Gold & Silver Market Morning, March 26 2012

New York closed at $1,662.70 yesterday. Asia held it there at the weekend and London then set it at $1,658.00 at the morning Fix and in the euro at €1,255.015 while the euro stood at €1: $1.3211. Ahead of New York’s opening it stood at $1,660.60 and in the euro €1,253.00 while the euro was at €1: $1.3253.

Silver held again at $31.22 down 40 cents in Asia. Ahead of New York’s opening it stood at $31.17.

Gold _{(very short-term)}

Gold will consolidate with a stronger bias, in New York today.

Silver _{(very short-term)}

Silver will consolidate with a stronger bias, in New York today.

Price Drivers

On a seemingly ordinary Monday morning ending March and signaling the closeness of Spring in the northern hemisphere there seems to be little happening of significance, in the gold and silver markets. After the Indian jeweler’s strike last week, we do expect a good pickup in Indian demand as the strike caused a postponement of demand not an elimination of it. We do see Chinese demand facing a similar situation too. While permission of the People’s Bank of China is required by importers to bring gold in, internal and official demand is relatively constant and rising. So a bureaucratic delay will also only postpone demand, not eliminate it. This is a positive for the gold and silver prices.

But there is an event of far greater significance about to happen in response to the U.S. use of the SWIFT international settlements system to prevent Iran from receiving payments for its oil. It goes without saying that if Iran is prevented from exporting oil that supply must be replaced likely by Saudi Arabia, who made a loud noise about the extra 25% capacity it has to squash any oil shortage that may arise from U.S. moves. But what is alarming for the BRIC nations [Brazil, Russia, India and China] is that they are also being hit as buyers of that oil. It is more than unlikely that they will cow tow to the U.S. moves and will seek and develop a SWIFT system that allows their currencies to be used in place of the Dollar for oil payments. We have written about this in our newsletter and in succeeding ones, as this could prove to be the key move, in undermining the U.S. dollar as the sole global reserve currency. [To follow this series, please subscribe to our newsletters at www.GoldForecaster.com and at www.SilverForecaster.com.] While it may appear to spectators that this will be a short-term defensive move by the BRIC countries, the need to reduce the power of the U.S. over these emerging powers will be seen as paramount to them. So the moves they make will be permanent. As precious metal investors, you will need to have a deep understanding of these issues and what lies beneath the surface if you want to maximize the benefits to you.

Regards,

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