Silver is leading the way

For the first time in recent trading sessions, overnight demand from Asia drove gold and silver higher this morning. It should be a wake-up call for western bullion markets.

Gold was almost unchanged over the week, but silver gained in subdued post-July 4 holiday trade. This morning in Europe, gold was $3335, down $2 on balance from last Friday’s close. Silver at a new high for the year at $37.45 was up 70 cents on the same timescale.

Both contracts continue to trade differently, with general indifference in gold reflected in low open interest on Comex while the price remains close to all-time highs:

The credible explanation is that we in the west are in our summer slumbers while Asian demand is accumulating physical on the dips. That appeared to change slightly this morning, when in Asian demand during Hong Kong and Shanghai trading hours both metal prices rose for the first time in weeks, indicating that buying the dips has probably drained liquidity with important implications.