Shanghai, London and New York gold prices aligning

Gold Today –New York closed at $1,182.50 on the 9th January after closing at $1,173.40 on the 6th January. London opened again at $1,185.15 today.

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

-         The $: € was weaker at $1.0611 €1 from $1.0532: €1 yesterday.

-         The Dollar index was weaker at 101.66 from 102.36 yesterday. 

-         The Yen was stronger at 115.47: $1 from yesterday’s 117.40 against the dollar. 

-         The Yuan was stronger at 6.9244: $1, from 6.9329: $1, yesterday. 

-         The Pound Sterling was weaker at $1.2150: £1 from yesterday’s $1.2185: £1.

 Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    1    10

     2016    1    9

      2016  12    6










$ equivalent 1oz @  $1: 6.9244

      $1: 6.9329

$1: 6.9211







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.]

 Again New York’s prices are moving up towards Shanghai’s, which continues to rise steadily but solidly.  Shanghai on Monday was only $6.50 higher than the close of New York. This morning London opened only $3.50 lower than Shanghai. The weaker dollar is impacting the gold price, to the relief of the People’s Bank of China.

LBMA price setting:  The LBMA gold price setting was at $1,183.20 this morning against yesterday’s $1,176.10. 

The gold price in the euro was set higher at €1,117.60 after Friday’s €1,117.54.

Ahead of the opening of New York the gold price was trading at $1,184.15 and in the euro at €1,118.71.  At the same time, the silver price was trading at $16.61. 

Silver Today –Silver closed at $16.57 at New York’s close yesterday from $16.51 on the 6th January. 

Price Drivers

As you can see below, another very large sale of physical gold took place in New York and is no doubt finding its way to China. The fact that the gold price ignored this sale and took prices higher, as the dollar weakened, is significant. As you know, we are watching to see if pricing power now sits with Shanghai. New York’s price reaction to the large sale of gold, confirms again that it does.

It does appear that the developed world’s gold world has not yet noticed these changes. We feel that they are the most important structural changes the gold world has seen since 1971. Please note, you’re reading it here first!

India – The shortage of cash in India persists and may continue until May. We are beginning to wonder if this was not a mistake by the government, or an attempt to force Indians to go electronic with their money. This may have happened with the middle classes, but the poor, who are not able to go electronic, continue to suffer unreasonably.  We are of the opinion that ‘Black Money’ will survive this attack as it is deeply embedded in the Indian culture. Likewise, a distrust of government, corrupt bureaucrats and the fear of disclosure of individual’s true financial positions will ensure its survival.

Gold ETFs – Yesterday, in New York, there were very large sales of 8.595 tonnes from the SPDR gold ETF but there were no sales from the Gold Trust, leaving their respective holdings at 804.996 tonnes and 198.30 tonnes. 

It is very notable that this had absolutely no impact on the gold price. If this happens many more times, we can expect to see the very large short positions on COMEX be closed in a rush. It is a battle now, between east and west and east is winning at the moment!

Julian D.W. Phillips | | StockBridge Management Alliance 

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