Silver Market Morning

Gold Today –New York closed at $1,191.70 down a huge $30.40 before Asia took it up to $1,196.4. The euro rose slightly to $1.2475. In London gold rose and the gold Fixing was set at $1,199.25 down $11.50 and in the euro, at €960.245 down €14.285 while the euro was half a cent stronger at $1.2489. Ahead of New York’s opening gold was trading in London at $1,200.80 and in the euro at €960.14.

Silver Today – The silver price fell disproportionately to $16.12 down 85 cents, 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

With the Fed meeting for the next two days, the market is once again trying to discount a rise in interest rates or at least a statement that implies one is coming very soon. If this does happen tomorrow then it will test the underlying strength of global financial markets. We have no doubt the Fed has factored in the impact of such a move not just inside the U.S. but across the globe. We are led to believe the Fed, like Treasury, does not want a stronger dollar, either.

There was another attack on gold yesterday as the gold price rose above what Asian buyers are happy to pay at the moment. The price has pulled back to current levels, but we suspect it is at levels now that Asia is happy to pay.

After the Ruble fell to 66 to the dollar, half of what it was at the start of 2014, the Russian central bank moved in to raise interest rates 6.5% to 17% in an attempt to halt the fall of the Ruble. If this does not work, we expect to see at least Capital Controls imposed soon. With the Ruble’s future tied to that of the oil price and O.P.E.C. warning that the oil price could go much lower, Russia will not sit idly by and let its currency collapse as we saw in these interest rate hikes.

The Russian central bank is fully aware of the dangers of using the U.S. dollar as such a haven and is unlikely to turn to that currency for protection. We would expect the central bank to channel local gold production into its vaults paying in Rubles for it. It is not a case of not being able to sell its gold in Europe [after all the Chinese market would welcome such supply] but having it in reserves for just such a time as now. While the Russian central bank prints Rubles it well knows that they cannot be trusted to hold value [with a local inflation of 11.5%].

While Capital or Exchange Controls are a sign of desperation, few observers will think that Russia isn’t desperate now, that’s why Controls will not cause more damage than has already been caused. For gold investors the fall of the Ruble is a classic case of where gold acts as a wealth protector. [Subscribe to www.GoldForecaster.com & www.SilverForecaster.com]

There were 2.391 tonnes of gold sold from the SPDR gold ETF and sales of 0.30 of a tonnes of gold from the Gold Trust yesterday. The holdings of the SPDR gold ETF are at 723.357 and at 161.44 tonnes in the Gold Trust.

Silver– The silver price will remain restrained, waiting for gold to give it direction. www.SilverForecaster.com

Kind Regards,

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