Silver Market Morning

Gold Today –New York closed at $1,191.40 down $14.90 on the high of the week before Asia took it up slightly to $1,195. This was due to a falling euro which started the week at $1.2284. In London’s the gold Fixing was set at $1,195.25 down $8.75 and in the euro at €975.475 down €2.115 while the euro was weaker at $1.2253. Ahead of New York’s opening gold was trading in London at $1,195.20 and in the euro at €975.43.

Silver Today – The silver price closed at $16.29 down 17 cents, in New York. Ahead of New York’s opening it was trading at $16.33.

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

In Japan the recession has worsened and points to a Yen going somewhere between 125 and 150. Right now it is at 122 to $1. Its peak was 76 last year. It could therefore halve in value, and yet this has not been enough to trigger growth in exports to the extent needed. If Abenomics is failing what is there, there to make us believe that similar policies will work elsewhere? In the U.S. QE primarily saved the banking system allowing the economy to slowly recover, not because of QE, which simply protected the banking system, but to its own efforts.

Growth in Chine has turned inwards to the development of its internal economy and its population, now that infrastructural development has been largely completed removing the need for massive capital goods imports. This will hurt the developed world leaving the E.U likely entering a recession in the New Year, despite the uptick in German manufacturing. With the E.U. decision not to take further stimulatory measures via quantitative easing until next year, we feel that politics is dominating finance to its detriment. We are of the opinion that the E.U. will also experience growing deflation in 2015, because of such inaction and lack of convincing efforts to stimulate growth. It is only the desire of the Fed not to see a strong dollar that prevents it from falling hard to $1.10 - $1.20. With the bad news out of Japan today [worsening recession] we see the Yen now at 122: $1 heading to between 125 and 150. 2015 will be a year in which currency wars escalate. If the euro is part of this war it will fall lower than our forecast. The impact on gold will be positive, particularly in those currencies keen to weaken now.

As to the Ruble, it is moving to 50% of its level at the beginning of the year. Putin said that he would never force an isolation of Russia financially. We read between these lines and hear a statement that he will not impose exchange controls. If history is a guide, such statements are made ahead of the imposition of exchange controls by politicians. We do not expect oil prices to recover. In terms of the gold price in the Ruble and the Yen, owners are delighted and expect an even better year in 2015. But for those with dollars, it’s a small step for the U.S. to freeze those assets.

There were purchases of 0.896 tonnes of gold into the SPDR gold ETF but no purchases or sales into the Gold Trust on Friday. The holdings of the SPDR gold ETF are at 720.914 and at 162.79 tonnes in the Gold Trust now. [Subscribe to www.GoldForecaster.com & www.SilverForecaster.com]

Silver– The silver will be volatile this week. www.SilverForecaster.com

Kind Regards,

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