Gold Today –Gold closed slightly weaker at $1,287.70 up $18.80 in New York on Thursday.  Asia held it there this morning but London took it down nearly $5 ahead of the Fix where it was set at $1,281.75 down $1.50 in London, on Tuesday’s Fixing. In the euro it Fixed at €953.399 down €1.8 on Tuesday’s Fixing. Ahead of New York’s opening the euro stood at $1.3448: €1 with gold at $1,282.65 and in the euro at €953.78.

Silver Today – Silver fell to $20.81 up 6 cents in New York on Thursday. Ahead of New York’s opening on Thursday, it traded at $20.66.

Gold _{(very short-term)}

The gold price could move strongly, either way, in New York, today.

Silver _{(very short-term)}

The silver price could move strongly, either way, in New York, today.

Price Drivers

The SPDR gold ETF saw no change in its holdings and no change in the in the Gold Trust, leaving their holdings at 865.713 tonnes and 172.21 tonnes. Reports that Paulson has retained his gold holdings, last quarter and the George Soros bought back into gold shares was positive news for U.S. gold investors. These august gentlemen weigh such decisions carefully. Hopefully, they represent other U.S. gold investors? If so we expect U.S. gold sales to ‘taper’ off removing what has been a significant source of supply to the gold market. [Find out more from www.GoldForecaster.com and www.SilverForecaster.com to subscribe to our newsletters and visit www.StockbridgeMgMt.com to hold gold so it can’t be seized]  

The big news for financial markets is Janet Yellen’s confirmation that she will continue the stimulus program of the fed so long as the economic recovery in the U.S. remains fragile. Here focus will remain on the expansion of the money supply which will be to the detriment of the value of the dollar. This is gold positive and may explain both Paulson’s and Soros’ views on gold?

We suggest subscribers stand back and pause when they look at her statements and add them to the rate cut we saw in the Eurozone last week. Now add the falling off in economic growth in Japan, where the economy has enjoyed massive stimuli and a picture emerges of a distinct fear of deflation coming in. Unless the stimuli works effectively, [to the point where higher interest rates can be absorbed by higher incomes earned by the consumer] deflation is the main threat to the developed world economies.  We have been focussed on imminent growth for the last five years and not on the threat of deflation. We have to say that gold benefits from both inflation and deflation. But please note that central bankers know that deflation is far harder to fight than inflation. So we ask, “Is it arriving now?”

Today, Friday has become the day when the most action is seen in the U.S. financial markets and it may well prove to be the same today. Gold and silver prices have been reflecting currency moves but in essence have remained in a very narrow trading range, which precedes strong moves, either way.

Silver – The silver price is ready for a stronger move than we have seen for some time. We note that last week it touched a high of $23 and now stands just below $21. The move we expect should be stronger than that move, either way.

Regards,

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