Gold & Silver Market Morning, January 27, 2012

New York closed at $1,719.80 almost the same as it opened. Asia held it at that level overnight. The euro was almost unchanged too at €1: $1.3107 ahead of London’s opening. At the Fix gold was set higher at $1,722.00 and in the euro at €1,310.303. At the time the euro stood at €1: $1.3142. Ahead of New York’s opening the gold price went a tad higher to $1,725.25 with the euro at €1: $1.3149, leaving the euro price of gold at €1,312.08.

Silver is showing remarkable robustness creeping up as gold consolidates to open in London at $33.51. Ahead of New York’s opening silver stood at $33.66.

Gold _{(very short-term)}

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

Silver _{(very short-term)}

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

Price Drivers

While many are now touting a stronger U.S. recovery, the important economy-affecting news remains bleak. With the U.S. consumer driving 70% of the U.S. economy his financial state should be the focus of government and Fed action. The Fed is doing all in its limited power, but the divided government is only focusing on elections now. So expect far too little to be done to stimulate the consumer before then. This provides a scene of flat interest rates [hurting the baby-boomers and other savers and bringing vulnerabilities to the U.S. dollar that it just can’t afford to have. 2013 + is being flagged as the year when financial conditions reach breaking point. Needless to say, this is why gold has returned too the upside trend, one that appears to be firmly in place for the foreseeable future.

Meanwhile, we have been informed by the E.U.’s head of Financial Services that the write down of creditors losses at ‘failing banks’, will not be written down for some months until after the E.U. is ‘over the worst of its debt crises.’ This leaves us flabbergasted! “Yes, we are failing, but we are not showing our losses to you until things are better.” If nothing else, this disclosure highlights just how bad the debt and banking crisis really is. With a growing likelihood of Greece defaulting, brace yourselves for the day when they have to disclose more. The focus has been on the survival of the Eurozone, but this statement alone should tell us the real crisis lies in the banks. One false step by the E.U. leaders may see the Eurozone survive with one less member and the euro grow stronger, unless the subsequent bank crisis causes a financial heart attack to the banking system.  

Meanwhile, the gold SPDR Exchange traded fund added 9 tonnes to its holdings yesterday. We look at this more closely in this week’s newsletters [So subscribe through www.GoldForecaster.com or www.SilverForecaster.com].  

Regards,

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