Gold and Silver's Daily Review for 16th December 2010

gold-forecaster2The Spanish bond auction did not do as well as expected.   The amount to be sold was reduced from €3 billion to €2.4 billion and a higher rate had to be paid than Spain wanted. The nation sold 1.78 billion Euros of 10-year bonds at an average yield of 5.446%, compared with 4.615% last time the securities were issued on Nov. 18.   It also sold 618.7 million Euros of 15- year debt at 5.953%, compared with 4.541% when the paper was last sold on Oct. 21.

Spain remains susceptible to further funding stress a condition that should precipitate a downgrade of Spain's credit rating. Markets are unhappy with this.
Meanwhile gold slipped at the London morning Fix to $1,384 but in the euro it stands at €1,046.88 up €6.4 on yesterday afternoon's Fix. It is now at $1,381 ahead of New York's opening. Apart from covering the gold and silver markets Gold Forecaster and Silver Forecaster are structured in a way that gives perspective to macro-economic factors from oil to currencies covering the pertinent global gold markets that directly affect the gold price and some that simply influence it. It is a "must-read" for all who want to understand why the gold price is moving as it is and why. It also aims to help you understand why currencies and today's national economic problems are influencing the global economy and the precious metal prices [we cover platinum in the Silver Forecaster too]. Subscribe at www.GoldForecaster.com or for silver at www.SilverForecaster.com].

Gold – Very Short-term
Gold will perform much the same as yesterday and we expect it to continue to stabilize at these levels as it continues to consolidate. We expect a quiet to positive day in New York today.

silverbarsSilver – Very Short-term
Silver will perform much the same as yesterday and we expect it to continue to stabilize at these levels as it continues to consolidate. We expect a quiet to positive day in New York today.

Gold Price Drivers
The positive undertone remains in the gold and silver markets as they continue to consolidate. There is such a strong desire for good news in the global economy that one can be respected for expecting a drop in the gold price. On two fronts we are skeptical that this will happen.
–  Asian demand is oblivious to the factors that most believe drive the gold price in the developed world. Demand for gold and silver, from that part of the world, will continue unrelentingly as more discretionary income fills the pockets of the new middle classes.
–  Secondly, the Sovereign debt crises on both sides of the Atlantic are deterring sales of gold, despite the first signs of a recovery gaining traction in the U.S.
–  Meanwhile, central banks have ceased selling and some are buying very significant quantities from local production and from the open market in London.
Any new crisis or suppuration of existing crises sends more developed world investors into gold, a condition that is not likely to change for the next year at least, if not longer.

Regards,

Julian D.W. Phillips