Shanghai now the world’s gold hub

 

Gold Today –New York closed at $1,244.60 yesterday after closing at $1,234.60 on the 20th March. London opened at $1,247.00 today. 

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

         The $: € was weaker at $1.0802: €1 from $1.0793: €1 yesterday.

         The Dollar index was weaker at 99.77 from 100.06 yesterday. 

         The Yen was stronger at 111.48:$1 from yesterday’s 112.86 against the dollar. 

         The Yuan was stronger at 6.8845: $1, from 6.8968: $1, yesterday. 

         The Pound Sterling was stronger at $1.2472: £1 from yesterday’s $1.2380: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    22

     2017    3    21       2017    3    20

SHAU

SHAU

SHAU

/

275.97

276.75

/

275.98

276.93

$ equivalent 1oz @  $1: 6.8845

      $1: 6.8968

$1: 6.9051

  /

$1,244.58

$1,246.60

/

$1,244.62

$1,247.41

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.]

 At the close in Shanghai today, the gold price was trading at 278.50 Yuan, which directly translates into $1,258.23. But allowing for the difference of gold being traded this equates to a price of $1,253.23. This more than $13.63 higher than the New York close and $6.23 higher than London.

The gold price in Shanghai jumped 2.50 Yuan today, but the rise was greater when translated into the weak dollar. As you can see, London and New York are trying to catch up with Shanghai as the price differentials narrow.  That’s why the concept of a ‘Chinese gold price premium’ distorts the reality of what’s happening. China is no longer a distant sub-market of London, while India continues to be so, as that country with its gold taxes and political interference cannot function nearly as well as Shanghai with its highly developed, huge, physical market. As we have pointed out in the past, Shanghai has become the world’s gold hub. It would therefore be more accurate as description to describe New York and London trading at a ‘discount’ to Shanghai.

LBMA price setting:  The LBMA gold price was set today at $1,246.10 up from yesterday’s $1,232.05.  

The gold price in the euro was set at €1,154.76 after yesterday’s €1,139.94.

Ahead of the opening of New York the gold price was trading at $1,245.45 and in the euro at €1,154.58 At the same time, the silver price was trading at $17.49. 

Silver Today –Silver closed at $17.52 at New York’s close yesterday against $17.42 on the 20th March. Silver prices continue rising but not quite as fast as gold’s dollar prices.

Price Drivers

Gold is responding to a weak dollar, but also to buying by the U.S.

Chinese demand kicked in overnight too, helping the gold price rise. Chinese continues to dominate gold prices pulling gold prices higher in the developed world.

The wave of euphoria after the election of Trump in the U.S. and world markets is faltering. U.S. equity markets are pulling back as the promised ‘firing from the hip’ at the establishment alongside huge tax cuts and infrastructure spending, have not yet happened. With President Trump finding it hard going to do away with Obamacare, the potential hurdles that lie ahead look like slowing down his program and markets are responding to that. The dollar is slipping through support and may well go much lower.

Gold ETFs – Yesterday saw purchases of 4.145 tonnes into the SPDR gold ETF but no change in the Gold Trust.  Their respective holdings are now at 834.396 tonnes and 197.82 tonnes. 

Since January 4th 2016, 231.186 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 21.13 tonnes have been added to the SPDR gold ETF and the Gold Trust.

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

 

3.85 tonne withdrawal from GLD has little gold pricing effect

 Gold Today –New York closed at $1,234.60 yesterday after closing at $1,228.80 on the 17th March. London opened at $1,231.70 today. 

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

         The $: € was weaker at $1.0793: €1 from $1.0765: €1 yesterday.

         The Dollar index was weaker at 100.06 from 100.16 yesterday. 

         The Yen was weaker at 112.86:$1 from yesterday’s 112.74 against the dollar. 

         The Yuan was stronger at 6.8968: $1, from 6.9051: $1, yesterday. 

         The Pound Sterling was weaker at $1.2380: £1 from yesterday’s $1.2419: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    21

     2017    3    20       2017    3    17

SHAU

SHAU

SHAU

/

276.75

275.49

/

276.93

275.78

$ equivalent 1oz @  $1: 6.8968

      $1: 6.9051

$1: 6.9068

  /

$1,246.60

$1,240.62

/

$1,247.41

$1,241.92

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.]

 At the close in Shanghai today, the gold price was trading at 276.50 Yuan, which directly translates into $1,246.97. But allowing for the difference of gold being traded this equates to a price of $1,241.97. This more than $12.37 higher than the New York close and $10.27 higher than London.

The price differential between the three centers is narrowing again as China continues to dominate gold prices. Even a nearly 4 tonne sale from the SPDR gold ETF did not change U.S. prices. As you can see above, Shanghai’s gold prices are steady at higher levels uninfluenced by London or New York at the moment.

LBMA price setting:  The LBMA gold price was set today at $1,232.05 down from yesterday’s $1,233.00.  

The gold price in the euro was set at €1,139.94 after yesterday’s €1,146.34.

Ahead of the opening of New York the gold price was trading at $1,233.15 and in the euro at €1,141.07 At the same time, the silver price was trading at $17.43. 

Silver Today –Silver closed at $17.42 at New York’s close yesterday against $17.38 on the 17th March. Silver prices continue rising slowly in line with gold’s dollar prices.

Price Drivers

Turning back to the G-20 statement we note that the G-20 maintained its call for competitive devaluations and FX market instability to be avoided. While it goes against brazen devaluations for the sake of gaining competitive advantage, protectionism will alter trade balances, which will affect exchange rates. Behind such international plays, nations do attempt to keep their exchange rates low and lower. So while brazen currency wars are to be avoided, they will continue indirectly. Hence, the concerns surrounding trade with the G-20 statement calling for protectionism to be resisted not included in the statement

Markets are still expecting the enormous policy implementation of new tax rates and infrastructure spending. These are certain to have far more impact on global financial markets than any policy decisions President Trump has made to date. Likewise any implementation of Trade tariffs. These will ripple out and over precious metal markets. At this point ahead of these announcements we see them being positive for gold.

Gold ETFs – Yesterday saw sales of 3.849 tonnes from the SPDR gold ETF (GLD) but no change in the Gold Trust (IAU).  Their respective holdings are now at 830.251 tonnes and 197.82 tonnes. 

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

Gold to progress as Trump policies may slow to a plod

 Gold Today –New York closed at $1,226.30 yesterday after closing at $1,220.00 on the 15th March. London opened at $1,227.00 today. 

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

         The $: € was weaker at $1.0754: €1 from $1.0709: €1 yesterday.

         The Dollar index was weaker at 100.38 from 100.72 yesterday. 

         The Yen was unchanged at 113.44:$1 from yesterday’s 113.44 against the dollar. 

         The Yuan was stronger at 6.9068: $1, from 6.8967: $1, yesterday. 

         The Pound Sterling was stronger at $1.2343: £1 from yesterday’s $1.2266: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    17

     2017    3    16       2017    3    15

SHAU

SHAU

SHAU

/

275.34

270.98

/

275.79

271.58

$ equivalent 1oz @  $1: 6.9068

      $1: 6.8967

$1: 6.9124

  /

$1,241.76

$1,219.32

/

$1,243.79

$1,222.02

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.]

 At the close in Shanghai today, the gold price was trading at 275.90 Yuan, which directly translates into $1,242.46. But allowing for the difference of gold being traded this equates to a price of $1,237.46. This more than $11.16 higher than the New York close and $10.46 higher than London.

As you can see the price differentials between the three centers has been narrowing considerably. With today being a day when the gold markets are taking a breather after the rise we expect the differentials to continue to narrow as Shanghai pulls gold prices higher across the world.

LBMA price setting:  The LBMA gold price was set today at $1,228.75 up from yesterday’s $1,225.60.  

The gold price in the euro was set at €1,144.51 after Friday’s €1,142.64.

Ahead of the opening of New York the gold price was trading at $1,230.55 and in the euro at €1,146.51 At the same time, the silver price was trading at $17.37. 

Silver Today –Silver closed at $17.32 at New York’s close yesterday against $17.31 on the 15th March. Silver prices have barely moved over the last day as the primarily American investors in silver have hardly reacted to exchange rate moves in currencies. This is where silver and gold are distinctly different in that silver prices are dollar based in American markets, so are not vulnerable to global swings in currency values, except indirectly via the gold price. Silver prices constantly follow the direction of gold price but not to the same extent.

Price Drivers

Today currency and precious metal markets are taking a breather as they digest the fed’s future path and its impact on the dollar. But the euro is strengthening significantly against the dollar.

We were in doubt as to whether the dollar’s previous bull run was resuming, but after the Fed’s action we continue to see the dollar’s bull market as over. The Fed’s action will affect the currency [and gold and silver] markets for some time to come [months] as it is a structural path that was not expected by markets. Markets expected a considerably more hawkish Fed statement. We cannot see this before the end of the year, if the U.S. economy becomes more robust than it is now.

On top of this we are now seeing more of President Trumps policies unfolding as he ‘muscles-up’ the U.S. government and defense departments at the expense of the State Department, etc. But we await his infrastructure spending plans.

But it is clear that his road through the Senate is going to be difficult. It is also clear that his implementation of his policies will run the same gauntlet. The exuberance of expectations is losing steam now the market sprint will likely slow to a plod. This points to a weaker dollar and better gold prices, we feel.

Gold ETFs – Yesterday saw sales of 2.369 tonnes from the SPDR gold ETF but purchases of 0.6 of a tonne into the Gold Trust.  Their respective holdings are now at 837.062 tonnes and 197.82 tonnes. 

Since January 4th 2016, 233.852 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 23.796 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 soars post-Fed. Dollar falls back

 Gold Today –New York closed at $1,220.00 on the 15th March after closing at $1,198.70 on the 14th March. London opened at $1,224.15 today. 

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

         The $: € was weaker at $1.0709: €1 from $1.0623: €1 yesterday.

         The Dollar index was weaker at 100.72 from 101.58 yesterday. 

         The Yen was stronger at 113.44:$1 from yesterday’s 114.65 against the dollar. 

         The Yuan was stronger at 6.8967: $1, from 6.9124: $1, yesterday. 

         The Pound Sterling was stronger at $1.2266: £1 from yesterday’s $1.2195: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    16

     2017    3    15       2017    3    14

SHAU

SHAU

SHAU

/

270.98

272.05

/

271.58

271.47

$ equivalent 1oz @  $1: 6.8967

      $1: 6.9124

$1: 6.9137

  /

$1,219.32

$1,223.90

/

$1,222.02

$1,221.29

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.]

 At the close in Shanghai today, the gold price was trading at 275.50 Yuan, which directly translates into $1,242.48. But allowing for the difference of gold being traded this equates to a price of $1,237.48. This more than $17.48 higher than the New York close and $13.33 higher than London.

With arbitrage opportunities wide open between Shanghai and New York/London we see Shanghai pulling gold out of them. Dealers in London and New York ignored the decent tonnages being bought into the U.S. based gold ETFs recently and held prices down. We expect this to change in the days to come.

LBMA price setting:  The LBMA gold price was set today at $1,225.60 down from yesterday’s $1,202.25.  

The gold price in the euro was set at €1,142.64 after Friday’s €1,131.85.

Ahead of the opening of New York the gold price was trading at $1,227.15 and in the euro at €1,144.14 At the same time, the silver price was trading at $17.49. 

Silver Today –Silver closed at $17.31 at New York’s close yesterday against $16.88 on the 14th March.

 Price Drivers

As we said yesterday, “One of the dangers of getting carried away by the early days of a new President is that markets can run too far and ahead of the realities facing that President. This may well prove to be the case with the sell-off in gold of late…..” The Fed has not joined in that exuberance, instead of just raising interest rates by 0.25% but making dovish statements that while a total of 3 rate hikes can be expected this year, the Fed will maintain its accommodative stance. This disappointed many markets sending equity markets higher [because the fear of much higher rates in the future has dissipated] and the dollar lower against all currencies. Gold benefitted and traded higher, but the digestion of the Fed’s speech leaves more gold price rises to come.

At the same time, President Trump announced major spending cuts but a major expansion of defense spending. We still await his announcements on infrastructure spending which will bring growth but at the expense of inflation and deficit spending. At the moment inflation is reported by government agencies at being close to 2%. This leaves rates negative.

What is expected around the autumn is a signal by the Fed that it will slow its re-investment policies in Treasuries as a start to improving the Fed’s Balance Sheet. This could take 10-year Treasuries to 3.10%. If they don’t it is expected 10-year Treasuries will end the year around 2.6%. We expect that by that time inflation will be higher than Treasury 10-year yields, which is positive for U.S. gold buying.

Over in Europe, the fear of a popularism victory in Holland has gone, as the previous government looks as though it will keep ruling there. The voter turnout was huge leading many to believe that both in France and Germany similar election results will be achieved. We would be cautious about that conclusion. We don’t expect France to be that liberal. But we don’t see markets discounting a Le Pen victory or a Merkel defeat. Nevertheless, those ‘winds of change’ continue to blow!

Gold ETFs – Yesterday saw purchases of 4.442 tonnes into the SPDR gold ETF but no change in the holdings of the Gold Trust.  Their respective holdings are now at 839.431 tonnes and 197.22 tonnes. 

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

ROSS NORMAN : Rates Up – Gold Up – Why ???

To observers of financial markets it must seem odd that they often behave exactly the opposite to what is expected. Explaining it is also a strange thing too.

Essentially when the US Federal Reserve jawbones a potential move such as a rate hike (for the best part of a year), investor positioning is congruent with the expected outcome – that is to say dollar / equities up an by extension, gold down.

But what happens when they are too successful in leading the markets expectations and the market positioning is too extreme for the expected move. Well you have a heap of investors who are short gold and long the dollar / equities who don’t get the win they expected… that is to say the move is over-priced into the news. As such, those investors – be they speculators in the futures markets or physical buyers who have forestalled their purchases for a hoped for price correction … are vulnerable.

In this environment a little counter-intuitive buying of gold and selling dollar / equities is usually sufficient to frighten them into covering their position. In short, markets end up moving exactly the opposite way to how classic economics would tell us. And the move feeds on itself because of the extreme positioning.

Evidence to support this view is gold’s move over the last few rates increases – the 25 bps increase in December 2015 saw a subsequent 18% rise in gold over the following 3 months. Meanwhile the December 2016 rate rise saw an 8% increase over the next 3 months. Yesterdays rate rise has seen a 2.4% rise in gold so far … and appears to be petering out. What this indicates is that the wonderful ruse by institutions who exploit predictable investor behaviour seems to be running its course.

So where do we go from here – well having been burned by behaving logically, presumably those investors who keep finding themselves “long and wrong” in dollar/equities and “caught short” in gold will be more perspicacious – a posh way of saying more wise and cynical. Ultimately we could just end up not listening at all.

Ross Norman – www.info.sharpspixley.com 

A positive mood for gold in the West

Gold Today –New York closed at $1,198.70 on the 14th March after closing at $1,204.60 on the 13th March. London opened at $1,202.00 today. 

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

         The $: € was stronger at $1.0623: €1 from $1.0643: €1 yesterday.

         The Dollar index was hardly changed at 101.58 from 101.56 yesterday. 

         The Yen was stronger at 114.65:$1 from yesterday’s 115.06 against the dollar. 

         The Yuan was stronger at 6.9124: $1, from 6.9137: $1, yesterday. 

         The Pound Sterling was stronger at $1.2195: £1 from yesterday’s $1.2130: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    15

     2017    3    14       2017    3    13

SHAU

SHAU

SHAU

/

272.05

271.55

/

271.47

272.49

$ equivalent 1oz @  $1: 6.9124

      $1: 6.9137

$1: 6.9051

  /

$1,223.90

$1,223.18

/

$1,221.29

$1,227.41

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.]

 At the close in Shanghai today, the gold price was trading at 272.50 Yuan, which directly translates into $1,226.16. But allowing for the difference of gold being traded this equates to a price of $1,221.16. This more than $22.46 higher than the New York close and $19.16 higher than London.

Today Shanghai is taking the gold price higher. With Asian demand buying on the fall or around the new bottom, the Chinese gold investor is not waiting for the Fed today, but buying the Technical picture.

LBMA price setting:  The LBMA gold price was set today at $1,202.25 down from yesterday’s $1,203.55.  

The gold price in the euro was set at €1,131.85 after Friday’s €1,132.01.

Ahead of the opening of New York the gold price was trading at $1,201.80 and in the euro at €1,130.89 At the same time, the silver price was trading at $16.92. 

Silver Today –Silver closed at $16.88 at New York’s close yesterday against $16.97 on the 13th March.

Price Drivers

The two day FOMC meeting starts today. But U.S. gold investors are moving into gold ahead of tomorrow’s announcement.

One of the dangers of getting carried away by the early days of a new President is that markets can run too far and ahead of the realities facing that President. This may well prove to be the case with the sell-off in gold of late and the record levels the equity market is experiencing.

Over in Europe, the same may be happening in the Dutch elections where the right wing is being discounted as the next ruling party.

France is next, with Germany following in the autumn. All are waiting for Italy to send shock waves into the E.U. too.

But what is clear in Europe overall, is that the ‘winds of change’ are blowing across the E.U. and there will be a shift to the right because of the immigration problems. In themselves they are not an invasion or fundamentally damaging, but they are being taken as unacceptable. Culturally they are deeply disturbing several countries there.

In turn, as these winds are impacting, the conservative turning to the safe haven of gold is underway, if only to protect against the breaking up of the E.U. Most feel that the E.U. will hold together as will the euro, but the potential for the euro to fail in one way or another is encouraging quiet but persistent ‘safe haven’ demand for gold there.

Markets have responded quickly to Trump’s election promises, perhaps too quickly as such policies could take a year or more to implement if opposition powers don’t slow the processes down even further. Overall, in the west, the mood is positive for gold.

Gold ETFs – Yesterday saw purchases of 2.962 tonnes into the SPDR gold ETF and a purchase of o.3 of a tonne into the Gold Trust.  Their respective holdings are now at 834.989 tonnes and 197.22 tonnes. 

Yesterday saw more purchases of over 3 tonnes. After the announcement by the Fed we expect to see U.S. investors back in the gold market buying or selling through the gold ETFs. We expect to see activity and volatility to jump then. But some investors are not waiting for the Fed in the U.S. and jumping in now.

Since January 4th 2016, 231.179 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 21.123 tonnes have been added to the SPDR gold ETF and the Gold Trust.

 

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

 

Lack of gold and silver bullion buying shows confidence in Trump – but should it?

By Clint Siegner*

The bullion markets offer their own commentary about conservatives’ state of mind since Donald Trump’s election. They are optimistic for the first time in years. Just look at the sales statistics from the U.S. Mint. Bullion. Coin sales have fallen sharply as investors see less reason to seek safe haven in the form of physical metal.

During Obama’s presidency, and during the campaign when it looked as if Hillary might succeed him, conservatives and libertarians aggressively bought American Eagle coins and other bullion products. The mint set new sales records nearly every year.

The mindset that drove the retail buying changed in November. Consider the February sales figures. Sales of gold American Eagles dropped 67.1% last month versus the same month in 2016. Silver American Eagle sales fell by 74.6%.

Now one month of data from the mint certainly cannot be used to extrapolate longer term trends. Mint statistics often vary wildly from one month to the next. But it is safe to say retail bullion demand is down significantly, and the shift seems primarily driven by optimism surrounding the Trump economy.

There is little else to put investors at ease. The European Union remains in crisis. Geopolitical turmoil still dominates the Middle East. Federal debt and deficits look certain to persist.

The rhetoric from the Federal Reserve hasn’t changed in years. Officials there are still telegraphing “gradual” rate hikes with the caveat that rates will likely stay well below historical averages indefinitely.

The U.S. retail market is only a small part of global demand. And demand for the precious metals from financial market participants as well as well as Asian buyers continues to be relatively strong with prices rising sharply since December. But the recent dip in demand among American retail buyers may represent a final capitulation before the ferocious global bull market resumes.

Why? Because expectations surrounding Trump’s administration represent an extraordinarily high bar. Investors will discover the tectonic forces behind eruptions such as the 2008 financial crisis are still at work. They are beyond the ability of any president to control. Expectations will have to reset lower – perhaps a lot lower.

That may begin happening soon. Congressional Republicans aren’t fully jumping aboard when it comes to Trump’s reforms. They won’t even pass the same Obamacare repeal legislation they approved during the prior administration. Their actual commitment to ending the federal government’s most recent entitlement program is laid bare for all to see now that there is a president willing to support the repeal.

Meanwhile, Trump’s tax cuts are on the back burner while Congress decides on how to sell out the citizens who despise Obamacare – most of whom voted for Trump. Mitch McConnell, Paul Ryan and company will get around to disappointing the voters on tax reform in due time.

Debt Ceiling

The same clowns will almost certainly pass another hike in the U.S. debt ceiling this month.

That issue made for good politics when Obama was president and Democrats controlled the Senate. Practically no one in Washington is genuinely interested in spending restraint.

The new Treasury Secretary – Goldman Sachs alum Steve Mnuchin – has taken the exact same stance as his predecessors. He is encouraging Congress to expand government borrowing capacity without delay.

The bankers, defense contractors, pharmaceutical companies and deep state insiders who have been calling the shots in Washington DC didn’t pack up and leave when Trump moved into the White House. Congress is still on their payroll.

It is only a matter of time before optimistic conservatives figure out just how badly they have been betrayed by Republican leadership.

In fairness, the country’s fiscal problems started way before the current crop of Representatives and Senators arrived in Washington. When the U.S. dollar’s last link to gold was severed in 1971, America veered down a one-way road toward national bankruptcy. Dishonest money financed the largest welfare/warfare state in world history.

No president will be able to dismantle it without the cooperation of Congress. We wish Trump good luck, but we’ll believe it when we see it.

Gold higher following Shanghai lead

 Gold Today –New York closed at $1,204.40 on the 10th March after closing at $1,201.90 on the 9th March. London opened at $1,209.20 today.

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

         The $: € was weaker at $1.0713: €1 from $1.0611: €1 Friday.

         The Dollar index was weaker at 101.04 from 101.82 Friday. 

         The Yen was stronger at 114.59:$1 from Friday’s 115.40 against the dollar. 

         The Yuan was stronger at 6.9051: $1, from 6.9160: $1, Friday. 

         The Pound Sterling was stronger at $1.2232: £1 from Friday’s $1.2166: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    13

     2017    3    10       2017    2    9

SHAU

SHAU

SHAU

/

270.52

272.74

/

270.31

271.92

$ equivalent 1oz @  $1: 6.9051

      $1: 6.9160

$1: 6.9113

  /

$1,216.62

$1,227.43

/

$1,215.67

$1,223.74

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.]

At the close in Shanghai today, the gold price was trading at 273.0 Yuan, which directly translates into $1,229.71. But allowing for the difference of gold being traded this equates to a price of $1,224.71. This more than $21.31 higher than the New York close and $16.51 higher than London.

Demand in China has jumped and taken their prices much higher than New York’s close and is pulling London’s prices up too. The weakening dollar against all currencies is the prime cause of the rise in dollar prices, but we believe that London and New York are being increasingly influenced by Shanghai prices as we have said before.

LBMA price setting:  The LBMA gold price was set today at $1,207.80 up from Friday’s $1,196.55.  

The gold price in the euro was set higher at €1,131.43 after Friday’s €1,127.76.

Ahead of the opening of New York the gold price was trading at $1,207.10 and in the euro at €1,130.77 At the same time, the silver price was trading at $17.06. 

Silver Today –Silver closed at $17.04 at New York’s close Friday against $16.97 on the 9th March.

Price Drivers

It seems we were right to see the performance of gold rather like that of an expected oilfield discovery and the price after the strike was announced.

The gold price since the jobs report has steadily recovered in all global gold markets. The dollar has gone weaker against the euro and all other currencies, so this is truly dollar weakness. This is seen as the main reason why the gold price has been adjusted higher today.

Gold investors were sellers on Friday in particular the U.S. based gold ETFs. The sale of over 9 tonnes was, no doubt made by an investor to push prices down. But he/they must be regretting that now. To us, if such a sale cannot drive the price down, then it must have reached a point where it is telling all it wants to rise.

The important event the U.S. is looking at is Wednesday’s Fed meetings to determining the rate hike. A 0.25% is expected, but the market is looking to see if Janet Yellen will indicate a more robust approach to rate hikes going forward. But clearly, the gold price has already discounted a robust statement on the matter.

We believe Asian demand is a factor both from China as you can see above and from India as the cash shortages abate.

Gold ETFs – Friday saw sales of 8.885 tonnes from the SPDR gold ETF and 0.3 of a tonne from the Gold Trust.  Their respective holdings are now at 825.216 tonnes and 196.92 tonnes. 

Total sales from the gold ETFs above were very large and should have hit the gold price hard, but quite the reverse, they had no impact as the gold price recovered. With today seeing gold prices even higher we can only surmise that dealers are expecting to see prices rise as the rate hike this week looks almost certain, but has been fully discounted.  However gold did give up most of its gains once New York opened

Since January 4th 2016, 230.291 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 20.21 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 moves back above $1,200 despite positive jobs report

Gold Today –New York closed at $1,201.90 on the 9th March after closing at $1,208.70 on the 8th March. London opened at $1,197.00 today.

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

         The $: € was weaker at $1.0611: €1 from $1.0535: €1 yesterday.

         The Dollar index was stronger at 101.82 from 102.17 yesterday. 

         The Yen was weaker at 115.40:$1 from yesterday’s 114.50 against the dollar. 

         The Yuan was weaker at 6.9160: $1, from 6.9113: $1, yesterday. 

         The Pound Sterling was barely changed at $1.2166: £1 from yesterday’s $1.2164: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    10

     2017    3    9

      2017    2    8

SHAU

SHAU

SHAU

/

272.74

274.14

/

271.92

274.09

$ equivalent 1oz @  $1: 6.9160

      $1: 6.9113

$1: 6.9049

  /

$1,227.43

$1,242.23

/

$1,223.74

$1,242.18

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.]

 At the close in Shanghai today, the gold price was trading at 270.9 Yuan once again, which directly translates into $1,218.32. But allowing for the difference of gold being traded this equates to a price of $1,213.32. This was $11.42 higher than the New York close and $16.32 higher than London.

The demand for gold in Shanghai at the moment is not sufficient to lift its own prices let alone those of New York or London, as we see above. This is in the face of a weakening Yuan. The head of the People’s Bank of China stated that the Yuan exchange rate will remain stable going forward. We are always wary of central bank statements on exchange rates, because history shows that such statements are usually way off the mark. We can only summize that the PBoC is going to filter purchases of U.S. dollars for investment and maintain such capital / Exchange Controls to ensure strategic foreign purchases that favour China overall are permitted.  It is only in this way that the exchange rate of the Yuan can be managed. But will Chinese gold investors believe this?

The investments of Chinese capital that don’t meet these criteria are unlikely to be permitted. We believe that gold purchases from overseas are deemed of strategic benefit to China.

This will not prevent the expansion of Yuan usage in international trade from rising.

LBMA price setting:  The LBMA gold price was set today at $1,196.55 down from yesterday’s $1,204.60.  

The gold price in the euro was set lower at €1,127.76 after yesterday’s €1,140.61.

Ahead of the opening of New York the gold price was trading at $1,204.40 and in the euro at €1,130.79 At the same time, the silver price was trading at $17.07. 

Silver Today –Silver closed at $16.97 at New York’s close yesterday against $17.24 on the 7th March.

Price Drivers

The latest US Jobs report came out at a 235,000 increase in jobs following a 238,000 rise in January that was more than previously estimated, the best back-to-back rise since July. The unemployment rate fell to 4.7%, and wages grew 2.8% from February 2016. This is positive for U.S. future growth.  

It seems that once the numbers were out, the gold price recovered havig fallen overnight to below the pschologically importants $1,200 level, as it was no longer an awaited item. Rather like the expectation of an oil strike raised share values of a producer, but confirmation of expectations let the price fall. Likewise with the gold price!

In line with that, the dollar weakened too.

As you can see the gold price is falling faster in the euro than in the dollar at the moment as the euro strengthened. While Mario Draghi said little of significance yesterday he indicated that the easing policy would continue for a long time still.

Soft Chinese demand [waiting for the dollar to react?] contributed to this but so was dealer’s ‘marking down’ of the gold price. As you can see below the volumes of sales out of the U.S. based gold ETFs was not large enough to move prices, but, as we said yesterday in such a wary, buyer-sidelined market, it takes small volumes to move prices. So, it looks like we will see gold prices consolidate until the Fed speaks next week.

To get a feel for the market, we say that if a substantial buyer came in prices would move higher – disproportionately higher. The market is in a delicate position right now even after the jobs report, ahead of the Fed’s statement and probable rate rise next week.

The question now is, does this report imply four rate hikes, not just two. This was why the gold price was being marked down so much.  But Oriental physical gold demand is strong and likely to get stronger as we move up to April, the start of this year’s wedding season in India.

Gold ETFs – Yesterday saw sales of 2.665 tonnes from the SPDR gold ETF and 0.3 of a tonne from the Gold Trust.  Their respective holdings are now at 834.101 tonnes and 197.22 tonnes. 

 

Since January 4th 2016, 230.291 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 20.21 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 looking for a bottom – nearing $1200

 Gold Today –New York closed at $1,208.70 on the 8th March after closing at $1,215.80 on the 7th March. London opened at $1,205.00 today.

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

         The $: € was stronger at $1.0535: €1 from $1.0558: €1 yesterday.

         The Dollar index was stronger at 102.17 from 101.90 yesterday. 

         The Yen was weaker at 114.50:$1 from yesterday’s 113.95 against the dollar. 

         The Yuan was weaker at 6.9113: $1, from 6.9049: $1, yesterday. 

         The Pound Sterling was slightly weaker at $1.2164: £1 from yesterday’s $1.2172: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    9

     2017    3    8

      2017    2    7

SHAU

SHAU

SHAU

/

274.14

275.50

/

274.09

275.49

$ equivalent 1oz @  $1: 6.9113

      $1: 6.9049

$1: 6.8981

  /

$1,234.88

$1,242.23

/

$1,234.65

$1,242.18

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.]

 At the close in Shanghai today, the gold price was trading at 272.01 Yuan once again, which directly translates into $1,224.15. But allowing for the difference of gold being traded this equates to a price of $1,219.15. This is $10.45 higher than the New York close and $14.15 higher than London.

Shanghai continues to see lower prices reflecting falling demand inside China. We cannot attribute these to the expected U.S. Fed’s rate hike too much as China walks its own road. The price falls are accelerating as we see the difference between New York and Shanghai narrow however, we do not expect this to last for too long as the Yuan has begun to reflect the rise in the dollar by falling to over 6.9. Inflation in China is reported as falling but the PPI index [Production Prices] have jumped, pointing to rising inflation.

LBMA price setting:  The LBMA gold price was set today at $1,204.60 down from yesterday’s $1,213.30.  

The gold price in the euro was set lower at €1,140.61 after yesterday’s €1,149.50.

Ahead of the opening of New York the gold price was trading at $1,206.35 and in the euro at €1,142.81 At the same time, the silver price was trading at $17.19. 

Silver Today –Silver closed at $17.24 at New York’s close yesterday against $17.48 on the 7th March.

Price Drivers

The gold price is testing support at the moment. But today’s actions on top of those of the last few days reflect the strength of the dollar mainly. As we wrote the gold price has started to move up ahead of the opening of New York. This is usually a sign of finding the bottom. We expect such consolidation for the next few days.

With the first assessment of the jobs numbers now out at 298,000 private sector jobs in February the real number expected tomorrow may prove so robust that it implies another rate hike in June. It is likely that the dollar will move higher tomorrow putting more pressure on the gold price. What is of key interest is the question of whether the rate hike brings in ‘real’ interest rates or is inflation leading the way leaving negative interest rates in place.

Most potential U.S. gold buyers are standing on the sidelines at the moment waiting to see if further falls are expected. Please note there are few physical sellers except in Shanghai today, at higher prices. This implies that it will take only small volumes of buying or selling to move prices.

Indian Imports

Having said that we have received reports of a 175% jump in imports of gold to India to 96.4 metric tons from a year earlier, as jewelers increased stockpiles before the festival and wedding period that starts next month. The wedding season runs from April to July, so we are expecting some more recovery in demand.

Chinese imports

In China, Shanghai withdrawals for February jumped 66.6% to 170.24 tonnes from a year earlier, showing that far eastern demand is robust and rising. The low prices we see now must be inciting demand further ahead of the wedding season.

Gold ETFs – Yesterday saw no sales or purchases into or from the SPDR gold ETF or the Gold Trust.  Their respective holdings are now at 836.766 tonnes and 197.52 tonnes. 

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Shariah gold – a whole new world of investment

By Stefan Gleason*

It’s not the 1970s anymore. Back then, big moves in the metals markets were centered on United States. The great gold and silver mania of the late 1970s was driven by inflation fears and a rush of speculative demand. Although coin dealers struggled to keep up, there was no actual global shortage of physical metal, and spot prices crashed after manic buying peaked in January 1980.

Today, it’s a whole new world when it comes to sources of gold demand. Gold prices are still quoted in dollars, but international buying and selling now figures much more prominently in determining those prices.

Over the past four decades, the populations and buying power of Asian countries have soared. As they have become wealthier, they have bought more gold. India is now the world’s number one consumer of gold. India and China together now make up more than half of all world gold demand, according to the World Gold Council.

The recently launched Shanghai Gold Exchange will make China one of the leading players in physically settled gold contracts. No longer does the global gold trade have to go through the New York or London paper markets.

Fast-Growing Muslim World Can Now Turn to Gold as an Investment

Going forward, the fastest growing source of gold demand could come from the Islamic world. Iron-fisted Islamic law imposes strict rules on the types of financial instruments that can be held in compliant accounts. Among the assets that are now permitted are physical precious metals.

The Accounting and Auditing Organization for Islamic Financial Institutions recently approved a new Shariah Standard on Gold. This new standard is expected to be widely adopted this year by Islamic banks, brokerages, and other financial institutions. It will enable gold to be held as an investment asset within Shariah-compliant accounts.

Gold Coins

The upshot is that investment demand for gold among Muslims could surge by several hundred tons amounting to tens of billions of dollars. Total Shariah-compliant assets under management are estimated by the Islamic Finance Stability Board to grow to $6.5 trillion by 2020. If clients opted for just a 1% allocation to gold, that would translate into $65 billion – or more than half of annual worldwide gold production.

While the fertility rate of most Western cultures has been declining at an alarming rate, the Muslim population itself is rapidly growing worldwide. According to a report by the Pew Research Center, “if current demographic trends continue, the number of Muslims is expected to exceed the number of Christians by the end of this century.” That would make Islam the world’s biggest religion.

Muslim immigration is obviously a hot-button issue in the United States and Europe. But regardless of whether the West finally decides that enough is enough and puts a cap on Muslim inflows, the worldwide Muslim population will keep expanding. That’s ensured by the comparatively high rates of Muslim fertility.

Higher numbers of Muslims, plus rising standards of living in Asia, means non-Western demand for gold and silver can be expected to go up for the foreseeable future.

Supply Will Struggle to Keep Up with Rising Global Gold Demand

Supply, meanwhile, will be difficult to expand. Higher prices could cause new mines and new mining technologies to come online down the road. But for now, the tough economics of the mining industry point toward the likelihood of reduced output over the next few years.

All the gold dug out of all of the mines around the world in a year would amount to an 18-foot cube. That would be enough gold to make one person insanely wealthy! But it wouldn’t be anywhere near enough for each of the world’s 7.4 billion people to have so much as an ounce of gold… or even half an ounce… or even a tenth of an ounce. In fact, total world gold production amounts to less than 1/70th of an ounce per person.

Annual Gold Production

Of course, there remains large above-ground gold stockpiles that could theoretically be sold into the market to meet rising demand for things like jewelry, coins, and gold-backed investment products. The largest gold stockpiles belong to governments and central banks. And lately, they’ve been more inclined to accumulate bullion than to sell it.

It would likely take much higher prices to incentivize major gold holders to sell. In the meantime, rising Asian and Islamic demand for precious metals is a major long-term trend that will continue to play out regardless of where the U.S. economy heads. The impact on prices may not be immediate or even detectable on any given day, but over time it will be significant.

*Stefan Gleason is President of Money Metals Exchange, the U.S. precious metals company named 2015 “Dealer of the Year” by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, TheStreet.com, Seeking Alpha, Detroit News, Washington Times, and National Review.

Gold continuing downwards drift

Gold Today –New York closed at $1,215.80 on the 7th March after closing at $1,226.00 on the 6th March. London opened at $1,212.60 today. 

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

         The $: € was stronger at $1.0558: €1 from $1.0598: €1 yesterday.

         The Dollar index was stronger at 101.90 from 101.57 yesterday. 

         The Yen was weaker at 113.95:$1 from yesterday’s 113.90 against the dollar. 

         The Yuan was weaker at 6.9049: $1, from 6.8981: $1, yesterday. 

         The Pound Sterling was weaker at $1.2172: £1 from yesterday’s $1.2232: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    8

     2017    3    7

      2017    2    6

SHAU

SHAU

SHAU

/

275.50

276.61

/

275.49

276.61

$ equivalent 1oz @  $1: 6.9049

      $1: 6.8981

$1: 6.8783

  /

$1,242.23

$1,250.82

/

$1,242.18

$1,250.82

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.]

At the close in Shanghai today, the gold price was trading at 274.02 Yuan once again, which directly translates into $1,234.34. But allowing for the difference of gold being traded this equates to a price of $1,229.34. This is $13.54 higher than the New York close and $16.74 higher than London.

We are reminded that gold cannot be exported from China, but it can be imported. This ensures that the ebbs and flows of gold prices always lead to gold entering China in a greater or lesser amount. With such price differentials being seen now arbitrageurs are buying London and selling Shanghai.

As we have seen over the past year when gold prices fall there is a shift of actual gold bullion to China. It is a constant feature that is making China the global, physical, gold hub. We have seen Shanghai dominate gold prices, recently and expect it to continue doing so in the future. But what, as we see now, happens when Shanghai prices fall? Is it easy to see who is leading whom. When an item like a Fed rate hike is on the cards, Shanghai listens and takes gold prices down after seeing them fall in New York so it is difficult to tell, but we feel it was the item that led the way, not New York’s lower gold price.

LBMA price setting:  The LBMA gold price was set today at $1,213.30 down from yesterday’s $1,223.70.  

The gold price in the euro was set higher at €1,149.50 after yesterday’s €1,157.60.

Ahead of the opening of New York the gold price was trading at $1,213.35 and in the euro at €1,156.84.  At the same time, the silver price was trading at $17.41. 

Silver Today –Silver closed at $17.48 at New York’s close yesterday against $17.77 on the 6th March.

Price Drivers

The gold price remains on support at current levels. The rate hike coming next week has/is being discounted by global markets. Shanghai prices are falling back but not nearly as much as in New York or London. These are not moves prompted by exchange rate moves. In both London and New York there are no buyers, so prices are drifting. It will take relatively small volumes to move prices either way.

Such lower prices, we believe, will prompt Asian demand but will not be seen in force until a bottom is formed. At that point Asian demand should lead the way. We expect Indian demand to become robust up until May.  While the equity markets look toppy now a rate hike may well hurt them.

Gold ETFs – Yesterday saw no sales or purchases into or from the SPDR gold ETF or the Gold Trust.  Their respective holdings are now at 836.766 tonnes and 197.52 tonnes. 

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Gold drifting ahead of Fed rate hike

Gold Today –New York closed at $1,226.00 on the 6th March after closing at $1,251.50 on the 28th February. London opened at $1,224.15 today.

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

         The $: € was weaker at $1.0598: €1 from $1.0557: €1 on 29th February.

         The Dollar index was unchanged at 101.57 from 101.57 on 29th February. 

         The Yen was weaker at 113.90:$1 from 29th February’s 113.45 against the dollar. 

         The Yuan was weaker at 6.8981: $1, from 6.8783: $1, 29th February. 

         The Pound Sterling was stronger at $1.2232: £1 from 29th February’s $1.2373: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    7

     2017    3    6

      2017    2    28

SHAU

SHAU

SHAU

/

276.61

279.66

/

276.61

279.65

$ equivalent 1oz @  $1: 6.8981

      $1: 6.8783

$1: 6.8689

  /

$1,250.82

$1,266.35

/

$1,250.82

$1,266.30

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.]

 At the close in Shanghai today, the gold price was trading at 275.50 Yuan once again, which directly translates into $1,242.23. But allowing for the difference of gold being traded this equates to a price of $1,237.23. This is $11.23 higher than the New York close and $13.08 higher than London.

In the past week Shanghai has remained higher than New York but moved down with it and London. Clearly the Fed’s voice when talking of a rate hike reaches Shanghai. The arbitrage opportunities are still in place.

LBMA price setting:  The LBMA gold price was set today at $1,223.70 down from 29th February’s $1,246.05.  

The gold price in the euro was set higher at €1,157.60 after 29th February’s €1,178.74.

Ahead of the opening of New York the gold price was trading at $1,222.90 and in the euro at €1,156.84.  At the same time, the silver price was trading at $17.69. 

Silver Today –Silver closed at $17.77 at New York’s close yesterday against $18.34 on the 28th February.

Price Drivers

Since we have been away over much of the past week the Fed has gone public on a rate hike coming next week. The market has been quick to discount this. While the economy looks much better in the U.S. than it was, we feel it is too early to say the U.S. has robust growth warranting more than two or, at the most, three rate hikes in 2017. At the same time it is clear that in both the U.S. and Europe, inflation is taking off. Certainly in Europe the E.C.B.’ interest rates are below inflation making real interest rates heavily negative except in the weaker nations of the E.U.

In the U.S. we have yet to confirm, but see that real interest rates may well also be negative. Inflation on both sides of the Atlantic is the bad kind caused by energy price increases and other cost increases. This is the sort that does not promote growth but can have a negative effect. For it to meet central bank objectives it should be driven by wage growth and capacity limitations indicating robust economic growth. As such we cannot see this as a reason to sell gold.  With the U.S. $ exchange rate being relatively unchanged a on a week ago one of the main gold price drivers of late has not caused a fall in the gold price. As a result we cannot see the gold price being held down for too long.

Technically, we see the gold price sitting on support now. When we look at the fundamentals of the gold market, we see them sound and positive for gold prices too.

Underlying the financial system are ongoing uncertainties in Europe with The Netherlands going to the elections ahead of France and Germany. The potential for upsets is great. If Wilders wins in The Netherlands, le Pen looks to be a solid contender for the French Presidency. Either or both of these potential events is going to bring heavy pressure on the euro, which is positive for gold.

In that case, if these were the only gold price factors, we see the gold price in the dollar continuing along the same path as it is on now, namely either sideways or higher. In the euro we see it then rising strongly. But other factors are also in play, which could change the scene too.

Gold ETFs – Since the 1st March we have seen sales of 4.403 tonnes from the SPDR gold ETF executed in one day last week and a sale of 4.72 tonnes from the Gold Trust.  Their respective holdings are now at 836.766 tonnes and 197.52 tonnes. 

Added together and seen as a reaction to the Fed’s indication that a rate hike will come next week and we see why the gold price has fallen over the last week.

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Gold as a diversifier

BY Frank Holmes – CEO and Chief Investment Officer US Global Investors

 the diversification benefits of gold

Gold posted its second straight monthly gain in February, the first such time it has done so since the summer, when Brexit-fueled uncertainty shook world markets. In 2017, the yellow metal has now advanced close to 9 percent, cracking the $1,260 an ounce ceiling on Monday for the first time since soon after the November election. Compared to the same number of trading days last year, gold was up 15 percent.

Gold Posts Second Straight Monthly Gain Since Summer
click to enlarge

Lately we’ve seen money managers and hedge funds increase their net long position on gold. This is impressive considering that equities are still holding strong and regularly hitting new highs. As of February 27, the Dow Jones Industrial Average was up for 12 straight days, a winning streak we haven’t seen in 30 years.

Dow Jones Industrial Average Up 12 Straight Days
click to enlarge

Gains in the large-cap index have been led by plane-maker Boeing, which stands to benefit “big league” from President Donald Trump’s proposal to boost military spending 10 percent, or $54 billion, announced yesterday.

Boeing Climbing Higher on Trump's Military Build-Up Plan
click to enlarge

Money managers’ bullish bet on gold at this time shows that the precious metal continues to hold an important place in most investors’ portfolios. Over the past 10 years, gold has shown little to no correlation with blue-chip or small-cap stocks, making it an exceptional diversifier for investors who might fear stocks have risen too much, too fast, and are due for a pullback. In a note last week, UBS analyst Joni Teves said as much, writing that “gold interest on the back of diversification and hedging reasons are likely to be resilient as uncertainty and political risks linger.”

Gold has little to no correlation with stocks, big and small
click to enlarge

Worldwide, Gold Investment Is Encouraged

Gold’s well-known diversification benefits are among the reasons that prompted Islamic finance policymakers to develop the Shari’ah Standard on Gold, unveiled in December 2016, which finally opens up the precious metal as an investment tool in the global $1.88 trillion Islamic finance industry. Before now, there were no Shari’ah-compliant investments that could be considered “safe havens.” Permitting physical gold and gold-backed funds into the universe of allowable investments changes that.

More recently, the governor of Kyrgyzstan’s central bank, Tolkunbek Abdygulov, expressed his “dream” to see all 6 million citizens of the Central Asian country to own at least 100 grams, or 3.5 ounces, of physical gold.

Kyrgyzstan's central bank urges all 6 million citizens to own at least 3.5 ounces of gold.

Speaking to Bloomberg,  Abdygulov said that the metal “can be stored for a long time and, despite the price fluctuations on international markets, it doesn’t lose its value for the population as a means of savings… We are hopeful that our country’s population will learn to diversify its savings into assets that are more liquid and—more importantly—capable of retaining their value.”

Here in the U.S., some states are taking action to diversify into gold and silver, thereby “breaking the Federal Reserve’s monopoly on money,” as Zero Hedge writes. The Texas Bullion Depository—the first such depository in the U.S.—is in its final stages of construction, and in Utah, legislation was just introduced that would expand on the state’s 2011 Legal Tender Act, which allows citizens, businesses and organizations to pay off debt using gold and silver. The proposed legislation would “authorize the investment of public funds in specie legal tender held in a commercial specie depository,” according to Zero Hedge. “Specie” refers to gold and silver coins. Therefore, it looks as though Utah aims to follow Texas’ lead by building a bullion depository and diversifying a portion of public funds in gold and silver

Gold takes a step back

Gold Today –New York closed at $1,251.50 on the 28th February after closing at $1,251.00 on the 27th February. London opened at $1,244.00 today.

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

         The $: € was stronger at $1.0557: €1 from $1.0593: €1 on yesterday.

         The Dollar index was stronger at 101.57 from 101.09 on yesterday. 

         The Yen was weaker at 113.45:$1 from yesterday’s 112.44 against the dollar. 

         The Yuan was weaker at 6.8783: $1, from 6.8689: $1, yesterday. 

         The Pound Sterling was weaker at $1.2373: £1 from yesterday’s $1.2427: £1.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    1

     2017    2    28

      2017    2    27

SHAU

SHAU

SHAU

/

279.66

280.67

/

279.65

280.57

$ equivalent 1oz @  $1: 6.8783

      $1: 6.8689

$1: 6.8800

  /

$1,266.35

$1,268.87

/

$1,266.30

$1,268.42

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.]

 At the close in Shanghai today, the gold price was trading at 279.50 Yuan once again, which directly translates into $1,263.89. But allowing for the difference of gold being traded this equates to a price of $1,258.89. This is $7.39 higher than the New York close and $14.89 higher than London.

President Trump’s speech was a patriotic call mainly but lacked sufficient details to move markets significantly. We expect London and New York to move back up towards the Shanghai price in the next few days in line with dollar moves.  But gold got hit by statements from various US Fed officials which raised the likelihood of an interest rate rise as soon as this month.  The FOMC meets on March 14-15.

LBMA price setting:  The LBMA gold price was set today at $1,246.05 down from yesterday’s $1,251.90.  The gold price in the euro was set higher at €1,182.21 after yesterday’s €1,181.15.

Ahead of the opening of New York the gold price was trading at $1,245.05 and in the euro at €1,181.26.  At the same time, the silver price was trading at $18.35. 

Silver Today –Silver closed at $18.34 at New York’s close yesterday against $18.23 on the 27th February.

Price Drivers

Before London’s opening the gold price was moved down by $8 from New York’s close. This sort of move is not unusual and can easily be reversed. With the Trump speech a patriotic rallying cry, but lacking in specific details the U.S. markets are relatively unmoved. We expect a similar reaction in the gold price but being seen in a recovery of the price to levels from which it has fallen in the last day.What he did state was that the government will spend $1 trillion to boost growth in the U.S. and provide jobs for Americans. This is a vast number that will be paid for by more debt. For anyone to properly assess Trump’s plans they need to have details of his Tax cuts. He tells us the cuts will be huge. We expect the market to react by weakening the dollar, over time, and to favour gold, over time, in the U.S. as U.S. debt becomes excessive. We are already seeing foreign investors begin to shy away from investing in U.S. Treasuries.

India

India’s February imports of gold surged in February to 50 tonnes, up more than 82% from a year ago, on pent-up jeweler demand and as retail consumers ramped up purchases for weddings.

The rise in imports by the world’s second-biggest consumer of the precious metal will support global prices that had been trading near their highest level in 3-1/2 months.

 

India’s gold imports had fallen to 27.4 tonnes in February 2016 as buyers postponed purchases in anticipation of a reduction in the import duty in the budget at the time.

This February, retail demand improved as cash supplies moved to the normal levels before de-monetization.

 

Gold ETFs – Yesterday saw no sales or purchases from or into the SPDR gold ETF but a purchase of 0.41 of a tonne into the Gold Trust.  Their respective holdings are now at 841.169 tonnes and 202.24 tonnes.   Once the markets have digested the Trump speech, we may well see activity increase.

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Gold waits to be Trumped

Gold Today –New York closed at $1,251.00 on the 27th February after closing at $1,256.70 on the 24th February. London opened at $1,251.70 today.

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

         The $: € was slightly stronger at $1.0593: €1 from $1.0586: €1 on yesterday.

         The Dollar index was slightly stronger at 101.09 from 101.06 on yesterday. 

         The Yen was slightly weaker at 112.44:$1 from yesterday’s 112.30 against the dollar. 

         The Yuan was stronger at 6.8689: $1, from 6.8800: $1, yesterday. 

         The Pound Sterling was slightly stronger at $1.2427: £1 from yesterday’s $1.2412: £1.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    2    28

     2017    2    27

      2017    2    24

SHAU

SHAU

SHAU

/

280.67

278.49

/

280.57

279.76

$ equivalent 1oz @  $1: 6.8689

      $1: 6.8800

$1: 6.8717

  /

$1,268.87

$1,260.53

/

$1,268.42

$1,266.28

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.]

 At the close in Shanghai today, the gold price was trading at 280.0 Yuan once again, which directly translates into $1,267.88. But allowing for the difference of gold being traded this equates to a price of $1,262.88. This is $11.88 higher than the New York close and $11.18 higher than London.

If Trump’s speech is positive for gold then we should see the price in New York rise to meet the Shanghai price, at least.

LBMA price setting:  The LBMA gold price was set today at $1,251.90 down from yesterday’s $1,256.25.  

The gold price in the euro was set lower at €1,181.15 after yesterday’s €1,185.02.

Ahead of the opening of New York the gold price was trading at $1,252.70 and in the euro at €1,182.02.  At the same time, the silver price was trading at $18.28. 

Silver Today –Silver closed at $18.23 at New York’s close yesterday against $18.35 on the 24th February.

Price Drivers

Later today in the U.S. we await President Trump’s speech before Congress. We are told he will raise defense spending by $54 billion, but of more importance to the gold price will be any mention of infrastructure spending or any indication of tax cuts. These will directly affect the dollar against other currencies as well as the dollar gold price.

As you can see most developed world markets are marking time until they hear what he proposes. But note that Shanghai has not marked time, but moved slightly higher reflecting the fundamentals of the gold market, leaving New York and now London pulling back ahead of his speech. Today may well show in both London and New York much higher volatility in the very short term. Thereafter the currency and gold world in the west will settle down and follow Shanghai again. This is where Shanghai’s new dominance over the gold price will show itself.

The previous statements from President Trump pointed to much greater debt and likely inflation in his attempts to promote growth. Being a media master, we may well see him make today’s speech dramatic by encompassing his fiscal and taxation measures at the same time as he mentions defense and infrastructure. It will be these that impact the dollar and gold as well as silver, the metal that follows gold, ‘wherever she shall go.’ On balance we expect his speech to benefit gold, when the dust settles.

Gold ETFs – Yesterday saw no sales or purchases from or into the SPDR gold ETF or the Gold Trust.  Their respective holdings are now at 841.169 tonnes and 201.82 tonnes. These gold ETFs have been quiet in the last week or so. After today we may well see activity increase. But will investors sell or buy? Today may well point the way forward.

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance