Gold & Silver Market Morning

Gold Today - Gold closed in New York at $1,466.80 up $8 in New York yesterday.In Asia, rose further to $1,474. In London it Fixed at $1,476.50 up $20.50 and in the euro at ?1,124.952 up nearly ?19 with the euro at ?1: $1.3125 against the dollar. Ahead of New York's opening it stood at $1,478.30 and in the euro at ?1,126.62.

Silver Today - Silver closed at $23.79 up 16 cents, in New York yesterday. Ahead of New York's opening silver stood at $24.17.

Gold _{(very short-term)}

The gold price will continue to consolidate with a stronger bias, in New York today.

Silver _{(very short-term)}

The silver price will continue to consolidate with a stronger bias, in New York today.

Price Drivers

Gold & Silver - While the Chinese market needed to gain momentum yesterday before it was in full swing we now see that happening.But what has begun to stand out strongly are thepremiums being placed on physical gold globally and the waiting times being put on delivery of orders for gold. On this we note that a supplier does not have the discretion to sell gold then wait a while before buying it for clients, that would be speculating, which any dealer with common sense just wouldn't do. This means that they have to go into the market to buy when such situations arise, irrespective of the price. So the impact of the shortages will continue to place an upward pressure on the gold price until such bottlenecks have been removed.

More importantly with 35% to 40% of global gold supply coming from "scrap sales" of gold, such suppliers are most unhappy with the price falls from $1,650 a level that has held for almost two years now. They see current prices too low for selling their gold with a view to buying it back at lower prices, so their current sales are reducing. Of course where a mother is giving gold to her daughter such sales are followed by an immediate buy and usually are not seen in the market place and are a simple transfer of ownership. Gold mines have to lower the size of their resources as they stop including grades that are unprofitable at these levels, so supply from the mines must drop with falling prices too. Balance strong current demand against falling supply, and you have the direction of the gold price tide. But the day-to-day waves of speculation continue to shove the price around seemingly ignoring this tide. But a fact of life is that tides will always dominate the waves on the sea shore.

The SPDR gold ETF again saw sales, this time of 6.06 tonnes making nearly 14 tonnes sold this week from the fund this week so far. [Subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]

Silver - Silver is now moving in tandem with the gold price. It seems as though it is at last reverting to its usual pattern of doing so.

Regards,