Silver Market Morning

May 18, 2012

New York bounced back to $1,573.70 and Asia continued to take it higher, with London running it up to Fix at $1,588.00. The euro was weaker at €1: $12693, where it was when the morning Fixing took place. In the euro it Fixed at €1,251.083 €34. Ahead of New York’s opening gold looked stronger at $1,591.23 and in the euro, which also continued to slip, €1,253.43 while the euro was at €1: $1.2695.

Silver Today - Silver closed at $28.02 in New York and rose in London opened at $28.41. Ahead of New York’s opening it stood at $28.49.

Silver _{(very short-term)}

Silver should have a stronger bias, today in New York today.

Price Drivers

Gold – Traders turned their positions to the upside as they saw physical demand come in as they saw bargain basement prices. The buying came in from China and India as well as the developed world’s funds. Gold rose in all currencies yesterday.

With fears that the Greek, Spanish [Portugal & perhaps Italy] debt crises will, contagiously, cross the English Channel and then the Atlantic, the fear factor is at a high. All equity and most commodity prices have fallen as an acceleration of global growth was factored into price. It is at this point that gold moves away from moving with the euro to moving on its own against all markets. Yes, it did rise in the dollar as the dollar rose. It did rise as Treasuries reached a new peak. We see this as moves to safe havens. If the U.S. Treasury market does fall subsequently, gold will then be an alternative to both that market and the dollar itself. An exit from the Treasury market, will likely lead to an exit from the dollar too.

Despite the continuing weakness of the Indian Rupee in the face of the Reserve Bank of India’s intervention, the low price of gold in the Rupee relative to the recent higher prices saw buying coming in again from that country. With the World Gold Council telling us that China will buy more gold than India in the years to come, we become confident that this demand from the emerging world will continue as the main gold price driver in the years to come..

Silver – Silver was slower to move higher than gold was. Perhaps we will now see a ‘shunt’ effect shortly. Silver investors are finding it important to understand the world of macro-economics for them to understand silver price moves. [To follow our weekly commentary, please subscribe to our newsletters at www.GoldForecaster.com and at www.SilverForecaster.com.]. After all, when was the last time that silver moved as a simple commodity?