Big gold ETF inlow gives gold small boost

Gold TodayNew York closed Friday at $1,310.90.  London opened at $1,318.

    • The $: € was stronger at $1.1159: €1 from $1.1240: €1 Friday.
    • The Dollar index was stronger at 95.92 from 95.30 Friday.
    • The Yen was slightly weaker at 102.04: $1 down from 102.00: $1 Friday against the dollar.
    • The Yuan was slightly stronger at 6.6737: $1 from 6.6740: $1 Friday.


  • The Pound Sterling was very weak at $1.3058: £1 from Friday’s $1.3229: £1.


Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
     2016  09  19

     2016  09  15







Dollar equivalent @ $1: 6.6737

$1: 6.6740





With Shanghai back in business we see it registered the purchase into the SPDR gold ETF and took the price higher. On the surface it looked like Shanghai was walking its own road after the holidays, but with the SPDR having to find the gold in London today to supply the Friday buying we feel that Shanghai was fulfilling its role in the 24-hour global gold market.

LBMA price setting:  The LBMA gold price setting on Thursday was at $1,315.05. Friday it was at set at $1,314.25.

The gold price in the euro was set at €1,178.41 against yesterday’s €1,171.03.

Ahead of the opening of New York the gold price was trading at $1,314.80 and in the euro at €1,177.98.  At the same time, the silver price was trading at $19.12.

Silver Today –The silver price was dropped to $18.77 at New York’s close Friday down from $18.98, Thursday.  

Price Drivers

The gold price received a positive input from heavy buying into the fund as you can see below. This has led to Shanghai and London lifting prices today. The buying and selling into the SPDR gold ETF continues to be the main driving force behind the gold price. As we said on Friday, “… the drifting nature of the gold price could be turned back just as fast by a large buy order.” This is what we are seeing now.

This week we expect market moving action from the Bank of Japan in the potential stimuli additions it may announce, or not. With the FOMC also due to meet this week we expect to hear a great deal of chatter on the subject of a rate hike until then.

Indian – The Indian government plans a proposal that includes a major increase in the tax on gold and other precious metals. The gold markets in India expect a Sales Tax between 2%-6%. Precious metals are currently taxed at between 1%-1.6%. If this happens, we expect a loud outcry from those on whom it is imposed.

We have pointed out how Indians are unwilling to bow to government on import duties, as well as Sales tax impositions including striking against such taxes. Normally, taxes deter the buying of gold, but in India there is a long tradition of smuggling gold into the country, with the public more than happy to disobey government and what is seen as their corrupt bureaucrats when policing the trade. We can just hear the whooping from smugglers at the prospect of such an imposition of tax. It will simply serve to make their business more profitable and to expand. As to gauging the volume of smuggled gold into the country, any figures should be treated as uninformed guesses. We have heard figures of between 150 and 250 tonnes per year, but have to question the willingness and veracity of smugglers who come forward with such statistics. It could be much higher! Right now such speculation is likely to spur demand ahead of such an imposition.

Gold ETFs – There was a huge purchase of 10.386 tonnes of gold into the SPDR gold ETF (GLD) but no change in the Gold Trust (IAU)Friday, leaving their respective holdings at 942.611 tonnes and 225.84 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen by 368.149 tonnes.

Silver – Silver prices are back over $19.00 showing great resistance to falling too far into the $18.00 area.

Julian D.W. Phillips | | StockBridge Management Alliance


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