Silver Market Morning

Gold Today –New York closed at $1,203.20 down $2.30. Asia took the gold price up to $1,207 before London pulled it down to $1,204. London then Fixed the gold price at $1,204.25, down $3.50 and in the euro, at €1,082.667, up €1.147, while the euro was at $1.1123 down nearly half a cent, again. Ahead of New York’s opening, gold was trading in London at $1,204.40 and in the euro at €1,082.17.

Silver Today – The silver price closed at $16.26 down 11 cents. Ahead of New York’s opening it was trading at $16.28.

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

There was a sale from the SPDR gold ETF yesterday of 2.688 tonnes, which pulled the gold price back in New York, but, again, did not penetrate support. It was accompanied by a sale of 0.03 of a tonne from the Gold Trust, on Tuesday. The holdings of the SPDR gold ETF are at 760.799 tonnes and at 165.94 tonnes in the Gold Trust. We see support holding around these levels.

On March 20^th the London Gold Fix changes to a new mechanism involving global banks as well as the London Bullion Market banks that operate the Gold Fixing now. Will this new system, operate more efficiently and smooth out global prices as well as lower the influence of the current London banks on the gold price? At the moment there is a $5 premium over and above the London gold price in China.

With the following Chinese banks; Bank of China Ltd, China Construction Bank Corp and ICBC joining in the London Fixing, the pricing power of the Chinese gold market will hopefully, directly impact the gold price. If we see the premium over the gold price, in China, disappear, this will have happened. Bear in mind that Industrial and Commercial Bank of China has become the world's largest gold retail bank already and will bring to bear their significant number of clients in China. Not only do we expect these banks to operate in a way that will remove the premium in China, which at the moment increases the profitability of the selling [mainly foreign] banks in China, but make the gold market more globally efficient.

We are hopeful that the gold liquidity of the Chinese banks in London will build up to the extent that arbitrage operations help to make the gold market a truly 24-hour market. With no gold exports from China permitted currently, a London based ‘gold pool’ in the Chinese banks could well assist in such an objective.

Add to this a Yuan Gold Fix in Shanghai later this year and we may well see not only a greater use of the Yuan in the gold world, but a real 24-hour gold market. We wait to see if this leads to higher or lower gold prices? We will give you a fuller report on these changes, in our weekly newsletter! Subscribe to www.GoldForecaster.com

Silver– The silver price remains cautiously steady at the moment alongside a gold price stable above $1,200. Subscribe to www.SilverForecaster.com

Regards,

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