Is this a solid breakout for gold?

The New York gold price closed Monday at $1,093.50 up from $1,078.50.  In Asia it moved up to $1,099.35 but in London it held back slightly where  the LBMA price was set at $1,096.00 up from $1,083.85 with the dollar index lower at 98.72 down from 99.42 yesterday. The euro was at $1.0863 up from $1.0741 against the dollar. The gold price in the euro was set at €1,010.23 up from €1,009.03 as the euro recovered. Ahead of New York’s opening, the gold price was trading at $1,102.45 and in the euro at €1,014.07.  

The silver price in New York closed at $14.02 up 3 cents.  Ahead of New York’s opening the silver price stood at $14.06.

Price Drivers

The gold price has confirmed its breakout solidly and has broken through the next overhead resistance at $1,100. The dollar was turned back for the 100 level on the dollar index and is now trading lower against the euro as we forecast. The gold price is moving independently of any currency moves on the part of the dollar and the euro and is rising in all the world’s currencies.

Yesterday saw sales of 1.403 tonnes from the SPDR gold ETF but none from the Gold Trust. The holdings of the SPDR gold ETF are now at 642.368 tonnes and at 152.55 tonnes in the Gold Trust.  If the unfortunate seller was shorting the metal, we expect him to cover his position a.s.a.p. Likewise, the massive short position on COMEX, while the Commercials have never been so neutral. With China closing its markets for the second time this week as downside limits are achieved the fear is that the 8th, when the ban on equity sales is due to expire the market will collapse. We see the Chinese authorities extending the ban to prevent this. But alongside their falls, global stock markets continue to fall alongside the oil price.

George Soros believes that the current situation is reminiscent of the 2008 credit crunch. This would explain his longer term investments in gold.

Data on a broad range on the U.S. economy is now disappointing and indicating a bear market in U.S. equities is on the cards.

It certainly points to cash being a sound investment. But the only non-currency cash/asset is gold and then silver. We do see that 2016 may have started with a bang, but this bang may well continue for a lot of 2016. Now is the winter of gold’s discontent turned to glorious summer!

The silver price has yet to catch gold up, but we expect it will.

Julian D.W. Phillips for the Gold & Silver Forecasters - and

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