Gold & Silver Market Morning, January 24, 2012

New York lifted the price of gold to $1,678 but Asia pulled it back to $1,672 where London held it ahead of the morning Fix. The euro was a tad higher against the U.S. dollar to €1: $1.3040 in London’s morning placing the euro gold price at €1,282.21 down €8 on yesterday.

London Fixed the gold price at $1,669.00 and in the euro at €1,282.169. The euro stood at €1: $1.3017. Ahead of New York’s opening the gold price was tending Higher at $1,670.00 with the euro at €1: $1.3010 almost the same as yesterday, leaving the euro price of gold at €1,283.63.

Silver is consolidating at $32.28 clinging onto gains made yesterday but off the top. Ahead of New York’s opening silver stood at $32.15.

Gold _{(very short-term)}

Again, the gold price should have a stronger bias in New York today.

Silver _{(very short-term)}

Again, the silver price should have a stronger bias in New York today.

Price Drivers

When you bargain for a Persian carpet the process can be an art and entertainment which all sides enjoy particularly when both are happy with the conclusion. When it comes to the solvency of an individual and creditors facing losses, there is no such pleasure. The debtor knows at a certain point he has more to gain by going bust than satisfying creditors. In the case of Greece’s creditors they stand to lose a great deal as well, so the fact that the levels of write downs, the interest rate, price and maturity of the new bonds to replace were not resolved last week, shows the tenuous nature of these negotiations. Far from complete, these negotiations are set to take around a week now that the E.U. has said only days remain before a solution is reached. If they do not resolve this by then, Greece will default. Some creditors do better in a default too. But the markets [in the euro] blithely believe all will be well. Do you? Some traders have very large short positions in the euro and have been closing their positions fearing a volatile market, but few deeply believe the euro is out of its storm. If Greece leaves the euro though, it will have every reason to strengthen, unless a major banking crisis breaks out. Is it any wonder the gold price is rising? Are we in the calm before the storm?

With the debt crises on both sides of the Atlantic is it any wonder that the World Gold Council has informed us that central banks bought 450 tonnes of gold in 2011? Is it any wonder that the signatories of the Central Bank Gold Agreement have stopped selling gold, except for tiny amounts for sales as coins, after selling over 400 tonnes a year in the past? We will be covering these subjects in our weekly newsletters and on our website [So subscribe through www.GoldForecaster.com or www.SilverForecaster.com].  We are also publishing an article on what a workable monetary system, incorporating gold, could have as its underlying principles.

Regards,

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