Gold & Silver Market Morning, March 13 2012

After New York closed Just below $1,700 at $1,699.40, Asia lifted it to $1,704 before London opened. The euro traded slightly higher at €1: $1.3168. The morning Fix in London set it at $1,694.75 and in the euro at €1,291.435 down €8, while the euro stood at €1: 3110. Ahead of New York’s opening it stood at $1,695.40 and in the euro €1,293.11 while the euro was at €1: $1.3111.

Silver stood at slightly lower levels at $33.74 just before London opened. Ahead of New York’s opening it stood at $33.56.

Gold _{(very short-term)}

Gold is hardly moving ahead of a strong move either way, in New York today.

Silver _{(very short-term)}

Silver is hardly moving ahead of a strong move either way, in New York today.

Price Drivers

With the Greek drama now on hold until the next tranche of bailout money is due, the failure of Spain to meet its targets is prompting more austerity. But the next danger is coming from Portugal. It just doesn’t stop and so constantly places a question mark over the euro. The unlimited cash provision from the E.C.B. is staving off a banking crisis and will keep doing so.

Yesterday we warned of the ongoing deflationary influences in the developed world and said, “There is no sign of a change in system needed to give currencies dependable values.” The route being followed is to replace lost asset values with new money as though deflation has not happened. History shows that man’s management of a paper currency system has shown NO success over the last few thousand years. Why should man succeed today in a divided world, where central bankers need to stimulate growth, maintain price stability and defeat deflation? To make matters worse the system is structured so that government bears that burden, but is too concerned with votes to fulfill it properly. This leaves central bankers inadequate tools and too few of them to do the job properly. Under these conditions how can gold and silver not rise? Contrary to what the popular media is reporting, deflation remains the greatest danger to the monetary system. This gives rise to the most important question of all. Can central bankers rein in inflation when economies return to growth? Bear in mind that deflation can become a vortex that demands more and more liquidity. At what point does this become unstoppable as it has done in the past? Bear in mind too that some parts of the economy grow while others shrink so it is not a one-stop solution. It takes so little for the situation to spin out of control.

The current consolidations of the gold and silver prices are very tight now promising a breakout one way or the other. Are you ready? [To get more of the right perspectives on the gold and silver markets and where gold and silver prices are going, subscribe through www.GoldForecaster.com or www.SilverForecaster.com].

Regards,

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