Silver Market Morning

Gold Today –New York closed at $1,240.7 up $5. In Asia and London the gold price remained at these levels. At the Fix gold was set at $1,237.50 down $4.75 and in the euro, at €1,096.783 up €0.599, while the euro was half a cent weaker at $1.1283. Ahead of New York’s opening gold was trading in London at $1,238.10 and in the euro at €1,097.17.

Silver Today – The silver price closed at $17.03 up 28 cents. Ahead of New York’s opening it was trading at $16.83.

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

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

Price Drivers

There were no purchases or sales from or into the SPDR gold ETF or the Gold Trust on Monday. The holdings of the SPDR gold ETF are at 773.305 and at 167.75 tonnes in the Gold Trust. The U.S. market is waiting for the bounce in the gold price before acting again. Usually U.S. investors like to buy on the rise.

In Shanghai there is a $5 premium on the gold price, once again showing the difficulty with which liquidity moves from one market to the other through arbitrage. Until this is rectified developed world markets will dominate the price, despite Asian demand taking more gold than available.

The euro fell another half cent before London opened, as the way forward for Greece is becoming a little clearer. With tomorrow’s meeting of Eurozone leaders likely to refuse to give the Greek government the space it wants we are moving to the opinion that we will see some stringent Capital Controls whether or not Greece continues to use the euro or turns to the Drachma. Only then will we see a bending of the Eurozone leaders as they will not want Greece to leave the euro.

Meanwhile the G-20, a political body is agreeing amongst themselves that the global recovery, such as it is, is faltering as inflation hits a low in China of 1%. All are agreeing to promote growth, with governments in conjunction with the private sector turning to investment led growth. Let’s see if they can keep their word this time? At the last session, they agreed to not weaken their exchange rates to promote international competitiveness. We now live in an environment where that is the general policy of nations.

If we are in a climate of low inflation/deflation and low growth, as a ‘new normal’, will gold do well? In a healthy growth and monetary climate confidence in the future is high. Trust in the banking and financial system is likewise high. When that confidence dissipates, gold and silver do very well. That’s where we are now. This next month may well see financial storms in the Eurozone damaging the global recovery.[Subscribe to www.GoldForecaster.com & www.SilverForecaster.com].

Silver– The silver price will remain skittish today. www.SilverForecaster.com

Regards,

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