Gold and Silver Market morning, November 19, 2012

Gold Today –New York closed at $1,711.9 down just over $2.00 on Friday. This morning, Asia and London dealers took higher to trade at $1,723.45 ahead of London’s opening. It was Fixed at $1,723.25 up $13.25 and in the euro at €1,349.663 up €7 from yesterday while the euro was at €1: $1.2768. Ahead of New York’s opening, gold was slightly stronger at $1,724.45 and in the euro at €1,350.49.

Silver Today – Silver showed a robust steadiness at $32.25 down 33 cents, on Friday, in New York. Ahead of the opening in London it rose back to 32.63 until, ahead of New York’s opening it stood at $32.70.

Gold _{(very short-term)}

Gold is expected to consolidate with a stronger bias, in New York today.

Silver _{(very short-term)}

Silver is expected to consolidate with a stronger bias, in New York today.

Price Drivers

Gold & Silver – While the week started with the promise of more urgent crises in Greece and the possibility of a financial accident in timing ever present, news on a much deeper fundamental driver of the gold and silver prices was announced over the weekend. As the new leadership in China announces future intentions, the head of the People’s Bank of China [its central bank] announced that next on its agenda is the convertibility of the Yuan. While it will be phased in so as to contain disruptions in capital and foreign exchange markets is it important to understand the ramifications of this short, medium and long-term on the gold and silver prices. [We look at these in the next issue of our weekly commentary, [please subscribe] in our newsletters at www.GoldForecaster.comand www.SilverForecaster.com]

Many expect the arrival on a new global reserve currency will see it appreciate in foreign exchanges. Perhaps that is because that’s what outsiders want. But China will do what’s good for China, so it is unlikely they will throw their important international competitive edge by allowing that. Internally this would mean a weakening of gold and silver prices, also an unlikely move in view of the fact that the Chinese government has encouraged its people to invest in gold. If a government approved appreciation of the Yuan saw gold and silver prices fall heavily in the Yuan it would place pressure on their popularity. China’s government is keenly aware of the danger of not promoting personal wealth and the lifting out of poverty all the citizens of China. Just as the U.S., from 1971 onwards, promoted the expansion of the volume of dollars outside the U.S., as they were linked to the oil price, so demand for the Yuan internationally is a chance to expand the issue of Yuan externally. This will facilitate international trade in the Yuan, likely at the expense of the dollar.

Silver – Silver is rising higher than gold today as it shows stronger short-term fundamental strength.

Regards,

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