Gold & Silver Market Morning, April 05 2012

New York closed at $1,618.46.30 down almost another $30. But then Asia lifted it up $7 to $1.625 while the euro dropped slightly to €1: $1.3150. Today, gold Fixed it at $1,622.50 down $9 and in the euro at €1,239.212 almost unchanged while the euro stood at €1: $1.3093. Ahead of New York’s opening it stood at $1,622.50 and in the euro €1,241.35 while the euro was at €1: $1.3070.

Silver fell back to $32.22 down a dollar. Asia lifted it to $31.52. Ahead of New York’s opening it stood at $32.35.

Gold _{(very short-term)}

Gold will consolidate and try to stabilize, in New York today.

Silver _{(very short-term)}

Silver will consolidate and try to stabilize, in New York today.

Price Drivers

When the 10-year Spanish bonds were only just able to raise enough to cover the offer, it became clear that financial markets were telling us that the Eurozone crisis was not just about Greece or the rest of the PIGS countries but the Eurozone itself. Markets across the world reacted badly ignoring expert reassurances that things were improving and deflation a receding danger and saying what lay ahead is far worse the Greece was. Markets were also saying that a Spanish bailout was more than likely. ‘Contagion’ is back and with it a dismal view of the developed world’s economic future. Combine that with the Chinese holiday and the Indian jewelers strike [now purported to be over] and you see demand for gold and silver decimated in the very short term.

Readers realize that austerity measures cut growth by virtue of their nature. Growth from government should only add to growth promoted in the economy itself. But as we are seeing in so many of the developed nations, austerity is reaching into the broad economy so deeply, it is killing growth. Without growth engineered from the top, the future of the Eurozone is at stake. After all even with €1trillion in a bailout fund, that’s not enough to bail out Italy on top of Spain and the rest. As always, gold will act as a counter to government and their currencies over time.

But we reiterate, with over 75% of demand for gold coming from the emerging world, events there considerably overwhelm events in the developed world. Keeping our eyes on those markets becomes key to understanding the larger moves in the gold price. Silver as its ‘shadow’ follows the gold price, so silver investors should watch the gold market as intently as they do the silver market.

[To follow our weekly commentary on the Chinese and Indian gold markets, please subscribe to our newsletters at www.GoldForecaster.com and at www.SilverForecaster.com.]

We have just issued an article on the development of a monetary system that is aimed at being independent of the present U.S. dominated monetary system. We are of the opinion that this will lead to a wounding of the dollar, permanently and for gold to be brought to a more active role in both systems.

Regards,

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