2016 to be ‘troubled’ with volatility, turbulence and uncertainty. How long can gold stay depressed?

The New York gold price closed at $1,074.60 up $1.70 from $1,072.90.  In Asia prices drifted higher to $1,075 as the dollar weakened slightly to 98.40 down from 98.58 on the dollar Index. The euro is at $1.0935 up from $1.0856 yesterday against the dollar. The London a.m. LBMA gold price was set at $1,078.40, up from $1,071.75 seen Tuesday.  In the euro the fixing was €986.55 down from yesterday’s $986.79. Ahead of New York’s opening, the gold price was trading at $1,078.45 and in the euro at €987.73.  

The silver price in New York closed at $14.16 down 12 cents. Ahead of New York’s opening the silver price stood at $14.27.

Price Drivers

The gold and silver prices are following the euro, as we forecast and should continue to do so through the rest of this week until the Fed does what it is going to do. We believe that they will have a surprise in store for us!

Consistent with the waiting game the markets have adopted this week, we saw no sales from the SPDR gold ETF and nothing from the Gold Trust, on Tuesday. The holdings of the two gold ETFs, the SPDR gold ETF and the Gold Trust remain at 634.63 tonnes in the SPDR gold ETF and at 157.07 in the Gold Trust.

What is of growing concern across the world is the slowing global economy. This exposes vulnerable economies, sectors and industries to ‘financial accidents’ in 2016.  Yes, it is most clearly expressed in the commodity sector, where we saw Anglo American’s plans to cut the workforce from 135,000 to 50,000 in the near future. Such a massive shrinking is not because of short term factors but to a long-term scenario in commodities.

At current gold prices Mark Bristow of Randgold Resources tells us that the gold mining industry now has a life of five years as they move to higher grades and shorter lives.  While this tells us that production has increased it cannot last for long before we see more closures and huge layoffs. Mergers and acquisitions will fuel that process.

It is time to begin looking forward to 2016. At first glance we see 2016 to be a ‘troubled’ year with volatility, turbulence and uncertainty reaching new heights. How long the gold & silver markets can continue down in such a scene is impossible to say. Why? Because the gold price does not reflect the physical gold markets. It reflects currencies and will therefore reflect the currency crises we expect to see then. The shift of wealth to the east will impact on western financial markets and the precious metal markets, as gloom shows signs of becoming doom. We may well see the start of that story when the Fed makes its play next week.

The silver price remains strong over $14.00 and should hold here over the week

Julian D.W. Phillips for the Silver & Gold Forecasters – www.silverforecaster.com and www.goldforecaster.com

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