Gold and Silver marking time: Waiting on Jackson Hole statements

Gold Today –New York closed yesterday at $1,290.20. London opened at $1,287.10 today. 

Overall the dollar was slightly weaker against global currencies before London’s opening:

-         The $: € was slightly weaker at $1.1794 after the yesterday’s $1.1784: €1.

-         The Dollar index was slightly weaker at 93.31 after yesterday’s 93.39

-         The Yen was slightly stronger at 109.29 after yesterday’s 109.36:$1. 

-         The Yuan was slightly stronger at 6.6621 after yesterday’s 6.6624: $1. 

-         The Pound Sterling was slightly weaker at $1.2807 after yesterday’s $1.2811: £1

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    8    24

     2017    8    23           

     2017    8    22







Trading at 277.20



$ equivalent 1oz at 0.995 fineness

@   $1: 6.6621

       $1: 6.6624

       $1: 6.6559     




Trading at $1,289.17



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.]

 New York closed at $2.40 higher than Shanghai’s yesterday’s close. Today, sees Shanghai holding almost the same level as it did yesterday, which was $2.27 higher than London’s opening. The global gold markets remain pretty much in line with each other.

We continue to see prices pausing and building strength, ahead of breaking higher.

Silver Today –Silver closed at $17.08 yesterday after $17.00 at New York’s close both Tuesday.  It has slipped back today.

LBMA price setting:  The LBMA gold price was set this morning at $1,285.90 from yesterday’s $1,286.45.  The gold price in the euro was barely changed being set at €1,090.76 after yesterday’s €1,090.86.

Just before the opening of New York the gold price was trading at $1,287.55 and in the euro at €1,090.36. At the same time, the silver price was trading at $16.96. 

Price Drivers

The currency and precious metal prices are remarkably quiet again, today. Once again there are no purchases or sales into or from the SPDR gold ETF and the Gold Trust.

While we do recognize that the Shanghai market has reduced volatility in the London and New York, currency and precious metal prices remain in calm waters. The Jackson Hole meeting of central bankers on Friday is headline news as Draghi, of the E.C.B. may now give a speech.

What we need to say about central bankers in the developed world is that they have to and will, keep interest rates negative for the foreseeable future.

With that being said we now see a calm rising gold price, in all currencies, reflecting that it is a measure of the value of currencies and not the other way around of late. For instance, the Shanghai gold price for the last couple of days has been very stable, while the Yuan is appreciating against the dollar. The dollar is struggling to hold levels in the dollar index, confirming what we have said since we called not only the top of the dollar index, but the start of the bear market in the dollar.

As we said before the dollar has entered a multi-year bear market as it loses dollar hegemony in favor of a multi-currency system. It is only a matter of time before China becomes the largest economy in the world, not only because it has around 4 times the population of the U.S. and three times that of Europe, but its infrastructure is nearly brand new as are its manufacturing industries. Germany and Japan gained the same advantages after the Second World War and look at them now.

After the establishment of the euro in 1999 that currency took a nearly 25% position in global reserves. As China grows so the Yuan will take an ever increasing percentage of global reserves. The currency system as we know it, was designed for dollar hegemony [including being the only currency with which to pay for oil] not a multi-currency system. The potential ruptures to the foreign exchange world necessitate gold taking a more important role. China has realized that, which is why it is amassing so much gold in its reserves including in the hands of institutions and its citizens. It still has a long way to go on that front before it has adequate amounts of gold in the country [gold is not allowed out of the country].

We are not convinced it wishes to hold just as much as the U.S. It will hold as much gold as it deems necessary to ensure its international position and size is backed by sufficient gold to guard it against any monetary crisis and to reinforce the Yuan internationally.

Gold ETFs – Yesterday there were no purchases or sales of gold into or from the SPDR gold ETF or the Gold Trust. The SPDR gold ETF and Gold Trust holdings are at 799.286 tonnes and at 215.47 tonnes respectively.

Since January 4th 2016, 177.11 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust. 

Since January 6th 2017, 15.51 tonnes to the gold ETFs we follow.

 Julian D.W. Phillips - | StockBridge Management Alliance 


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