Julian Phillips’ latest takes on the gold and silver markets and their key drivers.
New York closed at $1,183.40 down $5.10 over Monday’s close. Asia took it up $2 ahead of London’s opening with London then holding it there. The LBMA Gold price was set at $1,184.45 down only $0.30 on Monday’s level. The euro equivalent stood at €1,061.27 up €19.35 while the dollar was stronger at $1.1135 down from $1.1351 against the euro. Ahead of New York’s opening, gold was trading higher in London at $1,194.00 and in the euro at €1,061.33
The silver price closed at $16.28 down 20 cents on Monday’s level. Ahead of New York’s opening it was trading at $16.47.
The gold price is moving with the dollar not with the euro still, as the euro climbed to $1.1250 and the dollar index pulled back to 94.40 down from 95.12. It is bouncing between these two levels now as it consolidates.
There were imperceptible sales of gold from the SPDR gold ETF on Monday of 0.003 tonnes of gold from the SPDR gold E.T.F. but no movement in the Gold Trust on Monday. The holdings of the SPDR gold ETF are at 728.322 tonnes and at 166.14 tonnes in the Gold Trust. While there were no sales from the gold ETFs, trading in New York has set a pattern of rising initially, then a couple of hours into the session sees a $5+ drop in the price quickly, holding around that level for the rest of the session. Physical sales are coming from institutions outside the ETFs so it is clear that there are continuous attempts to hold the price down by others.
If we look closely at who is likely to benefit, two clear factors emerge. For the last 48 years it has been to the advantage of the U.S. to ensure that all turn to the dollar to measure value and transact business. To achieve this it was necessary for gold to lose the trust it had previously. Now with the Chinese Yuan about to move to center stage and keen to lift the nation’s holdings of gold, it is to the Chinese that the advantage comes, as it can acquire huge holdings of gold at very low prices.
We have no direct evidence of either authority acting directly in the gold market so this perception is difficult to establish. Likewise it is clear by the patterns formed over the last two years in the gold price that we are getting extremely close to a series of events that are going to change the world of gold and foreign exchanges
Greece paid its $835 bn bill today, but the Finance Minister warned that within two weeks Greece will run out of cash. This is a serious warning to the E.U. We are close to a point of resolution now, with the Greeks saying they will not leave the euro and have no more money. This throws the ball squarely in the court of the E.U. If Greece stays in the Euro and Eurozone, gold and silver prices as well as the euro are unlikely to be affected.
Silver prices are moving with gold but in a more resilient fashion.