Gold and Silver - ahead of the holidays

Gold Today –New York closed at $1,128.80 yesterday after closing at $1,131.60 on the 20th December. London opened again at $1,132.00 today after yesterday’s $1,131.80.

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

-         The $: € was almost unchanged at $1.0444: €1 from $1.0446: €1 yesterday.

-         The Dollar index was stronger at 103.04 from 102.95 yesterday. 

-         The Yen was stronger at 117.37: $1 from yesterday’s 117.67 against the dollar. 

-         The Yuan was weaker at 6.9488: $1, from 6.9323: $1, yesterday. 

-         The Pound Sterling was weaker at $1.2256: £1 from yesterday’s $1.2350: £1.

 Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2016  12    23

      2016  12    22

      2016 12     21   










$ equivalent 1oz @  $1: 6.9488

      $1: 6.9475

$1: 6.9506







Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle Eat 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.] 

The Shanghai Gold Exchange remains $25 above New York and $24 above London. We see the New York and London discounts to Shanghai attracting arbitrageurs to smooth out the price. So long as there are sizeable sales from U.S. gold ETFs we see the Shanghai premium continuing.

LBMA price setting:  The LBMA gold price setting was at $1,131.00 this morning against yesterday’s $1,130.55. 

The gold price in the euro was set higher at €1,082.09 after yesterday’s €1,080.01.

Ahead of the opening of New York the gold price was trading at $1,131.75 and in the euro at €1,082.70.  At the same time, the silver price was trading at $15.77.

Silver Today –Silver closed at $15.80 at New York’s close yesterday from $15.95 on the 21st December. 

Price Drivers

For the last few weeks, while the U.S. digested the election win by Trump, the euphoria has bubbled over. But as we all know, while Trump’s businesslike objectives may be encouraging, they are against the background of an economy that while moderately expansive is far from vigorous, as demand for durable goods fell 4.6% in November and jobless claims rose in the same month. So President Trump has to produce miracles to achieve what the Market euphoria expects of him. So a calming process in the markets must happen and we see the beginning of that now.

Likewise in gold and silver, the falls have gone a long way further because of the euphoria over Trump. With sales of gold from the U.S. based gold ETFs slowing to a halt for the second day we ask, “Are we seeing such sales come to an end?” Of course this is not the same as the start of buying into the gold ETFs, but it may well be telling us the bottom may be coming into position.

With the festive season starting tomorrow, today should see position squaring, which could bring volatility to the gold and silver markets. Of course there is still another week in the month, so the position squaring could continue through next week too.

Monte dei Paschi has failed to attract willing investors and its shares have been suspended as they await the Italian governments rescue, which has been confirmed as on the way. What form will that rescue take? After all, the devil is in the detail! If badly handled the rescue could bring new worries to the E.U. banking sector.

In a year of surprises to be followed by another year of surprises [particularly from the E.U.] a triggering of banking crises there will hit developed world banks too. With shareholders of the world’s leading banks [Deutsche and Credit Suisse with Barclays left fighting the U.S. Department of Justice] having to fork out billions for bad mortgage practices, the banking industry in the developed world is far from sound, so a crisis in Italy could ripple across the Atlantic.

In 1933 it was a severe U.S. banking crisis that precipitated the confiscation of gold. Today, cash and gold are the only way to avoid such crises. That’s why there is so much talk of a cashless world where there is absolute dependence on banks under the thumb of governments.

Gold ETFs – Yesterday in New York, there were no sales from the SPDR gold ETF or the Gold Trust, leaving their respective holdings at 824.541 tonnes and 195.60 tonnes. 

Since January 4th this year, 219.671 tonnes of gold has been added to the SPDR gold ETF and to the Gold Trust. 

Julian D.W. Phillips | | StockBridge Management Alliance   


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