Gold and silver still in consolidation mode

Gold TodayGold closed in New York at $1,319.30 on Wednesday after Tuesday’s close at $1,332.30.  

    • The $: € rose to $1.1029 up from $1.1002.
    • The dollar index fell to 97.00 from 97.12 Wednesday.
    • The Yen was slightly weaker at 107.02 from Wednesday’s 106.48 against the dollar.
    • The Yuan was stronger at 6.6742 from 6.6785 Wednesday.

 

  • The Pound Sterling was stronger at $1.3254 down from Wednesday’s $1.3178.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  21

2016  07  20

SHAU

SHAU

282.87

/

282.96

/

Dollar equivalent @ $1: 6.6742

$1: 6.6770

$1,318.25

/

$1,318.67

/

Shanghai prices were in line with those of New York. Demand in China is rising with these lower prices. The media has labeled retail gold buyers as ‘Mammas’, pointing to the conservative older ladies who invest for long term financial security. These investors likely experienced the days of hyperinflation, or at least their own mothers related tales from those days.  

We find it extraordinary that the media likes to give demeaning names to those who distrust the global financial system and favor gold itself. We have found such investors just as intelligent and perceptive as traders who go for short term profits. Fortunately few precious metal investors are affected by such puerile name calling.

LBMA price setting:  $1,322.00 down from Wednesday 20th July’s $1,325.60.

The gold price in the euro was set at €1,200.08 down €4.00 from Wednesday’s €1,204.00.

Ahead of the opening in New York the gold price stood at $1,320.65 and in the euro at €1,198.63.  

Silver Today –The silver price closed in New York at $19.61 on Wednesday down from $20.00 on Tuesday.  Ahead of New York’s opening the price was trading at $19.42.

Price Drivers

With today’s European Central Bank meeting likely to have an effect on exchange rates and the gold price the prospect of more easing becomes important. But as with the Bank of Japan’s failure to move of late [saying ‘helicopter money’ is off the table], so the E.C.B. finds itself in a position where it is extremely limited in what it can do now or in the future. Lending is timid, so stimuli are not bearing fruit!

With the downward impact of Brexit on growth there are few relevant statistics that can be used to guide the E.C.B. Therefore we do not expect any action today [rates remain unchanged]. But we might see signals for more stimuli to be deployed when data is available for the next decision in September.

A major concern is how much further Mario Draghi of the E.C.B. can go [like the B. of J.] with a stimulus package that already includes a €1.7 trillion-euro ($1.9 trillion) asset-buying program increasingly constrained by ultra-low debt yields. A problem for policy makers is that although they’ve gone out of their way to spur credit expansion, the pick-up in lending remains timid. Under its own rules, the central bank can only buy debt with a yield at or above the deposit rate. Will they change rules in the future?

The E.U. is in uncharted territory. It is likely to castigate governmental inactivity on the growth front. This is gold & silver positive!

Gold ETFs – In New York on Wednesday there were no purchases into the SPDR gold ETF (GLD) or the Gold Trust (IAU), leaving their holdings at 965.221 tonnes and at 216.94 tonnes respectively.

Since January 4th this year, the holdings of these two gold ETFs have risen by 384.57 tonnes.

Silver –Silver prices continue to fall relative to gold.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance [Gold Storage geared to avoid its confiscation]

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