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Silver Market Morning

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Gold Today –New York gold closed at $1,615.90 almost the same as the day before. Asia and London kept it there in the London day. Gold was Fixed at $1,615.25 up 15 cents on Friday’ p.m. Fix. In the euro it was Fixed at €1,306.837 down €5 on Friday’s p.m. Fix, while the euro stood at €1: $1.2360. Ahead of New York’s opening, gold was steady at $1,615.00 in the middle and in the euro at €1,310.55.

Silver Today – Silver in New York closed at $28.07 after which London took it to $28.15 Just ahead of New York’s opening it stood at $28.13.

Gold (very short-term)

Gold may well remain steady at current prices, today in New York.

Silver (very short-term)

Silver may well remain steady at current prices, today in New York.

Price Drivers

Gold & Silver –CME Clearing Europe, CME Group’s European clearing division announced that physical gold will now be accepted as collateral. This announcement follows the decision from CME Clearing, CME Group’s U.S. clearing division, to accept gold as collateral on October 2009. CME Clearing Europe, stated that the lower value of either U.S.$200m worth of gold or bullion worth up to 20% of the overall margin requirements may now be posted as collateral. Previously, the company accepted a narrow range of government securities as collateral but has now expanded its list to accept bullion.

With the current banking discussion on lifting gold to a Tier I asset [Its value would be raised to 100% of market price as a bank balance sheet asset] we see this step by CME as indicating that gold will be moved to a Tier I asset. This will bring in a new demand force into the gold bullion market from commercial banks from the beginning of next year.

This is also a stabilizing force in the market place when markets sag as they did at the onset of the ‘credit crunch’. At that time gold fell back from $1,200 to $1,000. With gold being adequate collateral from now on, when margin requirements are increased, investors are expected to continue holding it. This points to gold prices not falling back at such times, while other markets will as investors choose to use gold as collateral instead of selling it to meet margin requirements.

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Silver - Silver has started the week as still as a panther bracing up, ready to strike.

Regards,

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

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