Gold – an investment without national boundaries

Gold This MorningThe New York gold price closed Monday at $1,190.20 up from $1,173.60 up $16.60. Ahead of London’s opening some prices were quoted at $1,186 but as the market started to open, it rapidly climbed back to $1,193. Then the LBMA set it at $1,188.90 up from Monday’s $1,173.80 up $15.10 with the dollar index down slightly at 96.04 down from 96.97 on Monday. The dollar continues weaker against the euro at $1.12885 down from $1.1156 against the euro on Monday. The gold price in the euro was set at €1,053.20 up from €1,052.17. Ahead of New York’s opening, the gold price was trading at $1,193.30 and in the euro at €1,058.64.  

Silver This Morning –The silver price in New York closed at $15.31 up 27 cents at Monday’s close.  Ahead of New York’s opening, the silver price stood at $15.30.

Price Drivers

This morning across the globe, markets are falling around 5% taking nearly all of them close to a ‘bear’ market as defined by a 20% drop from their peaks. Markets are discounting slow growth across the world and a poor growth scene. Investors from the U.S. are pushing into gold now and as we have said for a long time now, once investors turn back to gold they will find it hard to get what they want and cause a rapid rise in gold prices. This is happening as we see now. In a bear market investors run to cash or short dated securities within their nation, but the beauty of gold is that is has no boundaries in the financial world. It is cash and an asset with no national obligations. Right now it is a haven. More surprisingly investors are turning to the Yen and to some extent the euro as they flee the dollar. Both these currency areas are doing their best to force their exchange rates down and not be a ‘safe haven’.

Let’s be clear, this is not a short-term panic from which markets will recover quickly. It denotes real and present dangers in the financial world. Global banks are suffering this morning as debt holdings take a higher risk as global debt burdens are far too high for shrinking economies. The markets are pricing in these higher risks too! Are we facing a debt breakdown in global markets?

If market emotions continue to point to debt crises and full bear markets in equities, gold and silver are going to come into their own.

Monday saw yet another large purchase of 5.056 tonnes into the SPDR gold ETF, making just under 10 tonnes bought this week. One more day of this and we will have recovered all the gold sold from the SPDR gold ETF in 2015.  We also saw another 0.75 of a tonne added to the Gold Trust. The holdings of the SPDR gold ETF are now at 703.518 tonnes and at 173.78 tonnes in the Gold Trust. We are entering “extreme times” in which gold and silver flourish.
Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com

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