at $1,178.75 down $5.75 and in the euro at €945.458, down €3.737 while the euro stood at $1.2468. There were two sellers at the Fix selling 40,000 ounces and two buyers buying 54,000 ounces. As we wrote this gold was trading in London at $1,174.10 and in the euro at €942.27.

Silver Today – The silver price was trading at $14.87 down $1.20 ahead of London’s opening, before springing back to $16.10. Ahead of New York’s opening it was trading at $15.73

Gold _{(very short-term)} The gold price will be volatile in New York, today.

Silver _{(very short-term) The s}ilver price will be volatile in New York today.

Price Drivers

Once again traders hit the market at its quietest time and knocked the market down heavily from Friday’s close. Momentum traders are hitting commodities and in particular oil which hit $64 [WTI]. Then demand came in to force the shorts to close. We have heard experts say that oil could fall as low as $40 again driven by these traders. The volatility in such markets has risen enormously and we believe will stay that way. The questions before us are, is this a final sell-off or does it signify the markets discounting degrees of deflation that will overwhelm government and central bank’s efforts to stimulate the global economy. If so, gold and silver investors would do well to look back to the initial impact of the ‘credit crunch’ in 2007/8 to see how markets reacted then. [We will cover this in detail in our next newsletter - Subscribe to www.GoldForecaster.com & www.SilverForecaster.com – to protect against confiscation and penalties -see www.Stockbridgemgmt.com ] Traders need physical sellers to come to the market and no Asian demand to invade the market, if the gold price is to fall to the $1,100+ level. With India abolishing gold import restrictions, we expect Indian demand to come through to London alongside Chinese demand as gold.

In the 1970’s the oil price rose from $8 a barrel to $35 as gold also took off. The dollar gained monetary hegemony at that time as it became the only currency with which you could buy oil. Dollars were issued to allow the world to buy oil, for 40 years. This was fine as the oil price rose through three figures. Now that it is approaching half of its peak level, as supply overwhelms demand, what will happen to the excess dollars now in circulation? While the charts for the dollar tell us that we can expect a dollar index level to go to 106 from 88 at present, the oversupply of dollars is telling us a different story! We note again that gold is first an asset, then in difficult days, becomes international cash.

The Swiss rejected the proposal to repatriate the nation’s gold and ensure 20% of their reserves are held in gold. We see the fall in the gold price as being driven lower by factors other than this.

There was a sale of 1.195 tonnes of gold from the SPDR gold ETF holdings of the SPDR gold ETF remain at 718.822 and at 161.20 tonnes in the Gold Trust. This was not enough to force the gold price lower.

Silver– The silver price is volatile with gold. www.SilverForecaster.com

Kind Regards,

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