Silver Market Morning

Gold Today –New York closed at $1,174.80 on the 24^th December. This was followed by a quiet week with thin trading as the holidays were underway, except for a big sale from the SPDR gold ETF. Today Asia holds the gold price at $1,196 ahead of London’s opening. The Fix saw the gold price set at $1,194 up $14.5 and in the euro, at €978.288 up €14.178 while the euro was 0.029 of a cent weaker at $1.2205. Ahead of New York’s opening gold was trading in London at $1,193.20 and in the euro at €978.27.

Silver Today – The silver price was at $15.74, in New York on the 24^th Dec. Today it stood at $16.18 ahead of London’s opening. Ahead of New York’s opening it was trading at $16.10.

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 our last report on the 24^th Dec we stated, “Traders and speculators saw opportunities to push gold and silver prices lower.” This they did, taking the gold price down to $1,174. But they were supported by a big sale of 12.25 tonnes of gold from the SPDR gold ETF. This was the biggest sale, in one day, we have seen for most of the year. Its timing tells us that the seller was not looking to maximize profits from this sale. Likely he had short positions on COMEX that would have made those profits as the gold price fell. But the operation succeeded only for a short time only, as prices rose to levels higher than it was when the sale took place. No doubt the supportive COMEX positions were closed fast on the rise. There was a purchase of 0.60 tonnes into the Gold Trust during last week. The holdings of the SPDR gold ETF are at 712.302 and at 161.95 tonnes in the Gold Trust.

We are now moving to the Chinese New Year in 2015 accompanied by a growing middle class there. It is important for gold investors to appreciate that the rate of Chinese growth is not the determinant of the level of Chinese gold demand. It is the size and wealth of Chinese Middle classes. The Chinese government has made it clear that overall growth will drop as the focus efforts on the growth of the middle classes as they strive to achieve sustainable growth which can only be achieved with a economically developed population. This will also ensure continuation, without revolution, for the Chinese government.

In India we expect ongoing rises in Indian demand in the current ‘marriage season’. The tempering factor in Indian demand remains the 10% duty on gold imports. Smuggling remains in full force as a consequence. But at least there is not ‘official’ choking off of demand as the 80:20 rule has been done away with. The advantage of ‘allowing’ smuggling to continue is that the Current Account will not reflect these imports. [Subscribe to www.GoldForecaster.com & www.SilverForecaster.com]

Silver– The silver price recovered as quickly, as gold did, again confirming that silver will move with gold despite having different fundamentals. It also confirms that markets are treating silver as a monetary metal and not as a simple commodity and will continue to do so. Hence forecasts of the silver price based on demand and supply of silver will not be accurate. www.SilverForecaster.com

Kind Regards,

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