Gold & Silver Market Morning, October 28, 2011

The gold and silver prices continued to rise this morning, opening ahead of London at $1,735 before rising as high as $1,738 before London’s morning Fix was set at $1,735.00 and in the euro at €1,224.504 while the euro itself stood at €1: $1.4194. The London Fixing price then continued to dominate trade just ahead of the opening of New York. The euro slipped slightly to €1: $1.4156 and gold began to rise ahead of New York’s opening to $1,737.50 and in the euro at €1,227.39.

The silver price in Asia stood above $35 then rose slightly in London to Fix there at $35.42. Thereafter the silver price moved slightly weaker, ahead of New York’s opening, to $34.97.

Gold _{(very short-term)}

The gold price should have a steady to strong bias, today in New York.

Silver _{(very short-term)}

The silver price should have a steady to strong bias, in New York, today.

Price Drivers

Now the euphoria over the ‘solution’ to the Eurozone crisis is abating, markets are looking a little more closely at what we have been told. There appears to be far more debt involved and the way that is to be structured points to the E.U. carrying a far greater load. It will be weeks before we have clear details, but markets are telling us, ‘so far’ so good!’ It is apparent though that there will be far more money around than before, far more than the 50% losses the banks will have to take on the chin in the Greek haircut. This is gold positive.

But we do not think that is the reason why gold and silver are rising. We are of the opinion that gold investors are absolutely clear that far more than a lifeboat is needed to rescue the current monetary system from itself. We need the ship to be made seaworthy. There is no sign of the political or financial will to do that. This continuing lack of confidence and uncertainty is a far greater contributor to the rising gold price than anything else.

Even now the E.U. is reaching out to both the I.M.F., who may come in, and China, who are unlikely to throw risk-free money into a high risk investment. With solid E.U. commitment to guarantee their investment it may well happen, but this will not solve the problem. This will only widen and deepen the situation.

As we have all seen, the capital flows being encouraged by low interest rates as well as by uncertainty and falling confidence can precipitate Capital Control imposition and protectionism. Argentina is today’s example of that. Indeed the state of the world’s monetary system is ripe for such measures and continues to encourage investments in gold and silver. We look at those factors and more on an ongoing basis in our newsletters, so we ask you to please subscribe through www.GoldForecaster.com or www.SilverForecaster.com.

Regards,

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