Silver Market Morning

Gold Today –On Friday New York closed at $1,086.30 down $8.90. The dollar is relatively unchanged at $1.0977, with the dollar Index almost the same at 97.32. This morning the LBMA gold price was set at $1,092.60 down $0.40. The euro equivalent was €995.35 down €1.96 on Monday. Ahead of New York’s opening, gold was trading in London at $1,093.10 and in the euro at €995.76.

Silver Today – The silver price closed at $14.52 down 19 cents in New York. Ahead of New York’s opening it was trading at $14.56.

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

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

Price Drivers

There were no sales from the SPDR gold ETF or from the Gold Trust on Monday. The holdings of the SPDR gold ETF are at 672.703 tonnes and 162.92 tonnes in the Gold Trust.

We saw the gold price try to fall but overnight and ahead of London’s opening the gold price recovered and spent London’s day just below yesterday’s high. While the gold price is failing to show sufficient strength to break through the $1,100 level it is also failing to break below $1,180.

We do expect more arbitrage of gold sold in the U.S. to reach Shanghai. But the important question is, “Which banks will do it?” We know that HSBC is ideally placed to do it and we believe they have and are doing it, but the latest demonstration must be teaching Chinese banks to do it just as efficiently. We expect them to follow suit, particularly once the Yuan gold fixing gets underway in Shanghai. Such actions accelerate the move of gold liquidity to the east. In time this will give Shanghai a greater pricing power over gold than London and New York.

With COMEX and London sitting with massive short positions the market needs to see gold prices fall. If they don’t we could see some spectacular action out there.

Just in case you missed the Greek debt crisis, we now have Puerto Rico with its complex debt defaulting. Puerto Rico is not a sovereign state but part of the U.S. in such financing terms. What is important to the financial world is not the defaulters or near defaulters but the concept of debt and its repayment. Puerto Rico cannot repay its massive debt nor can Greece. We watch to see these debts massaged or played with in the hope of them being manageable. The developed world is over-indebted with little to no hope of debts being repaid. At some point this will impact the market and its confidence in currencies. - Subscribe www.goldForecaster.com [See our new gold buying, transferring and storing website: www.Stockbridgemgmt.com ]

Silver– Silver is looking to fall. Subscribe www.SilverForecaster.com

Regards,

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