Gold and Silver Market morning, September 06 2012

Gold Today –New York closed at $1,693.6. London and Asia lifted it over the $1,700 barrier to $1,703, before London took it higher ahead of the Fixing to $1.709.30. The euro rose in London’s morning to €1: $1.2614. The gold price was Fixed at $1,708.50 and in the euro at €1,355.092. Ahead of New York’s opening gold stood at $1,709.16 and in the euro at €1,354.54.

Silver Today – Silver continued to rise gently to $32.24 in New York but London took a more vigorous approach and lifted it to $32.87 ahead of the Fixing. Ahead of New York’s opening it stood at $32.86 in London.

Gold _{(very short-term)}

Gold could pause, today in New York but has a good tailwind now above $1,700.

Silver _{(very short-term)}

Silver should again be stronger than gold, today in New York.

Price Drivers

Gold & Silver –Today the precious metals markets are expecting the E.C.B. to announce that it will, if need be, buy Spanish and Italian government bonds, if the markets demand yields that are excessive. The conditions are going to be, that provided they reform as required by the E.U. they will get unlimited support. The bank will buy the bonds, but then recover their money by draining the money markets of the same amount. We see this as affecting the European bank’s balance sheets negatively, so is not strictly QE. The effect so far, ahead of the announcement has been to lift the euro up over $1.26 and to take gold over $1,700. At the end of the day, this will be an informal bailout, but will not solve the problems! [To follow our weekly commentary, please subscribe to our newsletters at www.GoldForecaster.com and www.SilverForecaster.com]. Mario Draghi, the head of the E.C.B. has pledged to save the euro, so today will cast light on how he will do that. Sad to say it will require a lot more than the central banker of Europe to resolve the crisis. Hence, whatever ‘Super’ Mario does will it will have a longer term gold-positive action, not just short term.

Silver – The performance of silver is heartening for all those investors who have held onto their positions through the 18-month long consolidation. There was a time in Egypt when silver was more expensive than gold. This was in the earlier days of it being a monetary metal. Today, while officially not recognized as such, it is treated by the investor-at-large as a monetary metal. We then ask, “Does silver need the approval of the monetary authorities before it is a monetary metal?” The market gives us the answer by moving it in line with gold on a day-to-day basis.

Regards,

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