Next strong move in gold could be decisive

 

Gold Today –New York closed at $1,243.50 yesterday after closing at $1,251.5 yesterday. London opened at $1,246.00 today. 

Overall the dollar was slightly stronger against global currencies, early today. Before London’s opening:

         The $: € was slightly stronger at $1.1145 after yesterday’s $1.1155: €1.

         The Dollar index was stronger at 97.66 after yesterday’s 97.57

         The Yen was stronger at 111.14 after yesterday’s 111.39:$1. 

         The Yuan was slightly weaker at 6.8264 after yesterday’s 6.8258: $1. 

         The Pound Sterling was weaker at $1.2627 after yesterday’s $1.2659: £1.

Yuan Gold Fix

Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    21

     2017    6    20              

     2017    6    19

SHAU

SHAU

SHAU

 

/

275.61

276.21

 

Trading at 276.3

275.91

276.18

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8264

       $1: 6.8258

       $1: 6.8154     

 

   

/

$1,250.89

$1,255.54

 

Trading at $1,253.92

$1,252.25

$1,255.40

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 Despite the central Bank in Hong Kong statement of yesterday that it wanted a stable exchange rate to the dollar, the Yuan has weakened a little in the last two days. This does not mean the policy has changed, just as it will not be a fixed exchange rate.

What is becoming clear is that Shanghai’s pricing power over the gold price is being proved this week and last, as it has been leading the way both ways.

Now the three global gold markets are in roughly in line with each other. Again, we are seeing evidence of Shanghai’s pricing power as speculation in the three global gold markets is at low levels and where it is seen it is having only a temporary impact on the gold price.

Speculative action is barely visible in the gold price after last week’s sale of 12 tonnes after the Fed. To us this is the influence of Shanghai which will draw off such gold sales. That move was an attempt to drive gold prices down, but it had only a small impact on the gold price.

Silver Today –Silver closed at $16.41 yesterday after $16.65 at New York’s close Monday.

LBMA price setting:  The LBMA gold price was set this morning at $1,247.05 from yesterday’s $1,246.50.  The gold price in the euro was set at €1,118.83 after yesterday’s €1,117.74.

Ahead of the opening of New York the gold price was trading at $1,245.20 and in the euro at €1,117.47. At the same time, the silver price was trading at $16.44. 

Price Drivers

Shanghai

There has been no physical gold activity in the U.S. this week on the two WGC gold ETFs that we follow, telling us that the U.S. investor is sitting on the sidelines. London is moving in line with Shanghai and New York is following London. Shanghai was leading the way down but, at the moment, Shanghai has turned back up. The dollar is rising today and is not influencing the gold price.

We reiterate that the next strong move will be a very decisive one as the market’s demand and supply is into balance.

The market opening for gold in London is cautious and can turn either way in a heartbeat but is moving with Shanghai. It is drifting sideways with a slightly easier tendency so far today.

Oil

The oil price will affect global markets as it struggles to stay close to $50. Today it continues to fail to hold onto that price area. With U.S. production growing alongside that of Iraq and Libya growing supplies are countering the production cuts of others in OPEC and Russia. There is a distinct danger that the continued increase in overall oil production globally will take the oil price down further and into an area from where it is unlikely to recover for a long time.

This acts as a stimulus to the global economy as average oil costs will remain low for some time. Bear in mind we are talking much lower oil prices if this happens. Will gold fall on this? We think not, because to link to oil prices in the seventies was as much a monetary issue as anything else. Then it was important that the oil price rise, so as to increase demand for the U.S. dollar. The reverse is true with oil prices falling.  We believe that other currencies may well be being used to pay for oil now.

Russian &  Chinese gold reserves

It is reported that Russia has added another 21.8 tonnes to its reserves in May. It faithfully reports its reserves to the I.M.F. whereas China has ceased doing so.

Please note that the failure to report additions to reserves by the People’s Bank of China does not mean it is not doing so.

As we have said before the P.B. of C. considers that it “owns gold through its people”. In other words, while the people technically own the gold in China, the P.B. of C. controls it. So control is far more important than ownership, with control having more than the rights of ownership!

Gold ETFs – Yesterday once again, saw no sales or purchases from or into the SPDR gold ETF 0r the Gold Trust.

Their holdings are now at 853.684 tonnes and, at 207.06 tonnes respectively.

 Julian D.W. Phillips 

 GoldForecaster.com | StockBridge Management Alliance 

 

 

Has Mineweb effectively disappeared as an international site?

Time was when Mineweb.com, based in South Africa and owned by South Africa’s Moneyweb, run by well known journalist Alec Hogg, was arguably the world’s top independent international mining industry website.  It was edited and managed by myself out of London and carried international mining sector coverage perhaps unequalled anywhere in the world at the time.  We had some great internationally-based writers and it was supported by advertising from mining and associated companies from several countries – and in at least one year its revenues were such that they were instrumental in keeping its parent company viable.  The bulk of its income came in in US and Canadian dollars which for a company domiciled in South Africa, with a depreciating domestic currency, was doubly valuable.

Recently, having been asked by several people what had happened to the site, I clicked on Mineweb.com to see how it was faring, to find it was nowadays only a subsection of its parent, Moneyweb.co.za, and was only publishing a handful of articles.  The first featured article on the Mineweb site’s homepage was a Reuters article on Anglo American’s 2016 performance, dated January 26th, almost 6 months earlier and the second featured article was also a Reuters story on Goldman Sachs’ copper price predictions for 2017 – which was even older!

Scrolling down through the site I did find a couple of articles written in the current month, both Reuters stories on Sibanye Gold’s Cooke Section problems, but it appears that original articles written by Mineweb reporters are nowadays effectively non-existent- or at least that is the way it appears.

So what happened to Mineweb?  The initial nail in its coffin was that Alec Hogg lost control of the parent company and was ousted from its board. (Alec has since set up, and runs, www.biznews.com – a direct competitor to Moneyweb in South Africa). I was still editor of Mineweb at the time, but was soon replaced in that position by Warren Dick in Johannesburg and became just a correspondent for the site.  Our key Reno-based writer, Dorothy Kosich was let go and my position gradually became untenable as the site became more and more South African focused and we agreed to part ways.  That left one directly employed internationally-based writer, Kip Keen in Canada, and eventually he was let go too.

Most of the mining based advertising had disappeared, along with our key advertising salesperson, Jan Chadwick, who resigned when she saw the direction the site was taking.  She is now semi-retired occasionally helping out her husband, John Chadwick on mining conferences for his own mining publication, International Mining, now probably the world’s top mining monthly magazine.

So Mineweb still exists, but only as a section on its Moneyweb parent site, and publishes little of its own material, relying primarily on the Reuters and Bloomberg services for its articles with occasional input from its parent company’s correspondents on South African mining matters – and even then, as with the Sibanye articles mentioned above it may well use one of the international wire services. That, in my opinion, is a great shame.  Its readership outside South Africa is a tiny fraction of what it used to be – there can now be few, if any, international readers who have Mineweb as their own initial go-to webpage, and its independent editorial coverage of the global mining sector is mostly long gone.  A cautionary tale about what happens to  a niche business when it is taken over by a much larger company which doesn’t see it as a core part of their operation!

Is India’s Gold Market Recovering? – The Frank Holmes SWOT

Strengths

  • The best performing precious metal for the week was gold, off just 1.02 percent despite a Fed rate hike.  The Fed may not be in a position to continue with multiple rate hikes. Mike McGlone, BI Commodity Strategist, points out the current situation that both crude oil futures and Treasury bond yields are falling. Since 1983, the Fed has never sustained a rate hike cycle while both crude and Treasuries are falling.
  • Gold has risen from a three-week low as investors digest the latest rate hike and anticipate the probability of additional rate hikes, reports Bloomberg. Suki Cooper, an analyst with Standard Chartered, writes, “If the market starts pricing in the end to the current hiking cycle, this would remove a major headwind for gold and allow prices to breach the stubborn $1,300 threshold in a sustained move higher.”
  • Bloomberg reports that public sector investors increased their net gold holdings to an estimated 31,000 tons last year, an increase of 377 tons. This is the highest level since 1999.

Weaknesses

  • The worst performing precious metal for the week was silver with a loss of 2.90 percent.  Money managers cut their net-long by about 10 percent this past week.  For the second week in a row, gold traders and analysts surveyed by Bloomberg are bearish. This is the first time survey results have indicated two-week run of bearish outlook since December.
  • Gold futures have had the longest losing streak in three months, as investors have anticipated the Fed’s actions this week. Bullion futures for August delivery closed down for the fourth straight session earlier this week.
  • Palladium has declined after what some analysts see as an unjustified surge. The overall auto market, including the Chinese auto market, is a key demand driver for palladium, and that market is faltering.

Opportunities

  • As investors have sensed the Fed’s reluctance to continue multiple rate hikes, bullish gold investors are increasing their holdings in gold. Bloomberg reports that investors have added $675 million into the SPDR Gold Shares physical bullion ETF, taking the ETF to a six-month high. In addition, gold futures have climbed 10 percent this year on doubts that President Donald Trump’s economic agenda will make it through Congress and uncertainty around the U.K.’s Brexit plan.
  • India’s gold market appears to be recovering after the demonetization scheme last fall and with efforts to improve transparency, reports Bloomberg. Some new policies under consideration include the start of a spot bullion exchange to make the supply of gold more transparent. In addition some taxes could be reduced, such as the import tax of 10 percent and a gold tax of 3 percent versus the 5 percent that some had feared.
  • Barron’s reports that ANZ’s senior commodity strategist Daniel Hynes thinks gold can gold above $1,250 in the short term and break through $1,300 this year. Noting economic conditions and the signs of an improving market in China and India, Hynes goes on the say that the gold price may actually rise above $2,000 by 2025.

Threats

  • Capital Economics takes the opposing view that the Fed will continue to raise rates, more so than the market seems to anticipate, and that gold will fall in the remainder of the year. The firm published a note this week stating their gold price forecast of $1,100 by the end of the year.
  • Investigations into Trump are expanding to now include whether he may have attempted to obstruct justice, and exploring whether there is any evidence of financial crimes.
  • The South African government’s new regulations requiring local mines to be at least 30 percent owned by black people has spurred the rand to weaken the most in more than two months. Nomura International Plc criticizes the new rule, stating that it will deter investment at a time when the country is in an economic recession.  The controversy in Tanzania concerning Acacia Mining continues. Barrick Gold Corp., which owns 64 percent of Acacia, has stepped in to try to resolve the situation. Tanzanian President John Magufuli has demanded payment, and Barrick will help Tanzania build a smelter. Shares in Acacia surged on the news.

Gold drops below $1,250 – looking for direction!

Gold Today –New York closed at $1,256.50 Friday after closing at $1,254.60 Thursday. London opened at $1,250.20 today. 

Overall the dollar was slightly weaker against global currencies, early today. Before London’s opening:

         The $: € was slightly weaker at $1.1188 after Friday’s $1.1174: €1.

         The Dollar index was slightly weaker at 97.24 after Friday’s 97.34

         The Yen was stronger at 111.18 after Friday’s 111.31:$1. 

         The Yuan was almost unchanged at 6.8154 after yesterday’s 6.8152: $1. 

         The Pound Sterling was stronger at $1.2780 after yesterday’s $1.2774: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    19

     2017    6    16              

     2017    6    15

SHAU

SHAU

SHAU

 

/

276.22

278.41

 

Trading at 276.95

276.75

277.37

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8154

       $1: 6.8152

       $1: 6.8019     

 

   

/

$1,255.62

$1,268.12

 

Trading at $1,258.92

$1,258.04

$1,263.35

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

New York closed at almost the same level as Shanghai did on Friday. This morning saw Shanghai $3 higher, but London ahead of its open was trying to pull the price down a few dollars to $1,250, trying to guess the opening mood in London.

Hong Kong’s ‘central bank has stated that it prefers a stable exchange rate against the dollar. It is not independent of Shanghai and, judging by today’s exchange rate the People’s Bank of China agrees as we see the Yuan virtually unchanged today.  This will allow us to see more clearly the differences between the Shanghai Gold Exchange prices and London and New York.

Silver Today –Silver closed at $16.66 Friday

LBMA price setting:  The LBMA gold price was set this morning at $1,251.10 from Friday’s $1,256.60.  The gold price in the euro was set at €1,118.90 after Friday’s €1,124.42.

Ahead of the opening of New York the gold price was trading at $1,249.75 and in the euro at €1,117.64. At the same time, the silver price was trading at $16.63. 

Price Drivers

The Fed

The actions of the Fed last week continue to be digested by markets. In view of the weakening inflation and wage figures a consensus is building that the Fed was too hawkish in view of the data. Of course opinions are irrelevant, it is the action the market takes that counts. The condition for more tightening given by Janet Yellen that ‘the U.S. economy should continue to moderately grow, and continue broadening that growth throughout the economy’ needs to be fulfilled first. The data, so far, in the last couple of weeks is not pointing that way. It may well do so but we need to see that first before we can conclude that it is. We are not convinced.

Today sees the dollar tending weaker. The market opening for gold in London is cautious and can turn either way in a heartbeat. It is drifting sideways with a slightly easier tendency so far today.

Technical position

While the market is giving the impression it is just moving sideways and tranquil, the gold price is at a critical junction. The next strong move in the gold price will tell us the direction for the next few months. But this move has to be several tens of dollars not just a few dollars more or less.

Gold ETFs – Friday, saw no sales or purchases from or into the SPDR gold ETF 0r the Gold Trust.

Their holdings are now at 853.684 tonnes and, at 207.06 tonnes respectively.

Julian D.W. Phillips 

 GoldForecaster.com | StockBridge Management Alliance

U.S. Gold Bureau’s Parent Company to Operate Texas Bullion Depository

 For those unaware, I write occasional articles for Austin, Texasbased precious metals dealer, U.S. Gold Bureau, one of the largest such operations in the USA.  For non-US-based readers of this column the site – usgoldbureau.com  – has blocked access from non US ISPs as the company does not do business outside its home country – that is unless you use something like the Tor Browser (www.torbrowser.com ), which can be set up to make it appear you are based almost anywhere in the world, including the U.S.  While this saves U.S. Gold Bureau from the necessity of responding to queries from people it cannot do business with, it also means that people not located in the USA are also unable to access some interesting market commentary and articles on precious metals published on  the usgoldbureau site.

For this reason I am including this article, with permission, from usgoldbureau.com on the setting up of the Texas Bullion Depository – as the article notes the world’s first state (as opposed to country)-administered bullion depository which is to be run by U.S. Gold Bureau’s parent company, Lone Star Tangible Assets.  US-based readers of lawrieongold.com will, of course, be able to go directly to the usgoldbureau.com website and read it, and the other market commentary which appears on the site, directly.

The article on the Texas Bullion Depository follows:

Texas Comptroller Glenn Hegar has announced the selection of Lone Star Tangible Assets (LSTA) as the vendor that will partner with the Comptroller’s office to build and operate the Texas Bullion Depository – one of the first ever state-administered gold bullion depositories in the world (It has been pointed out to me that the Perth Mint in Western Autralia has a state-owned Gold Depository – Editor). LSTA is the parent company of the U.S. Gold Bureau, one of the nation’s leading tangible assets education and investment firms.

“Lone Star Tangible Assets brings the right combination of experience, financial stability and infrastructure necessary to make this depository a success,” said Hegar. “LSTA had a comprehensive vision for a safe and secure vaulting facility … and they addressed a lot of concerns we had relating to everything from transportation and security to customer service and IT infrastructure.”

Representatives from LSTA and the U.S. Gold Bureau were on hand at the announcement that took place at the Texas Capitol Building to provide more detail regarding existing facilities as well as next steps in the process. LSTA and the U.S. Gold Bureau are based in Texas and have been in the business of buying and selling precious metals since 2008. Their current vault facility is a highest rated Class 3 vault and will serve as the initial location for the depository as the company works to build a new vault facility for the Texas Bullion Depository.

“This is a great moment in the history of our state,” said Hegar. “The Texas Bullion Depository will be yet another example of why Texas is the greatest state in the nation and a leader when it comes to economic innovations. People will be able to sleep at night knowing the State of Texas is protecting their gold.”

“Lone Star Tangible Assets is honored and proud to have been selected for this incredible opportunity,” said Matt Ferris, chairman of LSTA and U.S. Gold Bureau. “We have already developed a fantastic collaborative relationship with the Comptroller’s office and we look forward to working with Comptroller Hegar and his staff as we make history together.”

The Comptroller’s office will provide ongoing oversight of the project to build out the depository and prepare for the opening. The Comptroller’s Criminal Investigation Division (CID) has already performed inspections of existing facilities and physical security measures, while the Information Technology and Information Security Divisions examined proposed software and digital security systems.

“Oh they were very thorough,” added Ferris. “But I think everyone involved in this process wants it to be done right rather than done fast. When you are asking people to trust you with their literal treasure, you need to make sure you’ve done your homework.”

The U.S. Gold Bureau and usgoldbureau.com will continue to operate as they have and will eventually offer secure metals storage at the Texas Bullion Depository, once the facility opens and the necessary details are worked through

 

How Precious Metals Can Help Protect Your Wealth from Hackers

by: Stefan Gleason*

More than five months into Donald Trump’s presidency, the “Russia hacked the election” conspiracy theories still won’t go away. They’re expanding to also implicate Russian hackers for meddling in elections in France and elsewhere. The latest Russian hacking story centers on Qatar.

Hackers

According to the Guardian, “An investigation by the FBI has concluded that Russian hackers were responsible for sending out fake messages from the Qatari government, sparking the Gulf’s biggest diplomatic crisis in decades.”

The Russian government has repeatedly denied involvement in these hacking campaigns.

Regardless of whether the news about Russian hackers is fake, the threat of cyber attacks is very real.

In recent months, major e-mail providers and e-commerce sites have been hit by hackers. They often take customers’ information and try to sell it on the dark web.

Think Bitcoins are “hack proof” due to cryptography? Think again. Tens of millions of dollars worth of the crypto-currency have been digitally stolen by hackers. The biggest heists hit Bitcoin exchanges Mt. Gox and Bitfinex. More recently, South Korean Bitcoin exchange Yapizon was hacked out of more than $5 million.

Electronic Banking Is Vulnerable to Hackers

Electronic banking and brokerage institutions are also vulnerable. A rogue government, a group of terrorists, or even a lone mischievous teenager could potentially crash markets by unleashing a debilitating computer virus or breaking into networks that undergird the financial system.

The worst-case scenario for the digital economy would be an electro-magnetic pulse (EMP) attack. An EMP could be triggered by an extreme solar flare or a nuclear detonation. In the event of an electro-magnetic pulse, large-scale economic disruptions could unfold as the power grid goes down and computer systems get fried.

If the Internet goes dark, then so does Bitcoin and other digital platforms. No online banking. Your ATM card may no longer work. A national “bank holiday” may have to be declared as a physical cash shortage sends the economy reverting to barter transactions.

Granted, this is an extreme scenario. But you don’t have to take extreme measures in order to protect yourself from it.

Reducing Your Vulnerability to Cyber Attacks: Simple Steps You Can Take

One of the most important steps to take to boost your resilience to digital threats is to hold tangible assets that aren’t dependent on, or connected to, the internet. Physical precious metals are a time-tested form of unhackable money.

Virtual ownership of metals in the form of futures, options, or exchange-traded products will leave you vulnerable to any of the major threats to the financial grid.

The upshot to owning low-premium bullion products you can hold in your hand is that it costs you nothing extra to obtain the protection and utility that physical metals provide.

We’re not suggesting that you pull everything out of your bank accounts and close all your credit cards – for now, they remain a convenience most of us won’t want to do without in our daily lives. (And we’re not saying to steer completely clear of cryptocurrencies either.)

But you can and should take steps to make your accounts at least somewhat more secure:

  • Close any dormant accounts that you no longer use.
  • Keep paper records, including statements, from accounts you access online.
  • Strengthen your passwords by lengthening them or using a password manager.
  • Select multi-factor authentication for logins wherever possible.
  • Avoid storing sensitive information directly on cell phones or other commonly stolen/ hacked devices.
  • Check your credit report regularly for signs of identity theft.
  • Install anti-virus software on your devices and keep it up to date.

For the portion of your wealth you want to secure in physical, off-the-grid metal, make sure you keep it far removed from the banking system. That means not storing your precious metals in a bank safe-deposit box that could be raided or rendered inaccessible during a financial crisis.

Keep at least some portion of your gold and silver stash stored in a home safe for immediate accessibility at all times. And keep quiet about it! Your neighbors don’t need to know all about your pure silver bars or your shiny gold Krugerrands.

Metals Vault

For the portion of your precious metals holdings you don’t want to keep at home, opt for a secure bullion storage facility such as Money Metals Depository.

MMD only uses physically segregated storage which ensures your metals aren’t pooled or co-mingled with those of other customers.

Even as new and potentially bigger cyber threats emerge, you can rest comfortably knowing much of your wealth is beyond the reach of hackers. That peace of mind is difficult to put a price on. Fortunately, it’s not difficult to obtain. Rotating wealth out of financial assets and into hard assets is as easy as writing a check to a reputable bullion dealer such as Money Metals Exchange.

Gold stabilizing post-Fed

Gold Today –New York closed at $1,254.60 yesterday after closing at $1,262.70 Wednesday. London opened at $1,255.70 today. 

Overall the dollar was slightly stronger against global currencies, early today. Before London’s opening:

         The $: € was slightly weaker at $1.1174 after yesterday’s $1.1164: €1.

         The Dollar index was slightly stronger at 97.34 after yesterday’s 97.28

         The Yen was weaker at 111.31 after yesterday’s 109.65:$1. 

         The Yuan was weaker at 6.8152 after yesterday’s 6.8019: $1. 

         The Pound Sterling was stronger at $1.2774 after yesterday’s $1.2696: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    16

     2017    6    15              

     2017    6    14

SHAU

SHAU

SHAU

 

/

278.41

279.24

 

Trading at 277.50

277.37

279.07

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8152

       $1: 6.8019

       $1: 6.7976     

 

   

/

$1,268.12

$1,272.71

 

Trading at $1,261.47

$1,263.35

$1,271.93

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 While London and New York are holding yesterday’s [after the Fed] levels Shanghai has pulled back but not so far and we are now seeing New York $6 lower than Shanghai and London also $6 lower than Shanghai today. This is basically a repeat of yesterday’s differentials.

Certainly Shanghai did not pull gold back as much as the other centers on the back of the Fed’s rate rise and statement. It does appear that this move in U.S. rates is now factored in.

Silver Today –Silver closed at $16.73 yesterday after $16.87 at New York’s close Wednesday.

LBMA price setting:  The LBMA gold price was set today at $1,256.60 from yesterday’s $1,260.25.  The gold price in the euro was set at €1,124.42 after yesterday’s €1,128.75.

Ahead of the opening of New York the gold price was trading at $1,255.00 and in the euro at €1,124.25. At the same time, the silver price was trading at $16.78. 

Price Drivers

The Fed

Gold pulled back after the Fed’s announcement yesterday, but that appears to have been factored into the gold price now. What influences will now be brought to bear on the gold price? First and foremost the trend will dominate, alongside the path forward for the dollar. Shanghai will more than likely increasingly dominate the gold price.

With U.S. equity market this high, we expect to see them become increasingly vulnerable to falls. This may well lead to sellers in these markets turning to gold for wealth preservation.

China

The first quarter of 2017 saw a rise of 60.2% in demand for physical gold bars compared to a 22.4% growth for the year-earlier period.

Recovering from a 14.4% decline during the same period last year, demand for gold jewelry rose just 1.4% which is to be expected when demand for gold bars and bullion is high. This year, total Chinese gold imports through Hong Kong are set to be higher than 1,000 tonnes, compared to 771 tonnes imported in 2016. Add that to the imports from Switzerland and other countries together with local production of around 450 tonnes, then gold accumulation in China must be very high although below record levels.

India

May’s imports of gold to India jumped from last year’s 39.76 tonnes to 123.17 tonnes this year as gold was imported ahead of the announcement of the new GST rates. These were perhaps lower than expected, so will not affect demand. What will affect demand is the seasonal period that has started as crops are planted for the monsoon season. This has started off very well as rains are good and heavy. The crops will be harvested in July and August just before the gold season begins around September. With such a good monsoon already we expect high demand for gold from then on.  In the past 70% of gold demand came from the agricultural sector. Since then a great deal of urbanization has happened reducing the seasonal influence, but not the religious influence as reflected in demand just ahead of festivals. We see imports of gold into India, including smuggled gold to reach record levels this year.

Gold ETFs – Yesterday, saw sales from the SPDR gold ETF 0f 1.184 tonnes but no change in the holdings of the Gold Trust. Their holdings are now at 853.684 tonnes and, at 207.06 tonnes respectively.

 

Since January 6th 2017 48.29 tonnes have been added to the SPDR gold ETF and the Gold Trust.

 Julian D.W. Phillips 

 GoldForecaster.com | StockBridge Management Alliance 

 

 

Fed puts gold on back foot – again!

Gold Today –New York closed at $1,262.70 yesterday after closing at $1,275.60 Tuesday. London opened at $1,260.00 today. 

Overall the dollar was stronger against global currencies, early today. Before London’s opening:

         The $: € was stronger at $1.1164 after yesterday’s $1.1217: €1.

         The Dollar index was stronger at 97.28 after yesterday’s 96.92

         The Yen was stronger at 109.65 after yesterday’s 110.14:$1. 

         The Yuan was weaker at 6.8019 after yesterday’s 6.7976: $1. 

         The Pound Sterling was weaker at $1.2696 after yesterday’s $1.2785: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    15

     2017    6    14              

     2017    6    13

SHAU

SHAU

SHAU

 

/

279.24

278.29

 

Trading at 278.20

279.07

278.36

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8019

       $1: 6.7976

       $1: 6.7979     

 

   

/

$1,272.71

$1,251.73

 

Trading at $1,265.82

$1,271.93

$1,251.85

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 Yesterday global gold markets saw volatility in all three markets ahead of the Fed. Once the statement was out global gold markets settled and steadied around $1,260, with London $5 lower than Shanghai.

We expect today  will see a digestion of Mrs Yellen’s statement followed by  gold’s reaction.

Silver Today –Silver closed at $17.13 yesterday after $16.76 at New York’s close Tuesday.

LBMA price setting:  The LBMA gold price was set this morning at $1,260.25 from yesterday’s $1,268.25.  The gold price in the euro was set at €1,128.75 after yesterday’s €1,131.71.

Ahead of the opening of New York the gold price was trading at $1,253.40 and in the euro at €1,123.72. At the same time, the silver price was trading at $16.69. 

Price Drivers

The Fed

In essence, Janet Yellen’s statement showed that the Fed sees a U.S. economy that will continue to grow at a moderate pace. No accommodation of President Trump’s intended policies was made. The Fed Funds rate after the rise is lower than inflation levels and look like remaining there as the Fed Funds rate, if the economy remains on the path they expect it will. If the economy remains on this path, then by the end of the year, the Fed will begin to reduce its Balance Sheet. It will be a very slow process intended to give markets no stress. As a result equity markets may rise more ignoring institutional worries that they are already too high. It is clear that hopes of a robust economy in the near future are unrealistic. For gold this was overall positive because of low inflation levels.

The dollar strengthened overnight on the back of her statement.

Technical picture

With yesterday’s huge sale of over 12 tonnes out of GLD the gold price fell back from the day’s high in New York over $1,276 to $1,260 before London opened where it moved down further. But the move higher in the day followed the previous day’s close as you can see above over $1,262. So it did not have that big an effect on prices. We expect gold prices to move higher in the next week as the impact of the Fed’s move was no surprise, so gold markets can get on with the trend they were moving in before the statement.

It looks like whoever sold was either trying to knock the price back [likely protected by short positions on COMEX] or had positioned themselves for a postponement of the rate hike. Either way, gold remains in consolidation mode today. It has not affected gold’s overall positive Technical position with its bottom level of support at $1,240 now.

Gold ETFs – Yesterday, saw sales from the SPDR gold ETF 0f 12.13 tonnes a huge amount but no change in the holdings of the Gold Trust.

Their holdings are now at 854.868 tonnes and, at 207.06 tonnes respectively.

 

Since January 6th 2017 50.13 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips 

 GoldForecaster.com | StockBridge Management Alliance 

Poor US data gives gold and silver a big boost ahead of Fed statement

Gold Today –New York closed at $1,268.60 yesterday after closing at $1,268.90 Monday. London opened at $1,267.24 today. 

Overall the dollar was slightly weaker against global currencies, early today. Before London’s opening:

         The $: € was slightly weaker at $1.1217 after yesterday’s $1.1212: €1.

         The Dollar index was weaker at 96.92 after yesterday’s 97.04

         The Yen was slightly stronger at 110.14 after yesterday’s 110.16:$1. 

         The Yuan was slightly stronger at 6.7976 after yesterday’s 6.7979: $1. 

         The Pound Sterling was stronger at $1.2785 after yesterday’s $1.2700: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    14

     2017    6    13

     2017    6    12

SHAU

SHAU

SHAU

 

/

278.29

278.67

 

Trading at 279.60

278.36

278.70

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.7976

       $1: 6.7979

       $1: 6.7985     

 

   

/

$1,251.73

$1,269.93

 

Trading at $1,257.70

$1,251.85

$1,270.07

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 As you can see from the above, Shanghai traded both yesterday and today lower than New York and London. This was the first time we have seen that happen! New York closed higher than Shanghai yesterday and London opened higher than Shanghai. On these numbers Shanghai is not a buyer from the west today.  

We have heard that China stands accused of gold price manipulation. They are accused of keeping prices low until they have acquired a particular number of tonnes. Meanwhile, Shanghai prices have consistently been at a premium to western prices. This is not the path down.

With no gold allowed to leave China, if this were true, it would have to be conducted in New York with derivatives of sales of physical gold in London, through Chinese banks in London. They would therefore have to buy these tonnages in London first, before they could sell them.

Since 2013 the reports of U.S. banks selling physical gold alongside huge derivative positions have been evident. Goldman Sachs has been at the forefront of these. The evidence therefore supports the story that it has been western banks that have engineered ‘bear raids’ at considerable profit as the gold price fell since then as the gold price was in decline. There is also evidence that western central banks have until 2009 at least, wanted sales of gold to hold back gold prices, as high prices place question marks against the value of currencies. Discussions on the B.I.S. ‘Gold Pool’ prior to this century, Central Bank Sales since 1975. Has this changed? We think not. But as we pointed out yesterday, the power to force prices down is no longer within their reach, due to Asian demand and higher prices. The evidence is that western institutions have manipulated gold prices for over 40 years in one way of another.

While there is no evidence of Chinese gold price manipulation we have seen gold’s pricing power shift to Shanghai. But with Shanghai trading gold lower than New York and London, that pricing power evaporated yesterday and today, because of demand for gold in western markets. Shanghai’s figures tomorrow will expand that story. It certainly does not seem that lower Shanghai gold prices can pull London and New York down.

What is very true is that China has bought as much gold as they can when the bears did drive prices down and will continue to do so whenever they can. Will higher prices make them stop buying? We think not as the Chinese middle classes continue to burgeon.

Silver Today –Silver closed at $16.76 yesterday after $16.94 at New York’s close Monday.

LBMA price setting:  The LBMA gold price was set today at $1,268.25 from yesterday’s $1,261.30.  The gold price in the euro was set at €1,131.71 after yesterday’s €1,124.55.

Ahead of the opening of New York the gold price was trading at $1,265.60 and in the euro at €1,130.15. At the same time, the silver price was trading at $16.95. 

Price Drivers

Technical picture

The pullback in gold seems to have been halted as New York held prices at around $1,268. We are seeing the gold market and currency markets wait for the Fed’s statement today.  However some weak U.S. economic data released as New York trading opened pushed precious metals sharply upwards, – gold hitting $1,280 and silver $17.40 before easing back – but the overall direction of prices beyond this will likely rest with the post FOMC meeting statement later today.

Gold ETFs – Yesterday, once again, saw no purchases or sales into or from the SPDR gold ETF but a purchase of 0.45 of a tonne bought into the Gold Trust.

Their holdings are now at 866.998 tonnes and, at 207.06 tonnes respectively.

Since January 6th 2017 62.26 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips 

 GoldForecaster.com | StockBridge Management Alliance 

Gold waiting for the Fed tomorrow

 Gold Today –New York closed at $1,268.90 yesterday after closing at $1,266.00 Friday. London opened at $1,262 today. 

Overall the dollar was slightly weaker against global currencies, early today. Before London’s opening:

         The $: € was slightly stronger at $1.1212 after yesterday’s $1.1220: €1.

         The Dollar index was slightly weaker at 97.04 after yesterday’s 97.13

         The Yen was slightly weaker at 110.16 after yesterday’s 109.94:$1. 

         The Yuan was slightly stronger at 6.7979 after yesterday’s 6.7985: $1. 

         The Pound Sterling was slightly weaker at $1.2700 after yesterday’s $1.2704: £1.

Yuan Gold Fix

Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    13

     2017    6    12

     2017    6    9

SHAU

SHAU

SHAU

 

/

278.67

280.49

 

Trading at 278.60

278.70

280.30

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.7979

       $1: 6.7985

       $1: 6.7988     

 

   

/

$1,269.93

$1,278.20

 

Trading at $1,269.72

$1,270.07

$1,277.33

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 New York closed lower than Shanghai yesterday and London opened lower than Shanghai as the gold price continues to consolidate slightly lower.

Silver Today –Silver closed at $16.94 yesterday after $17.22 at New York’s close Friday.

LBMA price setting:  The LBMA gold price was set today at $1,261.30 from yesterday’s $1,269.25.  The gold price in the euro was set at €1,124.55 after yesterday’s €1,131.44.

Ahead of the opening of New York the gold price was trading at $1,263.85 and in the euro at €1,121.43. At the same time, the silver price was trading at $16.83. 

Price Drivers

Technical picture

The pullback in gold continues and can do so for another $10 before support is reached. But if it can hold above $1,260, it is a positive sign. The upward trend remains intact.  We are watching the gold market and currency markets wait for the Fed’s statement tomorrow to see if there will be a rate rise or not?

While the markets continue towards the expectation that there will be a rate hike by the Fed tomorrow, more and more people are saying what we said yesterday, With Janet Yellen such a cautious person she may well have been disturbed by the poor data of late. While 94% of the market believes a rate hike must come this week, there is room, we believe, for a delay in the rate hike until the data is more positive. If she does, you will see the dollar weaken and perhaps equity indices move too high. We see gold benefitting if this does happen.”

Central Banks and gold.

We comment further on the position of global central banks and gold. One can rightly say that western central banks are content with their current holdings and be absolutely certain that they will no longer be sellers. In the past they threatened to sell gold to manage the price down, but now that option is not available to them.

China, in particular, is on the acquisition trail for gold. Because it owns the Shanghai Gold Exchange and the banks that deal in gold, as they say, “They own gold through their people.” In other words, they have effectively confiscated gold in China. As it is it is illegal to exports gold from there. So when we look at the gold reserves of the People’s Bank of China, technically, because it is controlled by the PBoC we should consider the gold in China as available to them as reserves.

So when one looks at gold imports to China from wherever, it does go under the government’s control.  Ownership and control are two entirely different things [as one finds out, if one does not pay one’s mortgage for six months]. This sets the future scene where one has to ask, will western banks ever buy gold again? With Asia taking the bulk, if not all, newly mined gold for the last few years, any attempt by other global buyers, including central banks, will drive prices higher, much higher. Of course, any sight of a western central bank buying gold will trigger a stampede into gold. But as in the last century, when western central banks did attempt to drive prices down, they may want to do so again. But this time they will not be able to do so, as it will be bought up very quickly by the east. The only option then  will be to take it from owners in their jurisdiction as is the case in China.

That’s why with the gold price sitting very close to a major inflection point short-term, medium term and long term, we could be very close to a signal that we are very close to a dramatic change in both the gold and silver markets?

Gold ETFs – Friday, saw no purchases or sales into or from the SPDR gold ETF but a purchase of 0.45 of a tonne bought into the Gold Trust.

Their holdings are now at 866.998 tonnes and, at 206.61 tonnes respectively.

 

Since January 6th 2017 61.81 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips 

 GoldForecaster.com | StockBridge Management Alliance 

Gold now moving with currencies

NOTE:  LAWRIE IS ON HOLIDAY AND POSTINGS AND THEIR TIMINGS MAY BE ERRATIC FOR 2 WEEKS.

Gold Today –New York closed at $1,266.00 Friday after closing at $1,279.50 Thursday. London opened at $1,267.00 today. 

Overall the dollar was weaker against global currencies, early today. Before London’s opening:

         The $: € was weaker at $1.1220 after Friday’s $1.1178: €1.

         The Dollar index was weaker at 97.13 after Friday’s 97.44

         The Yen was stronger at 109.94 after Friday’s 110.37:$1. 

         The Yuan was slightly stronger at 6.7985 after Friday’s 6.7988: $1. 

         The Pound Sterling was weaker at $1.2704 after Friday’s $1.2720: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    12

     2017    6    9

     2017    6    8

SHAU

SHAU

SHAU

 

/

280.49

282.78

 

Trading at 279.10

280.3

283.13

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.7985

       $1: 6.7988

       $1: 6.7954     

 

   

/

$1,278.20

$1,289.32

 

Trading at $1,271.90

$1,277.33

$1,290.92

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 New York closed lower than Shanghai on Friday but Shanghai was higher today as the U.S. dollar started to weaken again. London opened lower than Shanghai but was off its bottom. The London price setting lifted the gold price up above spot this morning.

Silver Today –Silver closed at $17.22 Friday after $17.41 at New York’s close Thursday.

LBMA price setting:  The LBMA gold price was set this morning at $1,269.25 from Friday’s $1,274.25.  The gold price in the euro was set at €1,131.44 after Friday’s €1,139.76.

Ahead of the opening of New York the gold price was trading at $1,269.15 and in the euro at €1,135.19. At the same time, the silver price was trading at $17.14. 

Price Drivers

Technical picture

The pullback in the gold price was not heavy [so far] and the upward trend remains intact.  We are watching the dollar weaken again which is why, this morning, the gold price was a little higher.

U.K.

For the second time U.K.’s conservatives have backed the wrong horse and suffered because of it. But we see the result of the U.K. election as a consequence of their manifesto, not a rejection of Brexit.

France

The President elect, M. Macron is sweeping into power, consolidating the future of a united E.U. Only Italy remains a concern on this front. But markets are expressing the belief that this is not a concern.

The Fed for Wednesday

The Fed begins its 2-day deliberations on interest rates ahead of its announcement on Wednesday. With Janet Yellen such a cautious person she may well have been disturbed by the poor data of late. While 94% of the market believes a rate hike must come this week, there is room, we believe, for a delay in the rate hike until the data is more positive. If she does delay, you will see the dollar weaken and perhaps equity indices move too high. We see gold benefitting if this does happen.

The dollar has turned back lower this morning against most currencies [except the Pound]. We expect it to weaken further.

Central Banks and gold.

The central banks of Europe stopped selling gold in 2009 when the mining companies had bought back their vast hedges established before the end of the last century and gold ETFs had been well established. This was the time when the Chinese and the Russian central banks entered the market to buy gold. At the same time the Chinese government encouraged their citizens to buy gold for themselves. This they have been doing alongside the Chinese banking industry. Gold is not permitted to be exported from the country so one-way traffic into China sees the shift of gold into Asia. Likewise Indian gold does not return to the west.

This has put a brake on western central bank sales of gold as they know it will be bought by Asia. This appears to have happened as evidence has surfaced of a reduction in Bank of England stocks of gold. [but this has also happened as a result of gold being moved to home countries] We believe all central banks sales of gold will be halted. Consequently, the past power of western central banks to manipulate the gold price is considerably reduced, as they know that if they sell their gold it will move east.  

As a result, we see the threat of future, announced central banks gold sales as being emasculated by this fact. We have no doubt that they will, at times, attempt to suppress the gold, using derivatives markets but only in the short term. After all, such maneuvers do not involve actual gold sales only cash transactions. We also don’t expect any announcements in the future of intentions to sell gold as per the Central Bank Gold Agreements.

We also doubt that the gold mining companies would ever again embark on an exercise to raise production at the request of and with the support of bullion banks with the backing of central banks as they did at the end of the last century.

This leaves global central banks on balance being buyers not sellers, in the future.

Gold ETFs – Friday, saw no purchases or sales into or from the SPDR gold ETF but a purchase of 0.45 of a tonne bought into the Gold Trust.

Their holdings are now at 866.998 tonnes and, at 206.61 tonnes respectively.

Since January 4th 2016, 261.86 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 61.81 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips 

 GoldForecaster.com | StockBridge Management Alliance 

Gold price technical trend still bullish despite fall

Gold Today –New York closed at $1,279.50 yesterday after closing at $1,293.20 Wednesday. London opened at $1,275.00 today. 

Overall the dollar was stronger against global currencies, early today. Before London’s opening:

         The $: € was stronger at $1.1178 after yesterday’s $1.1232: €1.

         The Dollar index was stronger at 97.44 after yesterday’s 96.89

         The Yen was weaker at 110.37 after yesterday’s 110.07:$1. 

         The Yuan was slightly weaker at 6.7988 after yesterday’s 6.7954: $1. 

         The Pound Sterling was much weaker at $1.2720 after yesterday’s $1.2941: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    9

     2017    6    8

     2017    6    7

SHAU

SHAU

SHAU

 

 

282.78

283.66

 

Trading at 280.00

283.13

283.67

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.7988

       $1: 6.7954

       $1: 6.7931     

 

   

 

$1,289.32

$1,293.79

 

Trading at $1,275.96

$1,290.92

$1,293.84

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 New York and Shanghai stayed at the same level yesterday and this morning. New York led the way down and Shanghai took it down further. London opened at the same level as Shanghai. The global gold markets continue to move together.

Silver Today –Silver closed at $17.41 yesterday after $17.69 at New York’s close Wednesday.

LBMA price setting:  The LBMA gold price was set this morning at $1,274.25 from yesterday’s $1,284.80.  The gold price in the euro was set at €1,139.76 after yesterday’s €1,143.37.

Ahead of the opening of New York the gold price was trading at $1,273.75 and in the euro at €1,147.52. At the same time, the silver price was trading at $17.34. 

Price Drivers

Technical picture

The pullback in the gold price is a correction that has not altered the trend. This remains to the upside.  A weaker euro has led to higher prices for gold in the euro and lower prices in the dollar. This shows a recovering dollar is the main reason for gold’s fall at the moment.

Over the last day global uncertainty has increased due to issues on both sides of the Atlantic and in the Middle East.

Middle East

In the Middle east tensions there continue to rise as actions are taken against Qatar. It is clear that this is not simply political issues between the Persian Gulf nations but between the two sides of Islam. These cannot be solved by simple diplomacy. We can’t see a solution to these or to terror itself. At best, the police in different countries may be able to contain it, but with wars smashing on in different parts of the Middle East over the religious issues, we cannot see an end of them at all.

British Elections have turned out to be disaster for Prime Minister May as we see a hung Parliament. As a result we expect to see more easing and perhaps a rate cut in the near future as uncertainty kicks into the way forward for Brexit. Most believed that the only issue was the size of the conservative majority. But this result changes things. Already the gold price is rising in the pound sterling, as the pound falls heavily.

This is a year of considerable surprises.  We now look to Italy for the next surprise.

The Dollar

The dollar is stronger today as it consolidates. This is the prime reason the gold price has fallen in the dollar. It has risen in other currencies.

With gold ETF purchases continuing in the U.S. uncertainty surrounding the way forward under President Trump increases. The resulting slowing of his agenda continues to provide a backdrop for gold to rise, but the markets see in Comey’s testimony, no reason to fall. It does appear so far that there are no grounds for impeachment of the President, but his agenda does seem to be mired in controversy.

Gold ETFs – Yesterday, saw purchases of 2.071 tonnes of gold and with the last two days before this the total purchases of the last three days is 17.005 tonnes of gold bought into the two gold ETFs, in the last three days. Yesterday saw 0.6 of a tonne bought into the Gold Trust.  Their holdings are now at 866.998 tonnes and, at 206.16 tonnes respectively.

U.S. buyers continue strong buyers of physical gold now. Today we may see a pause in their buying as the gold price consolidates at lower levels.

Since January 6th 2017 61.364 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips 

 GoldForecaster.com | StockBridge Management Alliance 

Sharp markdown in gold price as European and US tensions ease

 Gold Today –New York closed at $1,293.20 yesterday after closing at $1,293.80 Tuesday. London opened at $1,284.00 today. 

Overall the dollar was slightly stronger against global currencies, early today. Before London’s opening:

         The $: € was slightly stronger at $1.1232 after yesterday’s $1.1254: €1.

         The Dollar index was stronger at 96.89 after yesterday’s 96.73

         The Yen was weaker at 110.07 after yesterday’s 109.30:$1. 

         The Yuan was slightly weaker at 6.7954 after yesterday’s 6.7931: $1. 

         The Pound Sterling was stronger at $1.2941 after yesterday’s $1.2898: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    8

     2017    6    7

     2017    6    6

SHAU

SHAU

SHAU

 

 

283.66

282.37

 

Trading at 283.50

283.67

282.97

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.7954

       $1: 6.7931

       $1: 6.7954     

 

   

 

$1,293.79

$1,287.45

 

Trading at $1,292.62

$1,293.84

$1,290.19

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 New York and Shanghai stayed at the same level yesterday and this morning. London opened $9.20 lower. We see London preparing for sales of gold by marking prices down ahead of trading. With the geo-political and financial events taking place today in the U.K. and E.U  the market is pausing waiting for clarity going forward.

Silver Today –Silver closed at $17.62 yesterday after $17.69 at New York’s close Tuesday.

LBMA price setting:  The LBMA gold price was set today at $1,284.80 from yesterday’s $1,292.70.  The gold price in the euro was set at €1,143.37 after yesterday’s €1,151.01.

Ahead of the opening of New York the gold price was trading at $1,284.75 and in the euro at €1,143.17. At the same time, the silver price was trading at $17.63. 

Price Drivers

British Elections happen today. As we said yesterday, “With the discussions around the size of the conservative majority it appears to us that the result will not affect the gold price.”

Draghi and the E.U.

Growth in the Eurozone is now clearly evident, but inflation is falling. As we said yesterday, Draghi, who has repeatedly said that policy makers must be convinced that inflation can rise toward 2% on its own, before removing monetary stimulus, may well make a point of this, but will, it seems only change his language in the statement slightly confirming this. This is positive for gold.

The Dollar

We do expect the euro to continue getting stronger against the U.S. dollar. Today the $ index is consolidating.

Today the indications are that Japan is moving towards ending their stimulus program. Whether this is because they deem it is no longer working or whether they have  beaten back deflation is yet to be confirmed. Certainly falling and low inflation world-wide is indicating such battles have not been won.

Comey Testimony

Former FBI Director James Comey is to testify today on whether President Trump tried to interfere with FBI investigation into possible links between then Security Adviser  Michael Flynn and Russia.  Consensus was that Comey would not say anything too damaging to the Trump Administration and this consensus was a partial contributor to a sharp markdown in the gold price, along with profit taking and the stronger dollar. (Editor)

Gold ETFs – Yesterday, saw purchases of 9.764 tonnes of gold and with yesterday’s 4.61 tonnes of gold bought into the SPDR gold ETF, we have seen 14.93 tonnes of physical gold bought into U.S. based gold ETFs in the last two days. We saw 0.56 of a tonne bought into the Gold Trust. Their holdings are now at 864.927 tonnes and, at 205.56 tonnes respectively.

U.S. buyers are strong buyers of physical gold now although this may not continue if today’s gold price downturn lasts.

Since January 6th 2017 58.693 tonnes have been added to the SPDR gold ETF and the Gold Trust. This is an approximately 30% increase in the last two days!

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

 

Gold pausing before tackling $1,300

Gold Today –New York closed at $1,293.80 yesterday after closing at $1,279.60 Monday. London opened at $1,292.65 today. 

Overall the dollar was slightly weaker against global currencies, early today. Before London’s opening:

         The $: € was slightly weaker at $1.1254 after yesterday’s $1.1246: €1.

         The Dollar index was slightly weaker at 96.68 after yesterday’s 96.73

         The Yen was stronger at 109.30 after yesterday’s 109.52:$1. 

         The Yuan was stronger at 6.7931 after yesterday’s 6.7954: $1. 

         The Pound Sterling was slightly weaker at $1.2898 after yesterday’s $1.2904: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    7

     2017    6    6

     2017    6    5

SHAU

SHAU

SHAU

 

 

282.37

281.27

 

Trading at 283.60

282.97

281.35

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.7931

       $1: 6.7954

       $1: 6.8036     

 

   

 

$1,287.45

$1,280.86

 

Trading at $1,293.52

$1,290.19

$1,281.55

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 New York rose to the same level as Shanghai yesterday. Today, Shanghai is pausing at the same level. London opened at almost the same level as Shanghai.

Once again we see all three centers with gold prices at the same level. This is only the second time this has happened. The first was in the last month.

Silver Today –Silver closed at $17.69 yesterday after $17.57 at New York’s close Monday.

LBMA price setting:  The LBMA gold price was set this morning at $1,292.70 from yesterday’s $1,287.85.  The gold price in the euro was set at €1,151.01 after yesterday’s €1,144.40.

Ahead of the opening of New York the gold price was trading at $1,291.75 and in the euro at €1,150.37. At the same time, the silver price was trading at $17.67. 

Price Drivers

British Elections happen tomorrow. With the discussions around the size of the conservative majority it appears to us that the result will not affect the gold price.

Draghi and the E.U.

With inflation falling in the E.U. problems in the banking sector [Banco Popular has just been taken over by Santander in Spain]  Draghi, who has repeatedly said that policy makers must be convinced that inflation can rise toward 2% on its own, before removing monetary stimulus, is set to leave the current stimulus position in place through the rest of this year. This is positive for gold.

The Dollar

As you can see above, the dollar index continues to slip to a point where, if it falls to the lower 95 levels, it enters a bear market.  This is the main influence on the gold price, not the short term political news.

But this does not simply mean a falling dollar, it points to disruption in the global monetary system as all the globe’s currencies will be affected. It points to the proximity of a move from a dollar hegemony system to a multi-currency system. Within these changes lies a growing relevance of gold.

The environment globally, continues to be positive for gold.

Gold ETFs – Yesterday, saw purchases of 4.61 tonnes of gold into the SPDR gold ETF, but no change in the holdings of the Gold Trust. Their holdings are now at 855.163 tonnes and, at 205 tonnes respectively.

Since January 6th 2017 48.369 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips – GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Gold poised to attack $1,300

Gold Today –New York closed at $1,279.60 yesterday after closing at $1,278.20 Friday. London opened at $1,289.50 today. 

Overall the dollar was weaker against global currencies, early today. Before London’s opening:

         The $: € was slightly stronger at $1.1246 after yesterday’s $1.1264: €1.

         The Dollar index was slightly weaker at 96.73 after yesterday’s 96.77

         The Yen was stronger at 109.52 after yesterday’s 110.51:$1. 

         The Yuan was stronger at 6.7954 after yesterday’s 6.8036: $1. 

         The Pound Sterling was barely changed at $1.2904 after yesterday’s $1.2905: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    6    6

     2017    6    5

     2017    6    2

SHAU

SHAU

SHAU

 

 

281.27

278.34

 

Trading at 283.60

281.35

277.96

 

$ equivalent 1oz at 0.995 fineness

@    $1: 6.7954

       $1: 6.8036

       $1: 6.8153     

 

   

 

$1,280.86

$1,265.28

 

Trading at $1,293.08

$1,281.23

$1,263.55

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 While New York saw the gold price rise a little it was Shanghai that gave the spurt to the gold price trading at $1,293 late in their day today. London was pulled up at the opening to just $4 below Shanghai.

Silver Today –Silver closed at $17.57 yesterday after $17.52 at New York’s close Friday.

LBMA price setting:  The LBMA morning gold price was set today at $1,287.85 from yesterday’s $1,280.70.  The gold price in the euro was set at €1,144.40 after yesterday’s €1,137.04.

Ahead of the opening of New York the gold price was trading at $1,294.15 and in the euro at €1,148.62. At the same time, the silver price was trading at $17.73 

Price Drivers

Mainland China is set to import about 1,000 metric tons from Hong Kong in 2017, says, president of the Hong Kong gold exchange. That compares with net purchases of 647 tons last year and would be the biggest since 2013, data from the Hong Kong Census and Statistics Department confirmed.

Local consumption was up 15% in the first quarter, with sales of bars for investment climbing more than 60% and dwarfing a 1.4% rise in jewelry buying, according to data from the China Gold Association.  

Imports from Switzerland topped 100 tons in the first four months of the year, according to calculations on data reported by the Swiss Federal Customs Administration. In December, China imported 158 tons from Switzerland, taking the total for the year to 442 tons, up from 288 tons in 2015.

One has to be guarded about figures from Hong Kong being representative of Chinese demand. Gold enters China from Switzerland but also through Beijing and other ports of entry. In addition, the country mines around 450 + tonnes a year. It also imports gold directly from mines it owns outside the country. So the figures mentioned here are  just part of the picture. What we do learn from these is that Chinese demand is running close to record levels. The government has encouraged this as a matter of policy, so as to build up the nation’s gold. Gold is not allowed to be exported from the country. The volatility of the Stock Exchange there is a discouragement for long term investors and is not regarded as competition for gold, as in most parts of Asia gold is not bought for profit but for financial security.  As the Chinese middle classes burgeon so more and more gold investors arrive in the market. On top of this present middle classes continue to buy more.

India

Ahead of GST, jewelers increased their purchases to replenish inventory, so as to profit from demand for gold after the additional GST was imposed. From a year ago the gold imports surged four-fold to 103 tonnes. Now that the GST rate increase has happened, it is likely that internal gold demand will jump until these extra stockpiles are reduced. We fully expect Indian gold imports to slow until the harvest time is over, round about September.

With the forecasts for the monsoon positive this year and indeed having already started in  some regions, we believe demand later in the year will increase strongly.

Inflation in the E.U. and U.S.

The Federal Reserve’s preferred price measure rose 1.7% in April from a year ago, down from 1.9% in March and 2.1% in February. Core inflation, which strips out volatile oil and food costs, also slowed to the weakest annual pace since 2015. This raises questions about next week’s rate hike.

In the Euro zone, while producer prices rose 4.3% from a year earlier in May, that pressure has yet to flow through to consumer inflation. Euro zone inflation decelerated to 1.4 % in May, the weakest reading this year, from 1.9% a month earlier. We do not expect the E.C.B. to begin slowing their stimulus program until there is a marked change in this figure.

Gold ETFs – Friday, saw no purchases of gold into the SPDR gold ETF, but saw purchases of 0.66 of a tonne of gold into the Gold Trust. Their holdings are now at 851.003 tonnes and, at 205 tonnes respectively.

Since January 6th 2017 43.759 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips  – GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Hedge funds jumping back into gold

Frank Holmes’ SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis of what’s driving the markets over the past week

Strengths

  • The best performing precious metal for the week was palladium, up 6.17 percent. Consumer demand is rising for gasoline- versus diesel-engine powered vehicles, yet automobile sales have started to relax in recent months.  According to Bloomberg, gold bulls outnumber gold bears this week as Trump probes are boosting safe-haven demand for the yellow metal. In fact, gold advanced to the highest level in nearly a month as Trump’s administration “grapples with revelations of mounting scrutiny into son-in-law Jared Kushner’s outreach to Russian officials,” Bloomberg continues. In related news, Fed’s Brainard says that soft inflation data may warrant a rethink on interest rates. Inflation in the Euro-area slowed more than economists forecast.
  • The Indian rupee posted its first monthly loss since November, reports Bloomberg. The positive side of this is the decline came amid increasing demand for dollars to pay for imports of items such as gold. The Perth Mint reported its gold coin and minted bar sales for the month of May, coming in at 29, 679 ounces. This is compared with April’s sales of 10,490 ounces.
  • Data from the Commodity Futures Trading Commission shows that money managers boosted their long positions in U.S. gold futures by the most in almost a decade in the week ending May 23, reports Bloomberg. As you can see in the chart below, hedge funds are jumping back into the yellow metal.

Weaknesses

  • Platinum bore the brunt of the palladium move this week with a loss of 0.61 percent.  Shares of junior gold miners headed for the longest stretch of monthly losses in more than two years, reports Bloomberg, citing investor concern that “flagging momentum in this year’s bullion rally will dent the outlook for profits.” A Bloomberg gauge of 72 junior miners has lost 15 percent since the end of January and the rebalance of the VanEck Vectors Junior Gold Miner ETF (GDXJ) is also having a depressing effect on many gold names. Despite gold gaining 9 percent this year with a drop in the dollar, junior gold miners have not followed through with those gains as the GDXJ is set to cut in half its exposure to the junior mining space on June 16.
  • “Inflation has been below target for five years and has moved up only slowly toward 2 percent, which argues for continued patience,” said Fed Governor Jerome Powell in a statement this week. Powell is calling for gradual interest rate increases and a start to balance-sheet reductions later this year if the economy stays on track, reports Bloomberg, though he is keeping an eye on a recent slowdown in inflation. Based on prices in federal funds futures contracts, investors see the probability of a rate hike at around 85 percent when the FOMC meets June 13-14, the article continues.
  • Asanko Gold is set to release an expanded Mine Feasibility Report in response to a Muddy Waters short report that detailed negative assertions regarding the company and its operations, reports Bloomberg. Asanko said in a statement that there is no merit to the Muddy Waters report, while detailing that it maintains production guidance of 230,000 to 240,000 ounces for 2017. Asanko also said it sees no impact on production or safety resulting from a partial failure on the western wall of the Nkran pit, nor does it see a need for a $115 million pushback expense (as speculated by Muddy Waters).  The short report was likely timed to force Asanko’s market capitalization below the lower threshold limit for staying in the GDX index, thus triggering an additional 10.6 million shares to be sold.

Opportunities

  • Friday’s jobs report came in lower by 4.3 percent, and although the three-month moving average of 121,000 net new jobs is positive, the pace has slowed dramatically, writes Bloomberg. And if the Fed continues to raise rates, it will slow even further. Economists have three major risks they are worried about, according to the article: 1) slumping U.S. auto sales, 2) weaker Chinese manufacturing and 3) the potential for U.S. fiscal policy disappointment. “Anticipating a rate-hike endgame or more increases in rising inflation, gold is poised to continue to perform well,” explains another Bloomberg article. “In the current tightening cycle, spot gold and the S&P 500 Index are neck and neck, up 19 percent to June 1.”
  • In a research update from Industrial Alliance Securities, the group summarizes production statistics released by Rye Patch Gold from its Florida Canyon heap leach operation for May. Rye Patch reported 3,094 ounces of gold poured during May, up from 485 ounces in April. The mine is well on its way to achieving operating financial breakeven, the report continues. Rye Patch notes that heap leach operations tend to perform better in warmer temperatures (so notable production acceleration during the Nevada summer would not be a surprise) as well as the company’s extra cash in hand to fund further exploration. Similarly, Richmont Mines reported strong results from the Island Gold Mine Expansion Case Preliminary Assessment. It confirmed an increase in underground mine and mill productivity to 1,100 tonnes per day, supporting growth of 22 percent over an eight-year period, reports Bloomberg.
  • More company-specific news comes from Lundin Gold this week, which announced a $400-$450 million project financing package for Fruta Del Norte in Ecuador. The package comes with support from Orion Mine Finance and Blackstone Tactical Opportunities. Another announcement comes from AuRico Metals, noting a positive Preliminary Economic Assessment for the Kemess East Gold-Copper Project. Pre-production capital costs are C$327 million, reports Bloomberg.

Threats

  • As Jared Kushner, Donald Trump’s son-in-law and most trusted adviser, is sucked into an FBI probe, the President’s goals are increasingly at risk, reports Bloomberg. The probe could undermine policy priorities and hinder behind-the-scene communications with business leaders and foreign governments. “Kushner tried to establish a secret back channel between the president-elect and Kremlin after Trump’s election, and is reported to have held multiple undisclosed meetings with Russian officials during the campaign and transition,” the article states.
  • The AOMA Argentine union has threatened to restart a strike at Barrick Gold’s Veladero gold operation in the country next month if talks with management fail to resolve a contractual feud, reports Bloomberg. Barrick and the AOMA union were set for a third round of talks late Monday, with the dispute over contracts for outsourced workers being about three-quarters of the way resolved, said AOMA Secretary General Hector Oscar Laplace.
  • According to Wood Mackenzie, deep-water drilling costs are coming down as producers streamline operations and prioritize drilling in core wells. This means that oil at $50 per barrel could sustain some deep-water projects by 2018, reports Bloomberg. The tumbling costs present a challenge for the Organization of Petroleum Exporting Countries (OPEC), which is currently curbing output to shrink a glut, the article continues. Falling energy prices could dampen inflation expectations and be a headwind to gold prices.

Frank Holmes is CEO and Chief Investment Officer for US Global Investors