Gold Today – Gold closed in New York at $1,568.40 down $19. Asia took it up to $1,977 ahead of London’s opening at which point it held steady. The morning Fix today was set at $1,576.50 down $20 and in the euro at €1,284.004 down 9€, while the euro stood at €1: $1.2278 down 50 cents. Ahead of New York’s opening gold stood at $1,577.44 in the middle and in the euro at €1,284.46.

Silver Today – Silver was lower in New York at $26.8 before rising higher in London ahead of New York’s opening at $27.10.

Gold _{(very short-term)}

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

Silver _{(very short-term)}

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

Price Drivers

Gold & Silver – The brief relief for Spain with the first tranche of €30 billion for their banks was over pretty quickly. Today sees Spain impose another €65 billion austerity cuts into an economy already shrinking rapidly. While sensible and necessary, the danger is that cutbacks will spur greater shrinkage, which we believe it will. Then you have the Catch-22 situation of greater shrinkage leading to a deeper recession, then greater deficit then the need for greater cutbacks. There comes a point where desperation sets in and social unrest becomes ugly. Will this spread to a greater E.U. crisis? It seems to be in Portugal, which is just ahead of Spain in this situation.

The euro’s weakening tells us what the market thinks of the situation. Spain’s moves did not help. The question gold investors must answer for themselves is now, “What of gold and silver in a European/developed world recession?” [To follow our weekly commentary, please subscribe to our newsletters at www.GoldForecaster.com and at www.SilverForecaster.com.] We will be covering this question in our newsletter.

China is acting now to prevent a slide in growth by cutting the cost of fuel, stimulating infrastructure growth and taking other measures to keep that nation growing. Now the Chinese people have tasted growth, rising wealth and overall development, it is unlikely any government there could survive, if that were halted.

Gold and silver, together with all other world markets, are now sitting with no clear direction. We do believe that this will be resolved sooner rather than later. That’s why now, is the time to understand your investments and where they are headed.

Silver – Silver remains in a tightening trading pattern with gold. This signals a large move shortly, either way!

Regards,

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