Gold & Silver Market Morning, November 25, 2011

The gold price in New York closed at $1,694 and held close to that level in Asia standing at $1,691 in Asia, just ahead of London’s opening. The euro stood at €1: $1.3366 a cent down on yesterday and gold in the euro at €1,266.16 $2 down on this time yesterday.

At the Fix in London set it at $1,699.00 as the Fix overrode other market prices, In the euro at €1,270.395 while the euro stood at €1: $1.3374. Ahead of New York’s opening the euro stood at €1: $1.3380, the dollar price of gold recovered to $1,698.22making the price of gold in the euro €1,269.22. The silver price ahead of New York’s opening stood at $32.00 50 cents up on yesterday.

Gold _{(very short-term)}

The gold price should continue to consolidate in a narrowing pattern in New York today.

Silver _{(very short-term)}

The silver price should continue to consolidate in a narrowing pattern in New York today.

Price Drivers

When investors fail to buy all the German government bonds on offer they are in essences saying that they believe that Germany will be left holding Eurozone debt that is un-repayable. They are not prepared to back Germany on that basis. Even the Bank of England’s policy maker is expecting an E.U. member to leave the Eurozone now.

With the failure of Germany’s ‘Bund’ auction yesterday we saw yet another degenerating step in the Eurozone crisis. But this appears to not be about Germany, but about the banking system. European financial institutions are now part of the gold liquidation process, but not through gold sales, but increased gold leasing. This means that they lend gold to the market, which then sells it for cash. The bullion banks then receive the benefit of easier borrowing on better terms and the eventual return of their gold. Bond issues and short-term funding have been seizing up as the unease over government bonds has spread to banks, which themselves are big holders of government bonds. As you can see from the gold price’s stability just below $1,700, this is not causing gold to crash. Beware of believing that investors are fleeing gold. As central banks actions in buying gold, tells us, gold is still viewed as last resort money. We are nowhere near that point yet. When push does come to shove, institutions will not lessen their grip on their gold. [To get a fuller picture, please subscribe through www.GoldForecaster.com or www.SilverForecaster.com to our newsletters on these subjects.] Bear in mind too that in the current dangerous situation in the developed world’s debt, gold is doing its job, particularly for those institutions now leasing gold out. Likewise when emerging currencies weaken the gold price rises, justifying earlier purchases of the metal. And gold will not stop doing this in the future.

Regards,

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