Weaker Dollar and Fed Doubts Help Steady Gold Price

Gold Today –New York closed at $1,257.20 yesterday after closing at $1,251.80 Tuesday. London opened at $1,257.95 today. 

Overall the dollar was weaker against global currencies, early today. Before London’s opening:

         The $: € was weaker at $1.1234 after yesterday’s $1.1189: €1.

         The Dollar index was weaker at 97.01 after yesterday’s 97.33

         The Yen was slightly weaker at 111.80 after yesterday’s 111.88:$1. 

         The Yuan was stronger at 6.8737 after yesterday’s 6.8905: $1. 

         The Pound Sterling was slightly weak at $1.2973 after yesterday’s $1.2978: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    25

     2017    5    24

     2017    5    23

SHAU

SHAU

SHAU

 

 

279.54

281.40

Trading at 280.00

278.55

281.41

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8737

       $1: 6.8906

       $1: 6.8901     

 

  /

$1,261.82

$1,265.30

Trading at $1,267.00

$1,257.35

$1,265.35

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 New York closed $9.80 lower than Shanghai yesterday. London opened today at a $9.05 discount to Shanghai.

Shanghai prices rose after New York’s close rose too, catching up slightly to Shanghai, as you can see in the reduced discount New York is standing at. London opened at a smaller discount to Shanghai too. If this continues then Shanghai holds the pricing power. The Yuan overnight was quite a bit stronger against the dollar as the People’s Bank of China pressured the banks to take it higher against the dollar, likely to compensate for the weakness in the dollar.

Silver Today –Silver closed at $17.19 yesterday after $17.07 at New York’s close yesterday.

LBMA price setting:  The LBMA gold price was set today at $1,257.10 from yesterday’s $1,251.35.  The gold price in the euro was set at €1,120.81 after yesterday’s €1,118.77.

Ahead of the opening of New York the gold price was trading at $1,257.20 and in the euro at €1,121.30. At the same time, the silver price was trading at $17.18 

Price Drivers

The dollar has again turned weaker against other currencies, particularly against the Yuan which has been weakening with the dollar recently. Yuan strength was necessary to show overall stability against all currencies.

There were no sales or purchases into or from the U.S. based gold ETFs showing U.S. investors sitting on the sidelines and not influencing the gold price.

The gold price remains in a narrowing consolidation phase before a strong move either way.

The Fed

Equity markets have discounted a June rate hike and continue rising. But markets noted the Fed minutes indicated ongoing caution, needing more evidence that the economic slowdown in the first quarter was only temporary. It is a worry that while employment has improved considerably it is not sufficient to cause wages to rise. Service jobs have provided most of the employment, but as much of these are, primarily, temporary there is little wage bargaining power in these.

Swiss Gold Exports to India & China

India was the largest destination for Switzerland’s gold for the fourth straight month, over double 22 metric tonnes, recorded a year earlier, to 48 metric tonnes.

Exports to China totaled 40 metric tonnes in April, up from 19 metric tonnes a year earlier and 68% higher than 24 metric tonnes reported in March.

Ongoing heavy Asian demand continues with Swiss refineries still going flat out re-refining ounces into grams and kilos to meet that demand. Please note such refining is relatively expensive and only done when the change is semi-permanent or permanent. It does represent a permanent shift of gold to the east that has been going on for many years now. The west is seeing seepage of its gold to the Far East which will not return.

Flows west remain low, with exports to the UK falling below 1 metric tonne for the first time since January 2016, from just under 3 metric tonnes in March and 77 metric tonnes a year earlier. The UK was the largest destination for Switzerland’s gold last year due to a surge in investor demand, especially via gold-backed ETFs, but has fallen away significantly this year.

Exports to the US were just under 0.4 metric tonnes, largely unchanged on the month.

London Gold Price Setting [Fix] suffer lower liquidity and greater volatility

Trading volumes in the gold price setting, that replaced the London “Fix”, fell sharply after April 10, when four of the 14 participating banks and brokers stopped taking part after the auction’s administrator, Intercontinental Exchange (ICE), introduced a requirement to clear that meant participants had to modify their own IT systems and procedures.

Lower liquidity, which fuels volatility, led to the benchmark diverging more widely from the underlying spot price, according to the analysis of ICE and trading data, leaving gold buyers and sellers around the world with large unexpected gains or losses.

In the three weeks after clearing was launched, average trading volumes were 25% lower than in the previous three weeks and the average difference from the spot price tripled to 87 cents from 29 cents, the analysis shows. The biggest divergence, on April 11, saw the auction settle $12.20, or 1%, away from the spot price. Even excluding this large swing, the average divergence in the period rose to 42 cents.

ICE was warned by at least two participating banks that the loss of those banks which were not ready to handle clearing would make the benchmark significantly more volatile. This is a bad omen for the London price setters as Shanghai’s benchmark prices reflect spot prices more accurately. Already the Dubai Gold Exchange uses the Shanghai Benchmark prices in its derivatives trading. Producers and manufacturers will be more inclined after this news to turn to Shanghai for their contract pricing in the days ahead.

Gold ETFs – Yesterday, saw no sales or purchases of gold to or from the SPDR gold ETF but no change in the holdings of the Gold Trust. Their holdings are now at 847.452 tonnes and at 202.82 tonnes respectively.

Since January 4th 2016, 248.734 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 38.678 tonnes have been added to the SPDR gold ETF and the Gold Trust.

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Gold pulled back by stronger dollar and big sale out of GLD

 Gold Today –New York closed at $1,251.80 yesterday after closing at $1,260.30 Monday. London opened at $1,250.30 today. 

Overall the dollar was stronger against global currencies, early today. Before London’s opening:

         The $: € was stronger at $1.1189 after yesterday’s $1.1252: €1.

         The Dollar index was stronger at 97.33 after yesterday’s 96.90

         The Yen was weaker at 111.88 after yesterday’s 111.24:$1. 

         The Yuan was barely changed at 6.8905 after yesterday’s 6.8901: $1. 

         The Pound Sterling was barely changed at $1.2978 after yesterday’s $1.2980: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    24

     2017    5    23

     2017    5    22

SHAU

SHAU

SHAU

 

 

281.4

279.59

Trading at 281.30

281.41

279.76

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8906

       $1: 6.8901

       $1: 6.8903     

 

  /

$1,265.30

$1,255.27

Trading at $1,264.77

$1,265.35

$1,255.22

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 New York closed $13.55 lower than Shanghai yesterday. London opened today at a $14.47 discount to Shanghai.

London today and New York yesterday, took gold lower with Shanghai remaining steady at yesterday’s prices. If pricing power lies in Shanghai, gold price will climb this week in London and New York. This is a test of where that power lies [very short-term].

Silver Today –Silver closed at $17.07 yesterday after $17.14 at New York’s close yesterday.

LBMA price setting:  The LBMA morning gold price was set today at $1,251.35 from yesterday’s $1,259.90.  The gold price in the euro was set at €1,118.77 after yesterday’s €1,119.61.

Ahead of the opening of New York the gold price was trading at $1,252.80 and in the euro at €1,111.82. At the same time, the silver price was trading at $17.07 

Price Drivers

Again it was a day for the gold price to change because of the dollar’s influence as it strengthened a little, but remained at low levels. There was a significant sale of gold from the SPDR gold ETF (GLD) which assisted the fall. The discounts of London and New York to China widened quite heavily yesterday, but only to the extent that held the euro price of gold relatively steady. As we said yesterday, “For a convincing breakout in the gold price we need to see it rise strongly in the euro too. With the Chinese Yuan doing its best to stay close to the moves in the dollar, we expect Shanghai to remain stable.” Overall it is a day for gold to mark time waiting for an event to move it strongly either way.

The Fed

It is quite clear that the markets now expect a June rate hike from the Fed and, by the end of the year, a third hike. We don’t see these moves as promoting a fall in the gold price, except maybe for a short time. We do see inflation rates remaining negative, further encouraging gold price rises.

Gold’s seasonality in India

We are entering the quiet time of the year for Indian demand as they plant crops ready for the monsoon. This quiet period should last until the beginning of September, after crops are harvested. A good Monsoon is forecast, so we expect demand to be strong in the fourth quarter of the year.

In the past few years as the path of urbanization remains strong there, gold demand’s seasonality has diminished. The resulting enrichment of urban Indians has helped enhance overall gold demand. With last year’s ‘de-monetization’ of the two highest denomination banknotes in the country causing havoc and postponing gold demand, we expect a better year for Indian demand this year than last. Of course, with the threat of 3% [?] General Sales Tax being added to ‘legitimate’ purchases of gold and to the reporting of them to the authorities, the quest for ‘unofficial’ gold purchases [from smugglers] grows. We are certain that Indian gold buyers will buy, whether they do it legally or illegally. We therefore estimate that Indian demand will reach 1,000 tonnes + this year, but a significant portion of this will not be reported.

Gold ETFs – Yesterday, saw sales of 5.031 of a tonne from the SPDR gold ETF but no change in the holdings of the Gold Trust. Their holdings are now at 847.452 tonnes and at 202.82 tonnes respectively. This relatively heavy sale of gold was sufficient to lower gold prices on the back of a weaker dollar.

Since January 6th 2017 38.678 tonnes have been added to the SPDR gold ETF and the Gold Trust.

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Gold nudging upside resistance

Gold Today –New York closed at $1,260.30 yesterday after closing at $1,255.00 Friday. London opened at $1,260.05 today. 

Overall the dollar was weaker against global currencies, early today. Before London’s opening:

         The $: € was weaker at $1.1252 after yesterday’s $1.1240: €1.

         The Dollar index was slightly weaker at 96.90 after yesterday’s 96.94

         The Yen was slightly stronger at 111.24 after yesterday’s 111.34:$1. 

         The Yuan was barely changed at 6.8901 after yesterday’s 6.8903: $1. 

         The Pound Sterling was weaker at $1.2980 after yesterday’s $1.3018: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    23

     2017    5    22

     2017    5    19

SHAU

SHAU

SHAU

279.59

279.29

Trading unavailable

279.76

279.28

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8901

       $1: 6.8903

       $1: 6.8929     

  /

$1,257.10

$1,255.27

/

$1,257.86

$1,255.22

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 The Shanghai Gold Exchange was trading at 281.1 towards the close in Shanghai. Adjusting to the higher quality of gold traded there this price translates into $1,263.95. London opened at a $3.90 discount to Shanghai.

London and New York took gold higher yesterday, but today Shanghai lifted the gold price through resistance with London going higher on the back of Shanghai. All in all, the discounts of London and New York to Shanghai are very small, once again.

One misunderstanding some commentators have is that foreign banks are being forced to use the International Gold Exchange in Shanghai. The fact that many foreign banks have local presences and Chinese banks are Chinese means they can participate alongside the Chinese gold investor on the SGE. This places them in a position to effectively arbitrage western markets and Shanghai, through using currency books, positions in London and Shanghai, only moving gold into Shanghai when  their positions get too large in London. It also allows them to remain opaque in their dealings, while continuing to shift gold bullion into China. This means their positions are much, much bigger than seems to be the case on the International Shanghai Gold Exchange.

The result is far closer prices between the three Exchanges than has been the case in the past.

We note a major bank for the first time [Citibank] is acknowledging that Shanghai’s influence on the gold price will grow. But these analysts state that “Shanghai still holds a prominent position as the largest gold futures market outside of the U.S., despite a reduction in Shanghai Futures Exchange volume for the year to date to around 450 million ounces. By comparison, New-York based COMEX gold volume has grown 15% year-on-year to around 2.1 billion ounces.” We believe this distorts the real gold picture in the two markets.

What is true is that COMEX has a turnover of 2.1 billion ounces of ‘paper gold’ [Gold derivatives – Options and Futures] Of this  between 1% and 5% is actual gold bullion, whereas all of Shanghai’s gold trade is physical gold bullion. i.e. COMEX trades between 653 tonnes and 3,266 tonnes to Shanghai’s  almost 14,000 tonnes annually. COMEX’s turnover is far closer to 653 tonnes of physical gold bullion than 3,000 tonnes. This makes New York only 5% of Shanghai’s physical gold bullion turnover.

This is why we see Shanghai becoming, if not there already, the world’s gold hub for physical gold.

Silver Today –Silver closed at $17.14 yesterday after $16.84 at New York’s close yesterday.

LBMA price setting:  The LBMA am gold price was set today at $1,259.90 from yesterday’s $1,255.25.  The gold price in the euro was set at €1,119.61 after yesterday’s €1,117.17.

Ahead of the opening of New York the gold price was trading at $1,259.65 and in the euro at €1,121.35. At the same time, the silver price was trading at $17.13. 

Price Drivers

The gold price continued to rise in the U.S. dollar but only slowly in the euro. For a convincing breakout in the gold price we need to see it rise strongly in the euro too. With the Chinese Yuan doing its best to stay close to the moves in the dollar, we expect Shanghai to remain stable. The dollar continues to slip albeit at a slower pace. Meanwhile it continues to consolidate, while nudging overhead resistance.

As you can see below U.S. buying of physical gold via the SPDR gold ETF [GLD] resumed gently. This is not enough to move prices heavily, but it is an indication of returning U.S. demand.

Gold ETFs – Yesterday, saw purchases of 1.776 of a tonne into the SPDR gold ETF but no change in the holdings of the Gold Trust. Their holdings are now at 852.483 tonnes and at 202.82 tonnes respectively.

Since January 6th 2017 43.709 tonnes have been added to the SPDR gold ETF and the Gold Trust.

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

SGE revises 2017 gold withdrawals downwards

We had previously noted some anomalies in the reported figures for China’s gold withdrawals from the Shanghai Gold Exchange (SGE) and are pleased to note that a recheck has shown that the monthly and cumulative figures as announced by the SGE have been revised and now tally.  Earlier the announced cumulative total appeared to have been substantially adrift from that suggested by the monyh-by-month reported figures.The principal change is a sharp downwards revision of the gold withdrawal figures for February – a month where figures tend to be somewhat anomalous anyway because of the Chinese New Year holiday.  February figures have been revised downwards sharply from 179.24 tonnes to 148.24 tonnes, while the initially reported April figure of 171.17 tonnes has been adjusted downwards to 165.78 tonnes.  This brings the cumulative total for the year to date to 690.68 tonnes –only marginally higher than at the same time a year ago, and well down on the record 2015 figure.

Table: Revised SGE Monthly Gold Withdrawals (Tonnes)

Month 2017 2016 2015 % change 2016-2017 % change 2015-2017
January 184.41 225.08 255.42 – 18.1%  -27.8%
February* 148.24 107.60 156.36 +37.8% -5.2%
March  192.25 183.24 213.35  +4.9%  -9.9%
April  165.78 171.40 195.45  -3.3%  -15.2%
May   147.28 162.15    
June   138.51 195.67    
July   117.58 285.50    
August   144.44 265.27    
September   170.90 259.98    
October    153.25 176.29    
November    214.72 202.71    
December    196.37 228.21    
Year to date 690.68 687.02 820.58 +0.5% – 15.8%
Full Year    1,970.37 2,596.37    

Source: Shanghai Gold Exchange, Lawrieongold.com

For additional comment click on:

China’s SGE revises gold withdrawals lower

Trump Turmoil Grows, Prompting Flight to Safety

By Clint Siegner*

Donald Trump has been dogged by efforts to undermine his presidency since winning the election in November. Deep State operators and political partisans have been working around the clock to hang a scandal around the president’s neck large enough to ruin him.

If markets are any indication, they got some help last week from former FBI director James Comey. Comey’s leaked memo asserting the president tried to interfere with the investigation of Michael Flynn, the former National Security Advisor, prompted a selloff in stocks and a boost in precious metals.

James Comey Firing

Drama around former FBI Director Comey
may trigger Trump’s impeachment.

Democratic Congressman Al Green became the first in Congress to actually call for impeaching the president on the House floor. While there have certainly been plenty of people making the suggestion more informally, Trump’s opponents hadn’t gotten a lot of traction.

Now may be the time to start taking the impeachment threat more seriously.

There are signs that even some Republicans could support the effort. Representative Justin Amash from Michigan told reporters on Wednesday that if Comey’s memo is accurate, it provides grounds for impeachment. He trusts the former FBI director more than Trump.

Meanwhile, there is little reason to expect other prominent Republicans who have often voiced opposition to Trump, such as Paul Ryan, Mitch McConnell and John McCain, will fight very hard to protect the president.

To be fair, Trump has done plenty to weaken support amongst his own base. Many perceive him to be filling, not draining, the swamp by appointing a number of bankers and other insiders to key positions. His posture has been much more conciliatory than expected toward Hillary Clinton and other corrupt figures.

The president also appears anxious to compromise on key promises such as avoiding further entanglement in the Middle East, repealing Obamacare, and building a border wall.

PredictIt, a prediction market where participants can effectively wager on political outcomes, shows the odds of Trump being impeached moving significantly higher.

2017 Trump Impeachment Odds

It’s strange that markets, particularly for stocks, continue pricing in the eventual implementation of Trump’s economic agenda. The persistent controversy and the lack of cooperation from Congressional Republicans should have put a dent in investor optimism already.

In any event, traders are suddenly more anxious regarding what comes next. The president may survive this latest assault, but his opposition has proven committed to keep trying. There is a growing chance they will eventually succeed.

The escalating attacks make Trump likely to respond by going after Democrats, ratcheting up the turmoil even further. There is no shortage of fodder. Last week, for example, new evidence emerged that murdered DNC staffer Seth Rich, not the Russians, was behind leaks of DNC emails. The development drove further speculation that high ranking Democrats had Rich murdered for the transgression.

There is also a chance Trump will resort to the favored tactic of governments everywhere for boosting support and deflecting controversy – launch a war.

Trump is not known for any ability to quietly de-escalate. The drama in Washington is likely to keep on rising, and precious metals markets may be starting to reflect that.

Gold moves on weaker dollar

Gold Today –New York closed at $1,255.00 Friday after closing at $1,248.90 Thursday. London opened at $1,255.25 today. 

Overall the dollar was weaker against global currencies, early today. Before London’s opening:

         The $: € was much weaker at $1.1240 after Friday’s $1.1120: €1.

         The Dollar index was weaker at 96.94 after Friday’s 97.73

         The Yen was weaker at 111.34 after Friday’s 111.25:$1. 

         The Yuan was stronger at 6.8903after Friday’s 6.8929: $1. 

         The Pound Sterling was stronger at $1.3018 after Friday’s $1.2950: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    22

     2017    5    19

     2017    5    18

SHAU

SHAU

SHAU

279.29

280.67

Trading unavailable

279.28

280.6

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8903

       $1: 6.8929

       $1: 6.8814     

  /

$1,260.27

$1,263.61

/

$1,260.22

$1,263.29

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 The Shanghai Gold Exchange trading price was not available today.

Silver Today –Silver closed at $16.84 Friday after $16.61 at New York’s close Thursday.

LBMA price setting:  The LBMA gold price was set today at $1,255.25 from Friday’s $1,251.85.  The gold price in the euro was set at €1,117.17 after Friday’s €1,120.68.

Ahead of the opening of New York the gold price was trading at $1,256.80 and in the euro at €1,118.65. At the same time, the silver price was trading at $17.02. 

Price Drivers

Today’s gold price is all about a weaker dollar. But the dollar is barely changed against the Chinese Yuan.

The dollar took a hammering over the weekend falling to lows on the index that we have not seen for a long time. If the dollar continues to fall, as we expect, the dollar gold price will look strong. Technically, we see higher gold prices, but are keeping our eyes on overhead resistance to see if we can expect a breakout.

The prospects for the euro have improved considerably as the E.U. economy begins to recover solidly. The talk is that the E.C.B. may well either try to reduce its balance sheet before it raises rate or bring forward the time it is going to start exiting Q.E. another way. This is still rumor and needs to be verified. That’s why you see the gold price steady in the euro and strong in the dollar.

Russia buys for reserves again, but far less last month

The Russian central bank has announced another increase in its gold reserves during April, but this time only of 200,000 ounces (6.2 tonnes) compared with 800,000 ounces (24.9 tonnes) in March.  We cannot be certain of the reason a smaller amount was purchased as they do fluctuate substantially.  Russia is a substantial gold producer of around 20 tonnes a month. Of course when Russian miners are paid in Rubles it does have an inflationary impact, but makes considerably more sense than selling local production for dollars only to buy it back. Hence we see the amount purchased as having nothing to do with the dollar price of gold, simply what the Reserve bank deems appropriate to purchase that month.

Are they opaque, as China is in its reports on gold purchased monthly? We don’t have the information needed to come to that conclusion, but can see the advantage in being so to the Russians.

Gold ETFs – Friday, saw sales of 0.184 of a tonne from the SPDR gold ETF but no change in the holdings of the Gold Trust. Their holdings are now at 850.707 tonnes and at 202.82 tonnes respectively.

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Gold part of the fabric of Indian society

 Gold Today –New York closed at $1,248.90 yesterday after closing at $1,258.70 Wednesday. London opened at $1,248.20 today. 

Overall the dollar was slightly stronger against global currencies, early today. Before London’s opening:

         The $: € was slightly stronger at $1.1120 after yesterday’s $1.1131: €1.

         The Dollar index was stronger at 97.73 after yesterday’s 97.57

         The Yen was weaker at 111.25 after yesterday’s 110.77:$1. 

         The Yuan was weaker at 6.8929after yesterday’s 6.8902: $1. 

         The Pound Sterling was weaker at $1.2950 after yesterday’s $1.3036: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    19

     2017    5    18

     2017    5    17

SHAU

SHAU

SHAU

280.67

277.51

Trading at 279.75

280.6

277.63

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8929

       $1: 6.8814

       $1: 6.8919     

  /

$1,263.61

$1,254.33

/

$1,263.29

$1,254.87

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 The Shanghai Gold Exchange trading level towards the close translates into $1,257.34. New York closed at a $8.44 discount to Shanghai’s close yesterday. London opened at a discount of $9.14 Shanghai’s close today.

As you can see above, Shanghai did not pull back today as far as New York did.  With Shanghai now proving less volatile than London or New York we expect the pattern being formed now will lead to Shanghai giving a better indication of the direction of the gold price. At the moment that is higher, after this consolidation.

Silver Today –Silver closed at $16.61 yesterday after $16.89 at New York’s close Wednesday.

LBMA price setting:  The LBMA gold price was set today at $1,251.85 from Thursday’s $1,261.35.  The gold price in the euro was set at €1,120.68 after yesterday’s €1,135.02.

Ahead of the opening of New York the gold price was trading at $1,253.00 and in the euro at €1,121.55. At the same time, the silver price was trading at $16.80. 

Price Drivers

With the gold price shrugging off potential falls, we now expect to see it trade in a tightening range until the gold market is in balance, before the next strong move either way.The dollar is slightly stronger today in what is a normal market reaction, but we do not expect this to last for long.

India & GST

While the list of GST levels to be imposed in July has now been issued, the duty to be levied on gold [and services] is still to be finalized.  It is expected to be 3%.

When we look back at the actions of Modi and his government in India and on gold, since he came to power, we see that Indian governments are still unhappy with gold in the country and will always be. This is not a small problem for that government, when you consider that the total gold holdings of the world’s central banks is around 34,000 tonnes, private citizens and institutions in India hold around 24,000 tonnes, an amount that is rising by around 1,000 tonnes a year.

Why their dislike? Because gold lies outside government control, just as it did in the U.S. before it was confiscated in 1933. Thereafter, when all U.S. citizens could only use banknotes and the banking system, the U.S. government completely controlled the financial system. All governments need to do that if they want total control of a nation’s finances, despite any objection from their own people.

Every attempt to pull the Indian gold trade into the Indian banking system [as it is in the west] has failed and will continue to fail because of the financial mistrust between the government and its citizens.

But gold in India is far more to its citizens, than it was to U.S. citizens, prior to 1933. In India, it is tied in with religion, family as well as financial security. It is part of the fabric of society. This is unlikely to change in the future. It is unlikely, that any ban on gold dealing there would work because it didn’t work in the past.

So the expected 3% GST level being mooted in India is simply expected to incite more black market activity including making extremely profitable the business of smuggling of gold into the country

Gold ETFs – Yesterday, saw sales of 1.184 tonnes from the SPDR gold ETF (GLD) but purchases of 0.53 of a tonne into the Gold Trust (IAU). Their holdings are now at 850.891 tonnes and at 202.82 tonnes respectively.

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

 

Gold strengthens: All three major markets in sync.

 Gold Today –New York closed at $1,258.70 Wednesday after closing at $1,236.50 Tuesday. London opened at $1,258.20 today. 

Overall the dollar was weaker against global currencies, early today. Before London’s opening:

         The $: € was weaker at $1.1131 after yesterday’s $1.1116: €1.

         The Dollar index was weaker at 97.57 after yesterday’s 98.87

         The Yen was stronger at 110.77 after yesterday’s 112.18:$1. 

         The Yuan was stronger at 6.8902 after yesterday’s 6.8814: $1. 

         The Pound Sterling was stronger at $1.3036 after yesterday’s $1.2964: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    17

     2017    5    16

     2017    5    12

SHAU

SHAU

SHAU

/

277.51

276.56

/

277.63

276.49

$ equivalent 1oz @    $1: 6.8814

       $1: 6.8919

       $1: 6.9047     

  /

$1,254.33

$1,248.13

/

$1,254.87

$1,247.81

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 The Shanghai Gold Exchange was trading at 280.00 towards the close today. This translates into $1,258.97. New York closed at a $0.27 discount to Shanghai’s close Friday. London opened at a discount of $0.77 Shanghai’s close today.

On the evidence above, New York hit gold’s peak price in the day, first, then Shanghai rose to meet it and London opened at the same level. In an extraordinary picture ALL THREE GLOBAL GOLD MARKETS ARE AT AROUND THE SAME PRICE. This is the first time we have ever seen this happen. While we used the dollar as the measuring currency, we note that the gold price is the same in all markets, so currencies, today are not the influence.

What does this mean? It means today there is one global gold price! The gold price is doing its job! Shanghai’s demand was, in fact, the main factor driving prices higher.

LBMA price setting:  The LBMA gold price was set today at $1,261.35 from Wednesday’s $1,244.60.  The gold price in the euro was set at €1,135.02 after Friday’s €1,119.65.

Ahead of the opening of New York the gold price was trading at $1,260.30 and in the euro at €1,132.70. At the same time, the silver price was trading at $16.73. 

Silver Today –Silver closed at $16.89 yesterday after $16.82 at New York’s close Tuesday.

 Price Drivers

The jump in the gold price in all currencies was consistent with the gold price confirming it has returned to the upside, after resisting downside pressure while sitting on support.

While the gold price has moved strongly over the last couple of days in all currencies, that is not the exciting news of the day. Yes, gold has resumed its rise and held above support at $1,230 and looks like moving up to resistance, once more.

Global gold markets in unison

To us the exciting feature of the day is that the three global gold markets have virtually no premiums or discounts on the gold price between themselves. It is also clear that the influence of Shanghai is underlyingly dominant and may well remain so.  We continue to watch the interaction between the three markets. We ask, are the Chinese and U.K. banks honing their arbitrage skills?

Long term, this story may well exert the most important influence since 2005 when central banks and gold miners were forced to retreat from their anti-gold positions established in the late 20th century. What is for sure is that Shanghai’s influence cannot be removed by London or New York, nor can they re-capture their former dominance of the gold market. The gold ‘paper’ market, if isolated from the physical gold market, cannot exert its influence over the gold price.

The Trump Factor

We look at the current political turmoil in the U.S. from a different perspective to the financial and mainstream media. Standing back, it is very clear that President Trump has angered the media, in particular, but of more importance the “establishment”, which he described as a ‘swamp’, which he was going to ‘drain’. He certainly underestimated the power of the establishment in defending themselves and attacking him. These issues are the fundamental ones that will dictate the political future of the U.S. going forward.

The Russia/Comey issues are the battlegrounds on which the war will be fought. What is the impact on gold? We see none, as there has been no buying or selling of gold into or from U.S. based gold ETFs in the last few days. The gold price is rarely impacted by political issues, unless they reach into currency issues internationally.

Politically the U.S. government is being given the appearance of being emasculated by this turmoil, delaying any implementation of the promises President Trump has made regarding tax, infrastructure or any other major issue. Can the government get any business done? The fall in the dollar of late may have been assisted by poorer economic prospects, alongside a growing E.U. but the suddenness of the fall in the last two days may have been triggered by the ferocity of the attacks on Trump.

Gold ETFs – Yesterday, once again, saw no change in the SPDR gold ETF or the Gold Trust. Their holdings are now at 851.891 tonnes and at 202.29 tonnes respectively.

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

121 Mining Investment Event to Hit New York in June

For those lawrieongold readers interested in the junior mining sector and within easy range of New York City, we would recommend attendance at the first North American 121 Mining Investment event.  This will be held at the Westin, Grand Central on June 6th and 7th.  Having personally attended events in Cape Town and London I can highly support the format, which comprises brief corporate presentations, interspersed with expert analysis and panel discussions – and then the opportunity to network with the presenting companies on a one-to-one basis so you can delve deeper into their operations, performance and potential.

The group running the 121 events cut their teeth with the organisation for several years of the highly successful Mines & Money conferences in London and Hong Kong, before breaking away and launching the 121 series of events – initially in Hong Kong, and then Cape Town and London – back in 2014/2015.  Now 121 Mining Investment New York brings the tried and trusted 121 event format to what the group describes as the world’s leading mine finance centre, although others may argue with that description.

This investment series is thus organised by 121 Group applying a successful invitation only mode that focuses on pre-scheduled 1-to-1 investment meetings with mining management teams. Set over a two-day conference delegates will also gain insight through investor led panel discussions and analyst briefings on commodity trends.

By the date of the New York conference, 121 events will have featured more than 300 mining company presentations and brought together over 1200 investors to discuss the latest trends and opportunities in the sector.

What sets the 121 Mining Investment events apart from the competition?

  • Targeted networking– Two days of pre-arranged 1-2-1 meetings allowing miners to and capital providers to connect face-to-face in meetings relevant to their needs
  • Exclusivity – Entry is restricted to qualified investors, analysts, senior mining company executives and relevant mining investment professionals only
  • Market intelligence– Interactive two-day programme where presenters and panellists actively engage with the audience to create a two-way conversation
  • Convenience– Located in Midtown Manhattan within walking distance of many of the key mining investment houses

Mining corporates – Present project updates and meet with leading experts from New York’s mining and investment community –  Submit your interest in presenting at the 2017 summit here

Mining investment and finance experts – Share insights with your peers and receive project updates from the management teams of mining production, development and exploration companies gathered together in a convenient Midtown Manhattan location – Passes for institutional investors are free  – Click here to register

With limited space available, register now for this exclusive event.

121 Mining Investment New York is part of a highly successful global series, with events held in London, Cape Town and Hong Kong – Click here for more details

Technical picture positive for gold 

Gold Today –New York closed at $1,227.90 Friday after closing at $1,219.30 Thursday. London opened at $1,231.00 today. 

Overall the dollar was weaker against global currencies, early today. Before London’s opening:

         The $: € was weaker at $1.0979 after Friday’s $1.0864: €1.

         The Dollar index was weaker at 98.82 after Friday’s 99.64

         The Yen was stronger at 113.32 after Friday’s 113.75:$1. 

         The Yuan was stronger at 6.8919 after Friday’s 6.9047: $1. 

         The Pound Sterling was stronger at $1.2919 after Friday’s $1.2875: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    12

     2017    5    11

     2017    5    10

SHAU

SHAU

SHAU

/

274.75

273.62

/

274.90

274.02

$ equivalent 1oz @    $1: 6.8919

       $1: 6.9047

       $1: 6.9040     

  /

$1,237.66

$1,232.70

/

$1,238.34

$1,234.50

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 The Shanghai Gold Exchange was trading at 276.90 towards the close today. This translates into $1,244.66. New York closed at a $16.76 discount to Shanghai’s close Friday. London opened at a discount of $13.66 to Shanghai’s close today.

Shanghai continues to rise, pulling London higher and now New York higher. Pricing power is with Shanghai today.

On today’s moves, we would say Shanghai is dominating pricing power at the moment.

LBMA price setting:  The LBMA gold price was set today at $1,231.50 from Friday’s $1,227.90.  

The gold price in the euro was set at €1,122.20 after Friday’s €1,129.21.

Ahead of the opening of New York the gold price was trading at $1,235.50 and in the euro at €1,125.48. At the same time, the silver price was trading at $16.77. 

Silver Today –Silver closed at $16.44 Friday after $16.32 at New York’s close Thursday.

Price Drivers

The Technical picture is positive today so the gold price should rise steadily today, barring new news that halts its rise. But the main influence on today’s prices comes from Shanghai. While the discount of New York and London have been widening of late it is the lifting of today’s prices in Shanghai has caused prices in London and New York to suddenly rise. We expect the upward pressure from Asia to continue as the dollar weakness drops prices in India.

Sometimes it is difficult for gold investors to appreciate that the day’s news items are not responsible for gold price moves. Gold prices in different currencies are also not well understood. For instance, in India gold prices have been dropping because of the strong Rupee, which is in a country where it is low prices that incite gold buying. So while demand for gold has been strong there, only because prices are now historically low and the prospect of a new tax imposition from government is accelerating buying, the rise in the value of the Rupee has given Indian buyers this current opportunity. The average Indian investor would never be prompted by some Trump pronouncement to go into the gold market.  They would  only on gold prices that have stopped falling.

In China the GDP growth of 6.9% is a sure indication that individual and institutional wealth continues to grow expanding Chinese middle classes and their capacity to buy gold there. Demand for gold remains robust there.

So, on a day like today, when there is no specific gold related news, prices can rise in all currencies due to growing wealth in Asia alongside a weakening dollar. This trend should continue.

What is a major threat that would be positive for gold is North Korea and its psychopathic President intent on producing a clear and present danger to the U.S., no matter what risk this brings to North Korea’s world. The threat of sanctions and sanctions themselves may affect the people of North Korea but not the palace. It seems to us that that country’s President will not stop until stopped. But as yet we do not believe this has impacted global demand.

Gold ETFs – Friday once again saw no change in the SPDR gold ETF or the Gold Trust. Their holdings are now at 851.891 tonnes and at 201.69 tonnes respectively.

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

TED BUTLER – Silver: Expecting the Unexpected

The latest commentary from silver specialist analyst Ted Butler, published on Silverseek.com foresees  a rapid and spectacular rise in the silver price ahead:

“I am convinced that silver will soon explode in price in a manner of unprecedented proportions, both in terms of previous silver rallies and relative to all other commodities. By unprecedented, I mean that the price of silver will move suddenly and shockingly higher in a manner never witnessed previously, including the great price run ups in 1980 and 2011. The highest prior price level of $50 will quickly be exceeded.

By “soon”, I mean that the move can commence at any time, but more likely before many weeks or months have gone by. I know that the price of silver has been declining on a daily basis nonstop for three weeks now, itself an unprecedented move, but I also know the reason for the decline and how the sharply improved COMEX market structure has always guaranteed a rally in a reasonable period of time. The only question is whether on the next silver price rally will JPMorgan add aggressively to its COMEX short positions. I’m suggesting JPMorgan is not likely to add to short positions on the next rally.

At the heart of the unprecedented move higher in the price of silver is the manner in which it will occur……”

To read full article CLICK ON THIS LINK

Shanghai leading gold higher?

 Gold Today –New York closed at $1,224.10 yesterday after closing at $1,219.30 yesterday. London opened at $1,228.55 today. 

Overall the dollar was barely changed against global currencies, early today. Before London’s opening:

         The $: € was slightly stronger at $1.0864 after yesterday’s $1.0870: €1.

         The Dollar index was slightly weaker at 99.64 after yesterday’s 99.65

         The Yen was stronger at 113.75 after yesterday’s 114.19:$1. 

         The Yuan was slightly stronger at 6.9047 after yesterday’s 6.9056: $1. 

         The Pound Sterling was weaker at $1.2875 after yesterday’s $1.2941: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    12

     2017    5    11

     2017    5    10

SHAU

SHAU

SHAU

/

273.62

273.79

/

274.02

273.91

$ equivalent 1oz @    $1: 6.9047

       $1: 6.9040

       $1: 6.9064     

  /

$1,232.70

$1,233.03

/

$1,234.50

$1,233.57

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 The Shanghai Gold Exchange was trading at 275.60 towards the close today. This translates into $1,236.49. New York closed at a $17.39 discount to Shanghai’s close yesterday. London opened at a discount of $7.94 to Shanghai’s close today.

While New York rose slightly yesterday, Shanghai rose strongly and is leading the way for London.

On today’s moves, we would say Shanghai is dominating pricing power. As we said yesterday, Shanghai needed to stop falling before prices turn around. It has turned higher now.

LBMA price setting:  The LBMA gold price was set today at $1,227.90 from yesterday’s $1,221.00.  

The gold price in the euro was set at €1,129.21 after yesterday’s €1,123.48.

Ahead of the opening of New York the gold price was trading at $1,231.30 and in the euro at €1,128.60. At the same time, the silver price was trading at $16.45. 

Silver Today –Silver closed at $16.32 yesterday after $16.22 at New York’s close yesterday.

Price Drivers

Technically, it is time for gold to rise up into the pattern that it is forming. Its failure to breakdown further and the performance of the three gold markets across the world point higher today.

The latest figures on inflation in the U.S. has been hoped for and expected and is positive for the gold price. With negative interest rates here to stay for some time to come, the influence on gold is positive.

India

Demand for gold at the Akshaya Tritiya festival at the end of April was stronger than has been seen in the past confirming the problems with shortages of cash have dissipated. It is clear that Indian demand for gold is, once again, robust. Estimates for this year’s demand [because of positive forecasts for the monsoon as well] have gone as high as 1,000 tonnes. That’s official demand, excluding smuggled gold. In the past WGC estimates from years ago guesstimated smuggled gold was around 250 tonnes. It has certainly grown since then and will grow much more if the 5% GST tax is imposed on gold sales.

If one accepts this, China and India account for just over 80% of total supply [including scrap] of gold annually. This leaves very little for the rest of the world’s demand. If the rest of the world’s demand jumps, it will have a disproportionate impact on the gold price until that demand is pulled back by higher prices precipitating sales.

Gold ETFs – Yesterday once again saw no change in the SPDR gold ETF or the Gold Trust. Their holdings are now at 851.891 tonnes and at 201.69 tonnes respectively.

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

The Blockchain: A Gold and Silver Launchpad?

By David Smith*

Central governments around the globe have waged, against their own citizens, a virtual “War on Cash.” Efforts by Sweden to become “cash-free;” progressive “downsizing” of Eurozone currency units; a currency recall in India that affected 1.3 billion people; solemn talk about eliminating $100 and even $50 bills in the U.S. – all in the supposed fight against “drug dealing and tax evasion.”

US 100 Dollar Bill

Will Ben Be Going Bye Bye?

It’s really about people control.

The War on Cash goes hand in hand with the imposition of onerous taxation levels, negative interest rates, and destruction of what little privacy we have left.

Historically, nations backed their paper currencies with gold and/or silver. Today – without a single one doing so – it might seem, as some naysayers have observed, that gold is at best a “barbarous relic;” at worst, just a “pet rock.” And yet…

The War on Cash has unleashed a hydra. From the invention less than a decade ago of the “cryptocurrency” Bitcoin, to its present-day evolution, a change of monumental significance is underway.

The Foundation Is the Blockchain

Satoshi Nakamoto is credited with the creation of Bitcoin and as part of its implementation, devised the first blockchain database. By definition, a blockchain “allows connected computers to talk to each other, rather than through a central server. Using a ‘consensus mechanism’ the connected computers on the network stay in sync and agree with each other.” Every data entry references an earlier one, agreeing with the entire chain. (Summary from an essay by Peter van Valkenburgh.)

Three years ago, David Morgan aired his views in an essay titled, “My Two Bits about Bitcoin.” The technology was complex, relatively slow, and looked to become unwieldy. This was 15 months before the debut of a process that now holds the potential to turn night into day for just about any kind of online commercial transaction… and could spark a revolution for the use of “digital gold and silver.”

The key (for now) is Ethereum. Ethereum is a computing platform – and a cryptocurrency… that runs smart contracts – applications that run exactly as programmed without the possibility of downtime, censorship, fraud, or third-party interference (ethereum.org).

The Potential and the Promise

Acceptance of gold and silver as a store of value and medium of exchange most likely pre-dates recorded history. Then someone (the Chinese?) got the bright idea to create a paper substitute exchangeable for, but still backed by, precious metal.

American Gold Buffalo

In Venezuela, one ounce of gold
buys a house.

This worked swimmingly until they decided to print unlimited amounts of what David Morgan at The Morgan Report has so famously termed “paper promises.” These promises are never fully honored, causing the eventual decline of a circulated currency’s purchasing power to zero.

The original promise of value is accepted in good faith, but when that promise is broken through devaluation, faith evaporates, along with the value of the once-supported currency. For proof of this today, look no further than Venezuela.

Digital Metal Data Points

A number of firms work to merge cryptocurrencies with physical gold and silver. The weakness of purely digital money is that it is unbacked by anything tangible. It only works for people who have electricity and are connected to the Internet. Physical gold and silver don’t rely upon the grid and can never be “hacked.”

Cryptocurrencies such as Bitcoin cost almost nothing to transfer around the globe and they promise to be easy to transact with (akin to using a credit card). If those digital tokens can be anchored to tangible gold and silver bars, they could be more compelling as a store of value.

As you read the following passage in italics from an interview with Beautyon, editor of bitcoin-think, conducted on lfb.org., try substituting the term “digital metals” wherever you see “bitcoin.” Doing so shows the potential, the promise, and very possibly – eventual reality – for the evolving union of digital metals with physical gold and silver.

Bitcoin will succeed. There is nothing any government can do to stop it… No amount of time can put the Bitcoin genie back in the bottle…. (it) is good money, and all the State can produce is bad money… Bitcoin means the final death of government fiat money. It means the end of Big Government. It means an era of unprecedented prosperity, as savings once again become the source of investment.

Will the Promise Be Honored?

The keys to the argument are that when a person purchases digital metal, it must be stored in a secure location, in physical form of a stated purity, immediately available to its designated owner upon demand. It is not being loaned to others. The price is transparent, accurate, and available globally.

Bitcoin

Even though this is a nice image,
remember that Bitcoin itself is intangible.

The “authorities” have always sought, and will continue to try to control, peoples’ activities. But to the extent that investable physical gold and silver are removed from the control of exchanges and government coffers, and placed under “supervision” of the individual, the ability to manipulate the price and physical supply will deteriorate.

This, I believe, is the potential that digital metal represents. It will operate on a decentralized, secure, transparent platform. The blockchain and the portal through which it flows could be Ethereum or a similar protocol.

And if the “promise” is not honored? Then the concept of digital metal will be dispatched to irrelevance in the dustbin of history, as other experiments which have toyed with its essence have been. But pass or fail, no amount of digital tinkering will be able to stunt demand for gold and silver. Rather, the result will have simply been to introduce millions of new holders to the virtues of physical precious metals ownership.

Unintended Consequences

Global governments, having previously removed metals’ backing from the currencies they print, now attempt to force their citizens into holding only digital paper currency “wealth.” How ironic it will be, if by these very actions, the ultimate effect turns out to be the unleashing of new demand waves for digital metal – redeemable for physical gold and silver.

Last week, Stewart Thomson of Graceland Updates predicted the following:

“Going forwards, India-China operated digital gold wrapped in blockchain technology will be the undisputed currency of the world gold community, a 3-billion-person-strong titanic force…. This is the beginning of the end for world gold price manipulation, and you can take that to the bank.”

 

Resolution point for gold

 Gold Today –New York closed at $1,219.30 yesterday after closing at $1,219.80 Tuesday. London opened at $1,222.00 again, today. 

Overall the dollar was slightly stronger against global currencies, early today. Before London’s opening:

         The $: € was slightly weaker at $1.0870 after yesterday’s $1.0872: €1.

         The Dollar index was slightly stronger at 99.65 after yesterday’s 99.43

         The Yen was weaker at 114.19 after yesterday’s 113.95:$1. 

         The Yuan was slightly weaker at 6.9056 after yesterday’s 6.9040: $1. 

         The Pound Sterling was weaker at $1.2941 after yesterday’s $1.2969: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    11

     2017    5    10

     2017    5    9

SHAU

SHAU

SHAU

/

273.79

275.04

/

273.91

274.59

$ equivalent 1oz @    $1: 6.9040

       $1: 6.9064

       $1: 6.9035

      

  /

$1,233.03

$1,238.66

/

$1,233.57

$1,236.64

 

The Shanghai Gold Exchange was trading at 274.00 towards the close today. This translates into $1,229.12. New York closed at a $14.82 discount to Shanghai’s close yesterday. London opened at a discount of $7.12 to Shanghai’s close today.

With China continuing to see a slowly falling gold price, New York and London have stopped falling [for now?] seeing prices sitting on support around $1,220. It is clear that gold prices in Shanghai have to stop falling if we are to see gold prices turn around.

We need a clear move in gold prices to see where pricing power lies in the gold world.

LBMA price setting:  The LBMA gold price was set this am at $1,221.00 from yesterday’s $1,222.95.  

The gold price in the euro was set at €1,123.48 after yesterday’s €1,125.02.

Ahead of the opening of New York the gold price was trading at $1,223.65 and in the euro at €1,126.91. At the same time, the silver price was trading at $16.32. 

Silver Today –Silver closed at $16.22 yesterday after $16.15 at New York’s close yesterday.

 Price Drivers

We are seeing the influence of falling gold prices in Shanghai on New York and London, as we commented above, but New York prices are holding on despite no gold ETF demand. This demand has been responsible for U.S. gold prices rising. Until we see the strong move, we expect [either way], we cannot clearly see the way forward. We are at one of those junctures we call a ‘point of resolution’.

When all markets see less and less volatility it does mean that demand and supply have come into balance. Once that happens, it takes a relatively small sale or purchase to trigger a strong move. The situation is also ripe for a classic ‘bear raid’ one would think. But the growing influence of Shanghai and its policies against speculation has recently made such raids unsuccessful. So we sit and wait!

Events like the Comey firing do not move gold prices. What they do do, is to cause us to reflect on the state of President Trump’s administration and its ability to get things done as he promised. Trump’s promises of major tax cuts, combined with promises of infrastructure renewal, have not yet happened. While we expected these promises to take time to implement, the problems President Trump is hitting in his own party, as well as in government, point to enormous difficulty in getting these measures passed by Congress and the Senate, when he does try to get them through. Hence, we have to lower our expectations of “making America Great again”. Overall this is supportive of gold prices.

Gold ETFs – Yesterday once again saw no change in the SPDR gold ETF or the Gold Trust. Their holdings are now at 851.891 tonnes and at 201.69 tonnes respectively.

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

China and India step up to the gold demand plate

 My latest article on Sharpspixley.com

As always appears to be the case, statistics on gold demand can be contradictory which is perhaps why gold’s fundamentals are so difficult to tie down.  Take the World Gold Council (WGC)’s latest Gold Demand Trends report which suggests global gold demand fell by 18% (228 tonnes) during Q1, compared with the admittedly very high (record) figures achieved in Q1 2016.  But within the report there do appear to have been some major anomalies.

Firstly, the slump in assessed demand was largely for two reasons – sharply reduced gold ETF inflows and a fall in Central Bank gold reserve increases.  But, it should be noted, that gold inflows into the ETFs did remain positive over the quarter and the Central Bank figures were skewed by China’s non reporting of any gold reserve changes since its currency was accepted as part of the IMF’s Special Drawing Rights (SDR) in October last year.  In Q1 2016, China had announced additions of 35.2 tonnes to its official reserves – some 15% of the fall in assessed gold demand during the latest quarter.  If one takes China out of the equation other Central Bank gold additions came to a positive 7.4 tonnes – and on its reserve reporting track record China’s zero reserve addition figure has to be considered suspect.

Coming back to Central Bank shortfalls, can we believe the China figures at all?  One should recall that up until July 2015 China only reported any reserve increases at five of six year intervals maintaining the pretence that it was not adding to its reserves monthly, as it obviously was.  But, in the immediate run up to the IMF decision to re-jig its SDR make-up to include the yuan, the Asian nation began announcing monthly reserve increases.  Once the yuan officially became a part of the SDR, China has reported zero gold reserve increases.  Can this just be coincidence?

China is known to favour building its gold reserve as an important facet of securing its place in the global trade picture and its whole gold reserve adding policy has always been shrouded in secrecy.  Some China-watching  analysts will argue that, in fact, its real gold reserve is far higher than the officially stated figure of 1,842.6 tonnes.  After all it has been the world’s largest gold producer for some years now….

A critical juncture for the gold price

 

Gold Today –New York closed at $1,219.80 yesterday after closing at $1,227.20 yesterday. London opened at $1,222.00 today. 

Overall the dollar was stronger against global currencies, early today. Before London’s opening:

         The $: € was stronger at $1.0872 after yesterday’s $1.0904: €1.

         The Dollar index was slightly stronger at 99.43 after yesterday’s 99.34

         The Yen was weaker at 113.95 after yesterday’s 113.74:$1. 

         The Yuan was stronger at 6.9040 after yesterday’s 6.9064: $1. 

         The Pound Sterling was stronger at $1.2969 after yesterday’s $1.2926: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    10

     2017    5    9

     2017    5    8

SHAU

SHAU

SHAU

/

275.04

275.59

/

274.59

275.30

$ equivalent 1oz @    $1: 6.9040

       $1: 6.9064

       $1: 6.9035

      

  /

$1,238.66

$1,241.66

/

$1,236.64

$1,239.83

 The Shanghai Gold Exchange was trading at 275.60 towards the close today. This translates into $1,236.62. New York closed at a $16.82 discount to Shanghai’s close yesterday. London opened at a discount of $14.62 to Shanghai’s close today.

Today is one of those days when we can see just where pricing power lies. New York has tried to pull prices back well below support, hitting $1,216 at one point. Shanghai took prices higher today in their consolidation process, but London moved in line with New York last night.

How New York and London perform today becomes critical. If Shanghai falls, then pricing power sits in London and New York, today.

LBMA price setting:  The LBMA gold price was set today at $1,222.95 from yesterday’s $1,225.15.  

The gold price in the euro was set at €1,125.02 after yesterday’s €1,124.09.

Ahead of the opening of New York the gold price was trading at $1,223.65 and in the euro at €1,125.51. At the same time, the silver price was trading at $16.28. 

Silver Today –Silver closed at $16.15 yesterday after $16.28 at New York’s close yesterday.

Price Drivers

The gold price continues to consolidate around $1,220 support. New York tried to take it lower but Shanghai is holding higher levels. With London following New York today we are at a critical juncture for the gold price. If it convincingly breaks down below current levels, strongly, it is bad news for the gold market in the short term. If it rises it will be signifying that the current pattern being formed is positive for the gold price.

The fundamentals of strong Asian demand and a weak dollar are positive for gold despite it moving with the dollar, down recently. It comes back to who controls the gold price?

As we said yesterday we are soon to see a strong move, either way. We can’t be more precise than ‘soon’. The fundamentals certainly point to higher prices, but have been doing so all the way through the fall of late.

Volatility

Across the financial world volatility levels have fallen to extremely low levels.  In this almost blithe atmosphere realities are almost being ignored. Equity markets are at record levels, higher than they should be according to their earnings levels and bond yields far too low given the size of global debt. Granted, the U.S. economy is looking healthy, but not so healthy as to see wages rise. Europe is starting to give evidence of growing economies and China is looking healthy. This is when investors take a longer view and realize that the best is here and not, ‘still to come’.   A lot of global uncertainties have dissipated this year [in the E.U., with France electing  macron, a pro-EU centrist, etc], but markets have discounted much of this.  But few look around and say the future is rosy.

History tells us that this is the sort of investment climate when the markets are close to their tops and the selling starts. One should be contemplating a defensive portfolio.  

Gold ETFs – Yesterday saw no change in the SPDR gold ETF (GLD) or the Gold Trust (IAU). Their holdings are now at 851.891 tonnes and at 201.69 tonnes respectively.

Since January 4th 2016, 252.227 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 42.171 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

To ensure you can benefit from the future higher gold prices we will see then, you need to hold it in a manner that makes sure it can’t be taken from you. Contact us at admin@stockbridgemgmt.com to buy physical gold in a way that we feel, removes the threat of it being confiscated. We’re the only storage company that offers that!
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  Global Gold Price (1 ounce)
  Today Yesterday
Franc Sf1,231.79 Sf1,228.90
US $1,223.65 $1,225.60
EU €1,125.51 €1,124.56
India Rs.79,072.26 Rs. 79,209.30