Gold and silver struggling at support

Gold TodayNew York closed at $1,317.40 Friday after the previous close of $1,321.40.  London opened at $1,314.

    • The $: € was stronger at $1.1237: €1 from $1.1173: €1 Friday.
    • The Dollar index was stronger at 95.82 from 95.82 Friday.
    • The Yen was stronger at 101.21: $1 up from 101.21: $1 Friday against the dollar.
    • The Yuan was stronger at 6.6720: $1 from 6.6720: $1 Friday.

 

  • The Pound Sterling was weaker at $1.2956: £1 from Friday’s $1.2956: £1.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
     2016  10  3

     2016  09  30

SHAU

SHAU

Closed

284.79

Closed

284.88

Dollar equivalent @ $1: 6.6720

$1: 6.6720

/

$1,327.63

/

$1,328.05

Once again we see lower prices dominating while Shanghai is on holiday. New York prices dominate when China is closed.

The Yuan is now part of the SDR of the IMF, for the Chinese an important step on the way to international acceptability as a global currency. We expect to see its use accelerate from now on. Today’s Yuan exchange rate is merely academic because of the holiday there.

LBMA price setting:  The LBMA gold price setting was at $1,318.65 against Friday’s $1,327.90.

The gold price in the euro was set at €1,173.49 against yesterday’s €1,188.49.

Ahead of the opening of New York the gold price was trading at $1,315.80 and in the euro at €1,170.85.  At the same time, the silver price was trading again at $19.09.

Silver Today –The silver price rose slightly to $19.16 at New York’s close Friday from $19.07, Thursday.  

Price Drivers

The story of the week, this week, is Deutsche Bank. The media and Deutsche bank are telling the markets everything is OK. Deutsche Bank is facing an up to $14 billion fine from the Justice department and now is facing charges from Italy.  You have all read the papers and what they say, but the real problem is that the ongoing reports of bad behavior continue alongside the belief that the German government will break its own rules and rescue them no matter what. This is despite their heavy handedness over Italian and Greek banks. In turn this speaks of lack of confidence ‘in the system’ and cohesion within the E.U. needed to resolve the problems.

This is now being demonstrated by hedge funds removing their funds from the bank. There is no doubt that no matter what state Deutsche bank is in, if it loses the confidence of its clients and the system sticks to its rules Deutsche bank could fall. But everything will be done to protect it no matter what it has done. The story is gold positive.

As a reminder of what can happen if the banking system loses the trust of the financial world, in 1933 there were a host of ‘bad banks’ in the U.S. forcing the government under Roosevelt to close down the banking system for a long weekend. The bad banks were then closed, gold was confiscated and placed behind the dollar in its support. The banking system of all countries will be made to stand no matter what and no alternative to national currencies will be permitted to compete with them, including gold or cash held in or outside the banking system.

Gold ETFs – There were sales of 1.187 tonnes from the SPDR gold ETF but no change in the Gold Trust Friday, leaving their respective holdings at 947.952 tonnes and 226.68 tonnes

Since January 4th this year, the holdings of these two gold ETFs have risen by 374.33 tonnes.

Silver – Silver prices are holding above $19, above support.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

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