Gold price consolidating again

 Gold Today –New York closed at $1,235.60 on the 16th February after closing at $1,239.30 on the 17th February. London opened at $1,234.00 today.

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

-         The $: € was stronger at $1.0619: €1 from $1.0645: €1 on Friday.

-         The Dollar index was slightly stronger at 100.87 from 100.69 on Friday. 

-         The Yen was weaker at 113.17:$1 from Friday’s 112.85 against the dollar. 

-         The Yuan was weaker at 6.8783: $1, from 6.8654: $1, Friday. 

-         The Pound Sterling was stronger at $1.2462: £1 from Friday’s $1.2407: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    2    20

     2017    2    17

      2017    2    16










$ equivalent 1oz @  $1: 6.8783

      $1: 6.8654

$1: 6.8603







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.]

 Shanghai was trading at 275.30 Yuan towards the close today. This equates to $1,244.90, but allowing for the different quality of gold being traded [0.9999 fineness] it stands at $1,239.90. Shanghai is in line with both London and New York.

If we look back to the time when the SGE started to make speculation more expensive, earlier this year, we see that the price differentials between London, New York and Shanghai have narrowed and when Shanghai is not leading the way the three markets remain in line. This implies that the efforts of arbitrageurs appear to be succeeding in smoothing prices out. This makes the global gold price a reliable one with speculators losing their power to shift the gold price heavily without additional physical gold action.

Consequently, we expect in the future to see fewer violent swings in the gold price between markets. We do see that gold prices are reflecting exchange rate moves, which is what gold should do.

LBMA price setting:  The LBMA gold price was set today at $1,235.35 down from Friday’s $1,241.40.  

The gold price in the euro was set higher at €1,163.12 after Friday’s €1,166.29.

Ahead of the opening of New York the gold price was trading at $1,236.35 and in the euro at €1,163.90.  At the same time, the silver price was trading at $18.02. 

Silver Today –Silver closed at $18.00 at New York’s close Friday against $18.08 on the 16th February

Price Drivers

The week has started in a quiet mood with no startling gold related news moving prices. Sales from the U.S. based gold ETFs have held back prices below $1,240, but we don’t see them as precipitating a fall in the gold price today. We expect to see more consolidation today.

The august Alan Greenspan has said, “The European Central Bank (ECB) has greater problems than the Federal Reserve. The asset side of the ECB’s balance sheet is larger than ever before, having grown steadily since Mario Draghi said he would do whatever it took to preserve the euro.  I have grave concerns about the future of the Euro itself.  Northern Europe has, in effect, been funding the deficits of the South; that cannot continue indefinitely. The Eurozone is not working.” Greenspan said Brexit is almost certainly set to trigger a collapse of the ECB despite the UK not having signed up to take on the currency.

Alan Greenspan says that investors are back to safe havens including precious metals because there is no trust in the banking system. And he said countries cannot continue to borrow in the way that they have been signaling that quantitative easing is not working. He added: “I view gold as the primary global currency.

Alan Greenspan is not selling anything, is not given to extreme statements, but is an ex-Chairman of the U.S. Federal Reserve.

Central banks in all nations have to control their national currency. The more currencies face loss of confidence the more control over their own citizen’s money is needed. Within their own jurisdiction central banks almost cannot be held to account. That’s why Japan can sustain its horrendous debt, most of it is owned by their own citizens.

Outside it they are in danger [as we see in Greece today].  So, when Alan Greenspan himself makes the above statements we should be looking to gold, particularly those who have to live with the euro, before they can’t!

Gold ETFs – Friday saw sales of 2.37 tonnes from the holdings of the SPDR gold ETF and sales of 0.65 of a tonne from the Gold Trust.  Their respective holdings are now at 841.169 tonnes and 201.38 tonnes. 

Since January 4th 2016, 241.939 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 31.858 tonnes have been added to the SPDR gold ETF and the Gold Trust.

 Julian D.W. Phillips | | StockBridge Management Alliance 


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