Silver Market Morning

Gold Today –New York closed at $1.212.60 and Asia took the gold price down slightly to $1,208. The recovery from $1,151 to $1,218 at its daily peak was $67. In London’s the gold Fixing was set at $1,197.00 up $18.25 and in the euro at €962.683 up €17.225 while the euro stood at $1.2434. There were two sellers at the Fix selling 30,000 ounces and one buyer buying 36,000 ounces. As we wrote this gold was trading in London at $1,198.30 and in the euro at €962.84.

Silver Today – The silver price closed at $16.47 a rise of $1.60 in New York. Ahead of New York’s opening it was trading at $16.25.

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

Silver _{(very short-term)} The silver price will consolidate in New York today.

Price Drivers

The precious metal markets have not seen such a squeeze on short positions for a very long time, but more significantly we have see the rise break through overhead resistance, not only at $1,180 but above the 50 day moving average at $1,204. We look at COMEX where short positions have grown from the August level of 8 million ounces to 15 million ounces of late. These positions were put in place as the belief that gold would hit $1,000, but there were only slight physical sales from the SPDR gold ETF to back up these positions. Asian demand is persistently growing and taking available supplies off the market, leaving traders in a precarious position. Once physical demand edged above developed world available supplies [as shown in the warehouse levels in New York and London] the market became open to a price recovery. Yesterday saw this happen. We expect precious metal traders to take a breather today. Please note that we see this as a structural change in the market that will feed through once the next period of consolidation is completed. Why, because one of the major restraints on the gold price was the state of Indian demand, choked off by the gold import restrictions. While smuggling did compensate to some extent for the lower ‘official’ imports, the removal of these restrictions returns demand to what we expect to be higher levels of demand than before the restrictions were imposed. As India is now in its 6 months long ‘marriage season’, this demand will feed through to London as India’s ‘official imports come from the U.K. and Switzerland with both markets sourcing their gold through London’s bullion market where the Fixings take place.

The ramifications of the oil price fall and now the start of a consolidation process will carry on for some time. Some call the $70 level a ‘new normal’. Now we wait to see the ripple effect move through the world’s financial markets. [Subscribe to www.GoldForecaster.com & www.SilverForecaster.com]

There was another sale of 1.195 tonnes of gold from the SPDR gold ETF yesterday, likely from the same seller, but this was insufficient to affect the recovery in the gold price. The Gold Trust saw a buyer of 0.60 tonnes. The holdings of the SPDR gold ETF are at 717.627 and at 161.80 tonnes in the Gold Trust now.

Silver– The silver price is riveted to the gold price with wider swings either side. www.SilverForecaster.com

Kind Regards,

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