Either Clinton or Trump Presidency Would Be Good for Gold

Gold TodayNew York closed at $1,337.30 yesterday after the previous close of $1,337.90.  London opened at $1,334.00 again.

    • The $: € was slightly stronger at $1.1245: €1 from $1.1252: €1 yesterday.
    • The Dollar index was slightly stronger at 95.38 from 95.32 yesterday.
    • The Yen was slightly stronger at 100.42: $1 up from 100.44: $1 yesterday against the dollar.
    • The Yuan was slightly stronger at 6.6682: $1 from 6.6701: $1 yesterday.

 

  • The Pound Sterling was slightly stronger at $1.2947: £1 from yesterday’s $1.2933: £1.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
     2016  09  27

     2016  09  26

SHAU

SHAU

287.09

287.22

286.85

287.06

Dollar equivalent @ $1: 6.6682

$1: 6.6701

$1,339.12

$1,339.34

$1,338.00

$1,338.6

New York, Shanghai were barely changed on the day, but between the close of Shanghai and opening of London dealers have been pulling back prices ahead of the opening of London in line with a slightly weaker dollar, which then lifts prices in the Yuan.

To us this indicates the position of dealers [fearing sales, either because of their stock positions [unlikely] or because they may be caught on the exchange rates [likely], so take a cautious stance. Either way we do not see anything of significance in this as the prices are down only slightly.

The gold price in global gold markets still appears to be gathering strength to attack overhead resistance once more.

LBMA price setting:  The LBMA gold price setting was at $1,335.85 against yesterday’s $1,336.30.

The gold price in the euro was set at €1,188.06 against yesterday’s €1,187.61.

Ahead of the opening of New York the gold price was trading at $1,336.20 and in the euro at €1,190.27.  At the same time, the silver price was trading again at $19.42.

Silver Today –The silver price fell to $19.40 at New York’s close yesterday down from $19.66, Thursday.  

Price Drivers

The Fed is out of the limelight now because of the clever addition of certainty as to direction of interest rates likely at the end of the year. This appears to have negated any reading of nuances into words spoken by Fed officials.

Instead we see the attention turning to the [presidential?] debates, which, while they appear to have descended into finger pointing, are, we are sure, simply a publicity exercise for the bulk of voters.

For gold investors and macro-economic followers, the issues seem to be simpler. We have had for several years now a government that was gridlocked [emasculated?] as regards taking effective action. A Clinton Presidency would continue that [good for gold prices]. A Trump Presidency would remove that and give power to ‘government’ to act decisively once more. We see a large potential for globally divisive policies [good for gold prices too] under such a presidency.

The Fed has proposed additional restraints on Goldman Sachs & Morgan Stanley in commodity trading. We have long heard of complaints on manipulation of prices on gold and silver. What such banks are able to do is to ‘manage’ supply lines and distribution in such a way to manipulate prices to suit the positions they have in the market place. Such ‘management’ of distribution gives the banks effective control over supply and demand which allows them to make prices and to have prior knowledge of situations that directly affect prices.  

It is simpler to take a position in the paper [COMEX] market then a back-up position in the physical market to ensure that one profits on COMEX positions while making a small loss in the physical market. The Fed is simply making it more expensive to take a position in the physical market now. We do not think that will reduce the ability of the banks to ‘manipulate’ prices in this way. Just cover the extra expense with bigger paper positions!

The ‘spin’ being given on these restraints is that they add protections to environmental threats due to accidents which hurt the banks so much that they threaten the financial system.  

‘Managing’ prices in markets will we feel remain untouched by these additional regulations.

Gold ETFs – There were no purchases or sales into or from the SPDR gold ETF (GLD) but purchases of 1.88 tonnes of gold into the Gold Trust (IAU) yesterday, leaving their respective holdings at 951.216 tonnes and 226.29 tonnes.

Again, these purchases had virtually no impact on the gold price, leaving us in a position of waiting to see if more substantial purchases are coming. This is what’s needed to move gold and silver prices higher.

Silver – Silver prices continue to retreat while gold moves only slightly just below overhead resistance. If gold falls, we see little downside for silver now as they pre-empted gold’s fall.  Should gold rise, we see silver sprinting up.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

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