Gold touches $1200 in dramatic surge

Despite the Chinese market being closed for the Chinese New Year, the gold price has opened this week very strongly.  After a small dip overnight down to the mid $1,160s, it rapidly recovered any lost ground from Friday’s close, and then surged upwards through what many considered to be a key resistance level at $1,180.  At the time of writing it had pushed up to $1,196 and now commentators and analysts see it as heading to the $1,200 psychological level – a level it hasn’t see since June last year.  Indeed, as I write the gold price has surged from the high $1,170s to touching $1,200 in under an hour, before falling back to around $1,190.  Is this sign of the breakout the ardent gold bulls have been waiting for?

Sentiment towards gold appears to have made a complete sea change in the first five weeks of this year, not only in the world’s two biggest markets for physical gold, India and China, but now also in Europe and the USA, where the price tends to be set.  To an extent this is due to continuing serious nervousness in global equities markets.  For the past two to three years analysts have reckoned that gold had fallen out of favour as an asset class as far better returns were being made in the equities markets, but last year equities were largely flat, and ever since the U.S. Fed. commenced its so called interest rates normalisation programme, albeit with a tiny 25 basis points increase in mid-December. after a brief hiatus period equities have tanked and gold has been on the up.

Today, European equities markets opened lower, as did their U.S. counterparts, with the Dow falling back below 16,000 – it peaked last April at comfortably over 18,000.  Markets can move strongly in either direction, even in a day, but the overall trend since the beginning of the year has been sharply downwards.  The market pessimists have long been talking about a forthcoming equities crash, and now people are beginning to see this as a real possibility, and they are nervous.

Gold has thus been becoming a safe haven again.  We have seen purchases into the big gold ETFs heading towards erasing last years big liquidations in a matter of weeks.  Last week gold moved back up through its 200 day moving average, which reinforced other ‘buy’ signals, while panicky covering by some of the big holders of short gold positions will be adding to the surge.

Before gold investors get too euphoric though, it should be remembered that gold started last year really well too, with a similar surge, which took the then price up to around $1,296 by January 22nd – after opening the year at around the $1,170-1,180 mark (a rise of around 10% in only three weeks).  This year gold has risen so far by around 11% over five weeks – so a similar kind of increase.  Has the speed of the price increase been overdone?  Time will tell, and gold can be a somewhat fickle investment class, although long term it has tended to hold its value well.

Silver has not been immune to gold’s rise.  It was fixed this morning at the somewhat discredited London benchmark pricing system at $14.94 (although to be fair this was around the spot price at the time), but at the time of writing only a couple of hours later it had surged to $15.40 before falling back a few cents like its yellow sibling.

Gold and silver climate moving from winter to summer

The New York gold price closed Monday at $1.078.50.  In Asia it held there but in London it broke higher to see the LBMA price set at $1,083.85 up from yesterday’s $1,078.00 with the dollar index higher at 99.42 up from 98.94 yesterday. The euro was at $1.0741 down from $1.0902 against the dollar. The gold price in the euro was set at €1,009.03 up from €1,001.86 as the euro continued weakening. Ahead of New York’s opening, the gold price was trading at $1,086.25 and in the euro at €1,011.08.  

The silver price in New York closed at $13.99 up 13 cents.  Ahead of New York’s opening the silver price stood at $14.00.

Price Drivers

Please note that gold continues to rise with the dollar as the euro’s fall is heavy again! We continue to watch the Dollar Index and euro support at $1.07. It could slip to $1.05 which remains support as does $1.07.

The gold price has, at last broken through overhead resistance! This has been well over a year in coming. What is dramatic is that it has broken its relationship with the dollar and the euro and is rising as the dollar rises. This signifies that the monetary world perceives more is happening than a weakening euro and a falling/strengthening dollar. Something in the structure of the monetary system is in the process of breaking down. The next few weeks should clarify what.

The global sell-off in equities is contributing as is the exit of capital from emerging markets. The fall in the oil price too is pointing to the growing dangers of deflation.

We see considerable doubts about the recovery and general global financial markets across the world contributing to what is happening there today.

Yesterday saw no sales from the SPDR gold ETF but saw a sale of 0.03 of a tonne 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.  Demand for gold in the U.S. via the gold ETFs is overwhelming the supply. This is not sufficient to affect the gold price either way.

We see the climate for gold and silver changing from winter to summer right now.

The silver price is moving up with gold now. –

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

Gold price has broken down and looking for a bottom

New York closed at $1,088.00 down from $1,103.50 Friday. In Asia it rose to $1,095.00 before London opened. The LBMA price setting fixed it at $1,095.60 down from Friday’s $1,107.70.

The dollar Index was stronger today and rose to 99 up from 98.01 at the close of New York on Friday. The dollar was a cent stronger at $1.0768, up from $1.0879 against the euro. In the euro the fixing was €1,016.33 down from €1,018.29. Ahead of New York’s opening gold was trading in the dollar at $1,093.00 and in the euro at €1,013.91.

The silver price closed at $14.74 down 26 cents at Friday’s close. At New York’s opening, silver was trading at $14.75.

Price Drivers

The gold price has broken down and is looking for a bottom now, so we expect some panic selling today. Technically, we repeat what we said on Friday that the gold price is still pointing lower. The fact that we are in the ‘high’ season for gold in India and Chinese demand remains robust confirms how separate from the fundamentals the gold price is in New York where the pricing power remains. Friday saw sales from the SPDR gold ETF of another 2.679 tonnes making over 30 tonnes sold in the last full week. But nothing was sold from the Gold Trust leaving their respective holdings at 669.089 tonnes in the SPDR gold ETF and at 160.30 in the Gold Trust. We expected more sales in view of the Technical breakdown and will watch today if there is follow through selling. If these dry up then the picture becomes opaque once again. Our main focus today is the dollar index and exchange rate of the dollar against the euro as these may well demonstrate the U.S. Treasury and [by extension] the Fed’s attitude to a strong dollar. With the dollar index one point away from the 100 level, will the Treasury engineer a lower dollar as reports indicated in the last month? As we said on Friday, “A dollar index of over 100 is just not in the interests of the U.S. This impacts the U.S. & U.K. gold markets heavily as the gold price is being pushed down by those markets in expectations of a stronger dollar.” The excellent jobs report spurred the dollar higher as well as expectations of a December rate hike. Now let’s see official reactions to the rising dollar. –

Silver prices did exceptionally well on Friday and ended higher than the Friday’s close the week before. We may well see a test of the closeness of the silver price to the gold price pattern seen over the last few years.

Julian D.W. Phillips for the Gold and Silver Forecasters – and

As markets and dollar fall, gold is back on a rising path

On Friday New York closed at $1,159.40 up $26.70. The dollar was weaker at $1.1444 down from $1.1062 on Thursday with the dollar Index weaker at 94.94 down from 96.50 on Friday. It opened on Monday at 94.54. Asia took the price down on Monday to $1,154 as global equity markets slid. This morning the LBMA gold price was set at $1,153.50 up $5.55. The euro equivalent was €1,006.11 down €13.42 as the euro surged. Ahead of New York’s opening, gold was trading at $1,159.50 and in the euro at €1,007.65.  

The silver price closed at $15.28 up 2 cents over Friday’s close in New York. Ahead of New York’s opening today it was trading at $15.00.

Last week and this morning, saw different factors across the world knock equity markets down heavily. In China, the conciliatory statement to the IMF that the government would move more to allowing markets to move according to market forces saw those who were still allowed to sell, do so, knocking the Shanghai market down another 10% on the day.

In the U.S. where markets have risen because better yields can be found in equity markets than in the bond markets, the Dow continued to fall through support as a rate rise will come from the Fed in September or before the end of the year. Cash is the safest place to be unless the international cash aspects of gold are used. To validate that we see the dollar has sunk against the euro, the Yen and sterling while the Yuan has fallen against the dollar. This week will see heavy volatility in global financial markets.

Gold was rising against the dollar ahead of New York’s opening today.  To that end there were purchases of the large amount of 5.96 tonnes into the SPDR gold ETF and o.6 of a tonne bought into the Gold Trust on Friday. This leaves the holdings of the SPDR gold ETF at 677.827 tonnes and 161.62 tonnes in the Gold Trust.  

While the fundamentals of markets may not drive prices all the time they do so eventually. The greatest driver of equity markets is sentiment, which eventually will respond to fundamentals. It is in the nature of investors and the media to put a positive ‘spin’ on factors, but when smart investors are joined by the crowd the response to fundamentals becomes strong and emotional as we are seeing now. That ‘thundering herd’ can become unstoppable. But what’s different today is that global equity markets are joining the herd. –

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

Potential for instability and uncertainty increasing: World heading for extreme times.

Julian Phillips’ analysis of what’s happening in the gold and silver markets, sees some very uncertain times ahead.

New York closed at $1,162.40 up $3.60 with Asia and London holding it there in a barely changed market. The dollar was weaker at $1,1107 down from $1.1033 against the euro with the dollar Index 96.11 down from 96.50.  The LBMA gold price was set this morning at $1,162.40 up only $0.30. The euro equivalent was €1,038.27 down €14.69. Ahead of New York’s opening, gold was trading in London at $1,160.10 and in the euro at €1,037.01.

The silver price rose to $15.46 up 32 cents in New York. Ahead of New York’s opening it was also trading at $15.46.

Has Tsiprias done enough? Has he committed political suicide? Will he get the Greek Parliament’s backing? Will the E.U. feel it is enough? The German Finance Minister agrees that Greece cannot repay its current debt, but will not go with a debt write down. Better to make repayment last for 40+ more years at a miniscule interest rate, he feels. A rose by any other name? Monday will see if this issue will impact the exchange rate of the euro or not. The dollar gold price is relatively unmoved but with the euro climbing the euro price of gold is falling. Next week could prove dramatic! Certainly it looks as though, at last, there could be a resolution to the story? Markets are, on balance looking for the E.U. to accept the latest Greek offer, but we would rather wait and see. Until next week we do not see any really strong moves in currencies or precious metals.

The Chinese government’s ‘shackling’ of the Shanghai equity market is more a clash between Communism and free markets than it is of global economic concern. China had thought that it was a way of increasing wealth but did not account for speculation.

With the IMF lowering global economic growth forecasts and, in particular, that of the U.S., the potential for instability and uncertainty has increased. This takes us towards extreme times. With the Fed looking at the end of this year or next before raising interest rates, they too are keeping their heads down. What is important about these downward looking prospects is that this is all that has been achieved after 7 years of efforts to stimulate the global economy and in particular the U.S. economy. Is the global economy on a self-sustaining road forward to better times? That’s not what we are hearing. So are we at the bottom for gold and silver prices? With China aiming to have more control over the gold price and to inject the Yuan into the global monetary system there is a case to be made for this thought.

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

Gold price pattern shows strong underlying strength

Julian Phillips sees strong underlying strength in the gold price as short positions are being unwound.

New York closed yesterday at $1,204.20 up $20.00 from the previous day’s NY close. Asia lifted it to $1,205.00, but London pulled it back to $1,202.60 ahead of the LBMA Gold price setting. The LBMA Gold price was set at $1,201.50 up $20.25. The euro equivalent stood at €1,097.92 up €12.99. Ahead of New York’s opening, gold was trading in London at $1,204.30 and in the euro at €1,112.21.

The silver price closed at $16.96 up 31 cents. Ahead of New York’s opening it was trading at $16.83.

There have been no sales or purchases gold from or to the SPDR gold ETF or the Gold Trust yesterday. The holdings of the SPDR gold ETF are at 737.237 tonnes and at 164.92 tonnes in the Gold Trust.

What we did see yesterday was strong short covering of gold positions. This is significant in that the consolidation pattern we are seeing in gold shows a very strong underlying strength. It does seem that despite developed world markets persistently trying to push gold prices down, the area around $1,200 is certainly one that gold demand feels is an acceptable entry point.  This is forcing speculators, despite their determination, to accept this level. Their marauding, shorting of the market is being defeated time and time again. When they decide that there are more profits to be made on the long side, like yesterday, they will change tack to long positions,

The dollar was weaker yesterday falling from $1.0745 to $1.0816 and the dollar index at 97.82 down from 98.34 yesterday.

It is almost certain now that an Iranian deal is about to be announced as the talks have been extended yet again. The points of difference are apparently not sufficient to abandon the talks. For gold investors, the impact on the oil price will be the focus. Yet it will take time before Iran can make a new heavy impact on the oil market. Currently, it is selling oil to China easily, but the global markets will see a discounting of the future by speculators. In further conversations with oil experts we are told that the impact on the oil price will not be so great. Consequently, we no longer see the oil price having a market downward or upward impact on the gold price.

It is a holiday in India today and tomorrow. Of more importance than this holiday for gold demand, is the coming Akshaya Tritiya holiday on the 21st April.  Indian demand overall remains very strong.

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

Weakening dollar sees strengthening gold price

AIIB implications and the latest Greek developments as it tries to avoid default are among the geopolitical factors discussed by Julian Phillips in his market comment on a day when the gold price may be consolidating above the $1190 level.

New York closed yesterday at $1,190.60 up $7.40. Asia held it $4 below that level before London opened, where it was lifted back up to $1,191.10 ahead of the “LBMA Gold price”. This morning the “LBMA gold price” was set at $1,193.25 up $11.85 and in the euro equivalent of €1,086.75 up €1. Ahead of New York’s opening, gold was trading in London at $1,193.60 and in the euro at €1,087.36.

The silver price closed at $17.06 up 33 cents. Ahead of New York’s opening it was trading at $17.02.  Silver is currently showing more strength than gold (which can be expected when the gold price is rising.)

There were no sales or purchases of gold from or to the SPDR gold ETF of or into or from the Gold Trust on Monday. The holdings of the SPDR gold ETF are at 744.401 tonnes and at 164.71 tonnes in the Gold Trust.

As gold approaches resistance at $1,200 we expect the price to consolidate and either build up strength for an assault on that price or turn down again. The $1,200 level is an important psychological level for gold now.

The dollar continues to retreat with the dollar index dropping to 96.74. The euro is currently standing at $1.0981 after reports that Germany is recovering well, taking the ‘average’ Eurozone growth higher to a recovery, moving forward. Nevertheless, such an average is not a fair reflection of what is going on in the E.U. as its separate member states are not faring well in the southern part of the E.U. The factors that are weakening the euro are still in place [EU QE] and intended to keep the euro weak going forward.

The U.S. meanwhile is starting to howl over a strong dollar. But the dollar appears to have peaked and has weakened by 4 points on the index in the last week, after rising the same amount the week before. Bearing in mind that the dollar remains very strong, up from a dollar index of 72 in the last year, it is hurting the U.S. economy. But a fall in the dollar is proving gold positive now (at least in dollar terms!)

The widening of support for the Asian Infrastructure Investment Bank is seeing Canada now join, leaving only the U.S. and Japan amongst the major nations not joining. This is interesting particularly as the IMF is reviewing the composition of its currency the Special Drawing Right later this year.  Any visible opposition by the U.S. to the AIIB could indicate opposition to the Yuan being included as one of the currencies against which it is measured. This would be gold positive!

In the ongoing Greek tragedy, Greece will list more specifically its intended reforms by the end of this week.  The question is, “Can they implement them effectively?” The ‘run’ on Greek banks continues while we wait.  Merkel is trying hard to slow the acrimony between the two nations, but it seems that this is not going away.

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

Elliott Wave analysis: Gold and silver now in major long term uptrend

Peter Goodburn of Elliott Wave analysts, Wavetrack International, comments on the latest breakthrough in the dollar gold price as signifying the end of major counter trend declines in gold and silver.  Base metals such as copper are also due for a similar take-off.

Time necessitates this most urgent update of mining stock performance of the last few trading days. Last Friday’s punch higher for many of the mining ETFs, indices and equites broke key overhead resistance levels that now confirms the November/December ’14 lows as the finalising levels of the multi-year counter-trend declines that began from the 2008/09 and 2011 highs. This also confirms gold and silver bullion have also ended major counter-trend declines that began from the highs in year-2011 at the Nov/Dec.’14 lows of 1131.85 and 14.51 respectively.

Last year’s forecasts had projected the GDX down to 15.90 with the Nov.’14 low recording just a fraction higher at 16.45 – see fig #1.


The XAU was forecast down to 60.60 with the Nov.’14 low ending again, slightly higher at 61.39 – see fig #2.

02_XAU Gold_Silver Index 150118

Various gold and silver miners, for example, Newmont Mining was forecast lower, towards 18.07 with the mid-December ’14 low recording a low at 17.60 – many other equities being tracked in our portfolio are also confirming a major directional change has occurred, confirming a new multi-year bull market uptrend has begun.

Gold bullion is still in its early stages of upward development and although we expect an upside test towards the old but key resistance level of 1525.00+/- in the months ahead, there is some shorter-term resistance overhead now that prices have today traded above 1300.00+/-. See fig #3.


Silver was already confirmed as ending its entire counter-trend decline that began from 49.91 last December at 14.51, the morning after the Swiss referendum result. But recent action has distilled this bullish forecast with the early stages of a multi-year uptrend underway with forecasts into new record highs – see fig #4.


Meanwhile, Copper made headline news last week with prices plunging into a new 5-year low, but in doing so, key downside levels forecast last year have now been tested towards 5575 (US$ tonne) with a little room to do a fraction more towards 5090 if needed. But the key message here is that base metals are hot on the tracks of the precious metals sector in confirming a reversal of trend – see fig #5.


We conclude with one of the major industrial/base metals mining companies, BHP-Billiton – see fig #6. Throughout last year, we had forecast a large percentage decline for this equity based upon the ongoing development of a counter-trend zig zag pattern that was pulling prices lower from the April ’11 high of 2653.50. Prices were hit during the last several months, dropping by over -40% per cent from the July ’14 reaction high. A low traded last week at 1247.50 and by every account, slightly above idealised measurements to 1201.50 – despite this however, the following action is confirming a major low at 1247.50 has formed, ending the entire pattern from April ’11 and validating our bullish forecast for a new bull market uptrend in its early stages of development.

06_BHP Billiton_150118a

For more details, please contact Wavetrack International at [email protected] or send a message using the ‘Help-Desk’ at the top of


More major gold purchases into SPDR ETFs as gold hits $1300

Julian Phillips’ latest market commentary for gold and silver

New York closed on Tuesday at $1,292.70 up $1.00 as the euro started to weaken again. In Asia and early London the gold price moved up to $1,300 with the euro at $1.1561. The Fix saw the gold price set at $1,298.00 up $5.75 and in the euro, at €1,121.673 up €8.048, while the euro was at $1.1572. Ahead of New York’s opening gold was trading in London at $1,298.40 and in the euro at €1,122.21.

The silver price closed at $17.93, 19cents higher. Ahead of New York’s opening it was trading at $18.16.

There were purchases of 11.351 tonnes of gold into the SPDR gold ETF and a purchase of 1.8 tonnes into the Gold Trust on Tuesday. The holdings of the SPDR gold ETF are at 742.243 and at 165.42 tonnes in the Gold Trust.  These were, once more, substantial purchases, showing a changed attitude among U.S. investors to gold.

Once again Asian physical demand came through overnight pushing the gold price to $1,300 ahead of London’s opening. With Asian demand sucking just about all available newly mined gold in, there is little room for new demand except at higher prices.

We thus attribute the price rise to Asian demand not developed world demand. This is what we are seeing now, so while U.S. and European demand is growing, so is Asian demand. The laws of supply and demand are imposing their will now.

As we said yesterday, “With a new ‘big figure’ [$1,300] now firmly in the sights of the gold price, we would expect the gold price to consolidate before rising further. That is, unless there remain substantial short positions that need covering at that level, in which case the covering of these may cause a further price spurt.” We are seeing this play out now.

€500 billion worth of bond buying is what the most qualified believe will be unveiled tomorrow by the E.C.B.. They also say that this is not enough to achieve the objective of stimulating the Eurozone economy. We agree and point to the very low levels of confidence in that area.

Expectations of deflation are high, so whatever the E.C.B. does it has to turn that around. Without the support of Germany, this seems unlikely. The Eurozone will stay in the spotlight through 2015 and the euro will fall alongside declining confidence, despite Draghi’s best efforts. The only questions investors need an answer to is, “How much and how fast will the euro continue to decline?”

The silver price is starting to catch up and will do so as gold convinces investors it can hold above $1,300.

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

Gold price rise is solidly based in Europe and Asia

Julian Phillips’ latest report on the activity in the global gold and silver markets

New York closed yesterday at $1,276 up $1.00 as the euro consolidated. In Asia and early London the gold price moved up to $1,284.40 with the euro at $1.1580. The Fix saw the gold price set at $1,292.25 up $16.75 and in the euro, at €1,113.625 up €13.772, while the euro was at $1.1604. Ahead of New York’s opening gold was trading in London at $1,286.60 and in the euro at €1,110.81.

The silver price closed at $17.74, 5 cents higher. Ahead of New York’s opening it was trading at $17.73.

There were purchases of 0.51 of a tonne of gold into the SPDR gold ETF but no change in the Gold Trust on Monday. The holdings of the SPDR gold ETF are at 730.892 and at 163.62 tonnes in the Gold Trust.  The gold mood in the U.S. remains positive.

The gold price jumped on physical demand both in Asia and in London so the price rise is solidly based.  With a new ‘big figure’ [$1,300] now firmly in the sights of the gold price, we would expect it to consolidate before rising further. That is, unless there remain substantial short positions that need covering at that level, in which case the covering of these may cause a further price spurt.

We have been expecting these rises for more than a year now but, as we forecast, the price needed ‘an event’ before they could happen. We believe several more ‘events’ are on their way this year.

Tomorrow sees the E.C.B. make its announcement on quantitative easing. This appears to have been discounted already as the euro appears to have stabilized in preparation for the announcement. Only if the announcement brings surprises will the euro tumble further. The action of the Swiss National Bank appears to have implied ongoing falls in the euro.

The announcement is a big event for all financial markets as it affects the future and value of the euro. We have no doubt that the exchange rate prospects against the dollar have been discussed with the U.S. Treasury and that there are potentially actions planned to prevent further brutal falls in this exchange rate. But at what point will the U.S. say the dollar should not be allowed to go stronger?

For gold, the market induced relationship between the gold price and the euro has broken down and gold is travelling higher in all currencies.

The silver price is now lagging gold, but should catch up.

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

Re-evaluation of dollar strength equalling gold weakness

By Julian Phillips

Review of yesterday’s gold and silver market activity and trends in gold and silver prices.

New York closed yesterday at $1,218.90 up $13.40 as the euro continued to fall. Gold retreated to $1,214.10 with the euro at $1.1866 ahead of London’s opening. The Fix saw the gold price set at $1,213.75 up $2.75 and in the euro, at €1,023.83 up €6.525 while the euro was another half of a cent weaker than yesterday at $1.1855. Ahead of New York’s opening gold was trading in London at $1,213.40 and in the euro at €1,024.61.

The silver price closed at $16.53 up 33 cents. Ahead of New York’s opening it was trading at $16.42.

There were sales of 2.987 tonnes of gold from the SPDR gold ETF and sales of 1.25 tonnes from the Gold Trust yesterday. The holdings of the SPDR gold ETF are at 707.821 and at 159.90 tonnes in the Gold Trust.  U.S. gold investors were clearly loath to trust the move upwards of gold in the dollar.  Certainly, if gold retains its gains, there will be a re-evaluation of the view that dollar strength means gold weakness. Gold has shown more gold strength and is changing resistance into support above $1,200 and €1,000.

Asian demand and short covering are contributing to the rises and with a little more strength in gold in the dollar a new uptrend will have been established.

Today is the day when we may hear that the Eurozone is in deflation. If today’s reports do not show that, it is expected that next month’s numbers will. The debate in Europe continues around whether Q.E. will promote growth as interest rates are already at record lows. Despite the economic weakness in the Eurozone structural flaws on this front are not being addressed. The possibility of Greece and the U.K. leaving the Eurozone reflects the disunity in the zone. With the different nations strongly retaining their nationalism after millenniums of doing so, we cannot see these structures giving way to anywhere near the unity seen in the U.S.A. Hence 2015 does not bode well for the Eurozone on the economic front and the fall in the euro is likely to continue to the lower end of our 2014 forecast.

The oil price continues to fall and is now just about below $50 for Brent and well below it for WTI. We expect more falls to come still. Again an old superficial link between oil and gold is being destroyed as oil continues to collapse yet gold rises.  It is as though people are watching in disbelief and looking around to see what ramifications will come from the oil price collapse. Is it really positive for growth? Is it realistic to see deflation in falling oil prices? A clear lack of understanding is apparent, but with gold rising, the initial impact is proving positive for gold

The silver price is now proving as vigorous on the rise as it did on the fall. Even so it still looks oversold relative to gold, to us.

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


Should investors take the silver gamble?

Lawrence Williams

Silver has underperformed the other generally considered precious metals over the past year.  Is it due for a comeback?  A new, and shortened, complete update to earlier article on the silver investment gamble which has now been published on

Last year silver hugely underperformed gold.  While the yellow metal ended the year at approximately the same level as it had ended 2013, silver plunged 18% from $19.50  to $15.97 over the period.

See: Gold great value protector in 2014 – silver not

Not for nothing is silver referred to as the ‘Devil’s metal’ or ‘gold on steroids’.  It is hugely more volatile than its sibling – however last year’s underperformance was remarkable even so.  Indeed during the year silver reached over $21 in July but the metal’s performance down to the year end was, to say the least, dismal, falling as low as $15.28 in early November.  Silver is always reckoned to underperform gold in a downturn, but given gold was pretty well flat over the full year the drop in silver was far greater than investors might have expected.  (Prices are London silver prices as recorded by the London Bullion Market Association).

While silver tends to underperform gold on the downside, it conversely tends also to outperform gold on the upside and gold’s start to the year will have been giving silver bulls a little hope.  But the almost unanimous thumbs downs for the year for silver from mainstream precious metals analysts may be putting something of a damper on such hopes.

There were, however, some major anomalies in silver’s poor price performance over the year in that sales of American Eagle silver coins hit a new record in 2014 at around 44 million, eclipsing the previous record of 42.7 million in 2013, while reports of Chinese and Indian consumption have suggested that investment and industrial demand is at very high levels in both the East and the West which flies in the face of the price performance.  There is also the suggestion too that silver supply will be in a fairly substantial deficit in 2015 (assuming the largely unpredictable investment offtake remains strong).  Silver’s fundamentals thus look to be good BUT in today’s precious metals markets real fundamentals seem to have little impact on prices which appear to be increasingly being driven by speculative trading on the futures markets.

On this latter point, there is certainly the possibility that some banks and financial institutions have been buying physical metal against the day that futures and physical markets turn strongly positive.  The potential profits could be enormous if there is a strong market turnaround, which many feel is a probability, in the medium to long term.

On the other hand the strength in the general stock market, up until the last couple of days has made precious metals investment look a poor choice in comparison.   Markets have been boosted by the unprecedented amount of liquidity being pumped in to try and ward off recession through ‘Quantitative Easing’ type programmes.  While the U.S. Fed has effectively ended its most recent easing programme it is still obviously nervous that the markets will stutter and dive once the full effects of ending the easing programme begin to impact and consequently is not yet prepared to allow interest rates from their exceedingly low levels in case rate rises coupled with the end to monetary stimulation really spook the markets.

The Fed is also aware that the stock market is precarious and may have risen too far too fast (i.e. in a potential bubble situation) and is playing an exceedingly cautious game so as not to rock the boat.  If markets do start to fall they could drop dramatically – the current six year bull market may well have run its course and bull markets usually end  with some very sharp falls indeed.

An end to any bull market is, of course, inevitable at some time and if a feeling becomes apparent that the bull market is indeed at or close to its top this could precipitate a move into precious metals as an asset class providing some investment insurance.  And a move into gold, and a consequent rise in the gold price, could be all that silver needs to take off.  If this should happen we could see some very sharp gains indeed.  Even a rise back to $20 would be a 20% plus increase from current levels.  Some may well see that as a gamble worth taking.

Silver bulls, of course,  are still looking for a return to its 2011 high of close to $50, and perhaps more.  Some talk of a return to what they see as the historic gold:silver ratio (GSR) of 16:1 but, despite all the arguments to the contrary, ever since silver largely lost its monetary role a return to this level seems unlikely.  There have only been two occasions in almost the past 100 years when silver did indeed return to this kind of level – in 1968 and 1980, and in both cases it was very shortlived  Otherwise the GSR has fluctuated between a little over 30 and 100, averaging around 50 plus and is currently near 74 – a high level which many feel suggests that silver is indeed due for a sharp price boost and bring the ratio down.   Should the gold price make a sharp recovery, a return to a GSR of 50 or a little lower could be on the cards as the more volatile silver price gains traction.

So what are the prospects for this kind of upwards performance in 2015?  Downside in the gold price over the year is generally seen as somewhat limited, although a further fall before a major recovery cannot be ruled out.  This suggests that silver may well provide an interesting gamble (and a gamble it would be) on a gold price rise during 2015.  The downside in silver is fairly limited, although some observers still see a drop to around $13 if gold doesn’t pick up, but the upside potential if gold does improve in price looks as though it could be very positive.  But be warned, silver has burnt many investment fingers in the past and no doubt will again in the future.

To read article on Mineweb click here

Gold breaks through Dollar and Euro resistance

Julian Phillips’ market commentary on gold and silver for Jan 6th.

New York closed yesterday at $1,205.50 up $18.00 as the gold price broke through key resistance in the dollar and in the euro. Gold continued to rise in Asia to $1,209.7 and in London to over $1,212 ahead of London’s Fix. The Fix saw the gold price set at $1,211 up $19.00 and in the euro, at €1,017.305 up €18.495 while the euro was another 0.3 of a cent weaker at $1.1904. Ahead of New York’s opening gold was trading in London at $1,211.80 and in the euro at €1,018.49.

The silver price closed at $16.20 in New York up 41 cents. Ahead of New York’s opening it was trading at $16.31.

There were purchases of 1.648 tonnes of gold into the SPDR gold ETF and sales of 0.03 tonnes from the Gold Trust yesterday. The holdings of the SPDR gold ETF are at 710.808 and at 161.15 tonnes in the Gold Trust.

Yesterday was an important day for gold as resistance was broken in the euro and strength is now indicated in the dollar price of gold. This makes today just as important as yesterday, as any price rises in either currency reflects the changing mood of markets globally and a positive indicator for gold.

With the year ending on a positive note for global financial markets, yesterday saw the mood turn down, as markets fell across the world alongside the oil price. The oil price is hitting new lows making the prospect of $35 a barrel of oil a distinct prospect, as oil producers raise production to compensate for lost revenue, exacerbating the situation in the oil market.

The euro is currently standing at $1.1904 and looks like falling lower. Emerging markets are showing the greatest signs of stress as prices fall there. While the oil price falls are direct stimuli to the global economy, these are part of the computations for economic growth measurement. In this case such statistics distort what is happening as they treat lower oil prices as deflationary, not as they really are, growth factors.

What is becoming clear to investors is the reality that central bank and government’s ability to promote true growth is very limited as we have seen in the last 8 years.  For precious metals what is important is the reality that any confidence in the future is tempered by the visibly high degree of uncertainty, volatility and a dash of prudence, that will prove positive for gold and silver.

The silver price is now back on track and moving up with gold. As on the fall it exaggerates the downside, so on the rise it will also exaggerate the upside.

Julian Phillips is founder and editor of and  



Where will gold end 2015 – $1,000, $1,325 or maybe $2,500 or …?

A look at the prospects for gold and silver prices in 2015 – and predictions of end year price levels for the two key precious metals.  (An updated version of this article has now been published on

By Lawrence Williams

Well there’s nothing like being optimistic at the start of a New Year and there are certainly many factors to be optimistic about if you are a gold bull. Gold demand remains strong – notably in China and India with those countries alone probably accounting for 100% or more of new mined gold at the moment.  At the end of this article we will make some not very scientific predictions on the final levels for the gold and silver prices at year end 2015 – perhaps to have these totally shot down in flames when the year end comes. It is always easy to be wise after the event.

China (in the form of the Shanghai Gold Exchange) is looking to perhaps see full year demand fall around the 2,100 tonne plus mark, only a fraction below last year’s record of 2,181 tonnes. So much for the almost incessant mainstream media reports throughout 2014 of a collapse in the Chinese gold market!

India too has seen a remarkable pick-up in demand in the second half of 2014 despite the maintained imposition of 10% import duty on gold and silver – so much so that some commentators have reported that it may have become the world’s No. 1 gold consumer again, retaking this position from China. It hasn’t! But even so, if one takes smuggled gold into account to avoid the import restrictions, it could well have imported close to 1,000 tonnes in 2014 – maybe more – and with world newly mined gold output estimated as likely to be at perhaps just over 3,000 tonnes in 2014 then it definitely looks as though the two Asian giants will indeed have accounted for virtually all of this.

But of course China and India are not the only consumers of gold. Virtually every Asian and Middle Eastern nation has a propensity to accumulate gold, while there are also signs that the jewellery sector – the main non-investment gold consumption market – has also been picking up healthily in the U.S. in particular as the populace is fed a seemingly unending positive spin on a return to economic growth.

Geopolitical events are also impacting positively on safe haven demand for gold. The crisis in Ukraine and Crimea is still playing out and is likely to cause ever more strife moving forwards. Russia’s President Putin in his New Year address made it quite clear that Crimea is now again wholly part of Mother Russia, while Ukraine’s economic plight is dire and one finds it hard to see how it can continue without defaulting on its financial commitments. This could have a major adverse impact on creditor banks and nations, which in turn could have a knock-on effect on financial institutions globally. One can foresee runs on banks and domino bank and fund collapses as a result with the global financial system being so closely interlinked.

But Russia too has seen economic sanctions and low oil prices bite severely and it is also in somewhat of a financial imbroglio. But still it has been buying gold for its reserves which it sees as a stabilising influence. Russian banks are in financial trouble too as access to Western funds is cut off. What should worry the West is that Russia has the capability of itself imposing substantial financial damage on western economies by restricting oil and gas supplies, and possibly by cutting off wheat exports as well as restricting imports from countries imposing sanctions, among others. True this would further damage the Russian economy but the nation’s rulers may feel that is a worthwhile sacrifice – and no-one should doubt the Russian peoples’ capacity for absorbing economic pain, particularly if the internal political spin puts the problems all down to the wicked Americans and their European allies which it is doing very successfully at the moment.

And this all has the propensity for escalation from the current uneasy stand-off, to a resumption of the Cold War and even escalation into a limited Hot War should NATO move into Ukraine – a move President Putin sees as totally unacceptable. But increasingly hostile rhetoric and action on both sides could well lead to this taking place. That is indeed a scary scenario for Europe in general and former Soviet Union satellites in particular. Continued escalation on this front could well lead to an ‘insurance’ move back into gold and if financial institutions start to falter, or collapse altogether as a result of Western bank difficulties, the flow could become a flood.

Meanwhile there is no resolution in sight in Syria and Iraq with fundamentalist Islamic forces still firmly in place despite total Western air superiority. How long before the West has to put troops on the ground to hold back, or defeat, the fundamentalist forces? When religion is involved, defeat is perhaps not an apt word – attempted control may be better. Look at Muslim Afghanistan as an example. The Taliban has supposedly been defeated but still is capable of some horrendous day to day impacts, while the spillover into Pakistan and the rise of similar fundamentalist groups in parts of North Africa has to be deeply worrying. ISIS (or whatever it calls itself now) is unlikely to be able to build its Caliphate covering much of the Middle East, North Africa and even parts of southern Europe to emulate the Moorish empire of the past. However its fanatical support, now with access to oil revenues to provide finance to buy ever more sophisticated weaponry, may provide a military headache for the Western/Christian/Moderate Muslim alliances for many years to come.

New mined gold supply is peaking as pipeline projects come on stream and build up (but leaving very little new in the pipeline now to replace depleting and uneconomic resources). The industry’s unprecedented cost cutting exercises will have put back new mine developments by many years and pushed back possible expansion plans.

The other major source of gold for the markets comes from scrap, but the lower prices have put something of a dent in supplies from this source. And much will have also been drawn out in 2009/10/11 when the gold price appeared to be rising inexorably and calls for individuals to sell unwanted gold jewellery were at their peak. Probably much less such metal is available to the markets nowadays.

On the negative side for gold, the metal price has shown weakness for three years now despite many of the above factors already being in play. Chinese demand hit a record in 2013, yet the gold price plunged. Sales out of the big gold ETFs will have been a factor that year. In 2014 too there were some significant sales out of ETFs as well but at perhaps only around 15% of those in 2013 and while there could be more to come from this source the amounts will likely diminish further. Nonetheless there are forces working against the gold price – and these may be even more prevalent in the much smaller silver market. The markets for both precious metals appear to being driven by the paper futures markets with relatively little physical metal changing hands.

There is a theory out there – not one believed by all – that the big money bullion banks are manipulating the gold price for their own ends – either to buy and make enormous profits when the market turns again, or at the behest of the U.S. Fed and other central banks. These may feel that a strong gold price would be seen as yet a further indicator of substantial weakness in the global fiat currency system and would act as a destabilising factor in efforts to portray national economies as being stronger than they actually are. With major bank analysts mostly still bearish on gold – some more so than others – one does not know if this represents collusion with those seeing lower prices as in their best interests, or strongly held beliefs – but regardless of which these do tend to take the form of self-fulfilling prophecies as the big bank analysts will have very strong followings amongst the financial institutions in particular.

So there are strong pressures out there both for and against gold and it is difficult at this stage to predict which will win out in 2015, although one has a strong feeling that the long term future for the gold price is very positive – but then long term is a somewhat indefinite time period. So where will the gold price be 12 months from now. Here I’ll take a leaf out of Martin Murennbeeld’s book and come out with three price scenarios, and apply a weighting to each to come up with a final median prediction.

  1. The high price scenario (probability weighting perhaps 15%) – Gold at $2,500, silver at $55.
  2. Low price scenario (probability weighting 20%) – Gold at $1,000, silver at $12.50
  3. Middle price scenario (probability weighting 65%) – Gold at $1325, silver at $24.

If we average these out we get a final median figure of: Gold $1396.50, Silver $26.35. Well it’s probably as good a guess as any at this time of year!




Gold great value protector in 2014 but silver tanked

LBMA Gold price end 2013: US$1201.50; Gold price end 2014: US$1199.00.

Lawrence Williams

LBMA Gold price end 2013: US$ 1201.50; Gold price end 2014: $1199.25 – only down a minute 0.19% over the year   Thus, by effectively marking time vis-a-vis the US dollar over the full year gold outperformed virtually all other currencies in maintenance of value.  Frank Holmes of U.S. Global Investors pointed this out neatly with the graph below in a recent article – but maybe he jumped the gun a little producing the graph just before the final year-end London gold price was set, with gold making a small recovery in the interim to bring it even closer to its 2013 closing figure (LBMA Fix – or London Gold Price as it is now called). However, the spot price did fall back to the $1180s after the final London price for the year was set.  Indeed its LBMA afternoon price on December 30th at $1206 was actually 0.4% higher than its 2013 close but something of a dollar rally on the morning of the 31st brought it down a little.   See Frank’s chart below comparing key currency performance with that of the U.S. dollar over the year.  To read his full original article click on Gold Beat All Other World Currencies in 2014.


Most gold investors will probably have considered 2014 a poor year with gold making early-year moves upwards before coming back down again in the latter part.  But if one looks at the strength of the US dollar (or perhaps this should be the weakness of other currencies vs the dollar) with the dollar index rising 12.4% over the year, an investment in gold in any other currency will have seen an increase of above this percentage over the year.  And if one lives in Russia or Argentina the percentage increase would have been large indeed!  Gold has thus, over 2014, performed extremely well as a wealth protector.  As an example – in Swiss Francs the gold price actually rose 9.5% over the year. In the Russian ruble it rose no less than 77% over the period.  Perhaps we are far too focused on gold’s US dollar performance to see its real value for those outside the USA.  Sometimes one needs to take a step back and look at other valuation parameters.

For the time being at least, gold seems to have found a price equilibrium at, or around the $1200/ounce level.  We might argue that this is the kind of level China is comfortable with – see: Path of the gold price is in China’s hands.  Whether China is, or is not, keeping the price at this level is obviously open to speculation, but it certainly has the capability of so doing and with so many of its citizens holding gold it may well have a strong interest in keeping prices relatively stable.

It is also widely believed that China is building its national gold reserve without reporting it to the IMF, and that this gold reserve is now very comfortably above the official 1,054 tonnes which it has claimed to have had for the past six years since its last upwards valuation.  But this again remains as speculation until and unless China reports another reserve increase.  The thought is that it may refrain from doing so until its gold reserve matches the official reserve of the U.S.A. north of 8,000 tonnes.

By comparison, silver investors have had a pretty dismal year.  Of the countries featured in Frank Holmes’ chart above, only silver investors in Russia and Argentina will have seen value protection in their own currencies.  Again, as we pointed out here recently silver investors take much more of a gamble than those investing in gold given the white metal’s vastly increased volatility over its yellow sibling.  See: Silver in 2015 – the gambler’s precious metal.   But even so, this year’s silver price performance, or lack of it could be considered remarkable vis-à-vis gold with which it usually has a closer relationship.  By many calculations silver is currently in a supply deficit, but this seems to have had no positive effect on price movement.  The key price drivers at the moment are purely speculative and as a much smaller market than gold, speculators have a far easier path to price manipulation than gold – and the general belief nowadays is that the gold price is being manipulated too by mega-money players.  If the manipulation premise is correct, then the gamble therefore with silver is in picking the point at which the speculators change tack to make huge profits on an upturn.  Maybe this point is near, but relying on this is not for widows and orphans.


Gold’s notable strength in the Euro

Julian Phillips’ latest gold and silver market commentary.

New York closed yesterday at $1,198.80 up $15 with Asia lifting it just over $1,200. The Fix saw the gold price set at $1,199.25 up $12.75 and in the euro, at €986.550 up €10.007 while the euro was barely changed at $1.2156. Ahead of New York’s opening today gold was trading in London at $1,197.80 and in the euro at €985.56.

New York saw short positions closed yesterday with the gold price rising to $1,206 at one point, before settling back to consolidate at $1,200 once more.

There were sales of 1.494 tonnes from the SPDR gold ETF but no change in the Gold Trust yesterday, but this did nothing to slow the recovery of the gold price over $1,200.  The holdings of the SPDR gold ETF are at 710.808 and at 161.73 tonnes in the Gold Trust.

We expect trading ranges to narrow today, the last day of 2014, as we move forward to the point where the gold and silver prices make strong moves into the New Year. What is of note is the strength of gold in the euro at €985.

We expect 2015 to be the first of the next few years of consequences.   We may well see a Fixing or similar established in Shanghai as that market matures and becomes the center of gold trading, overtaking but partnering with London in a 24-hour gold market. It will likely, also be a year when arbitrageurs between the two centers will smooth out the premiums between east and west giving us  a global price all the time.

Just a word on yesterday’s commentary, where we said that, “New York is losing its influence over the gold price.” While New York and London have highly developed markets where traders can move prices around very quickly and make them react in the short-term to most pieces of news, the physical demand for gold has risen to the point where marginal supplies of gold are also being absorbed by the east. This is making it difficult for traders to move physical gold in sufficient amounts to move prices. The physical amounts of gold available for trading the gold price have dropped dramatically in the last two years leaving physical demand from the east reaching in to take most of that stock as well. Consequently, just as oversupply in the oil market has crushed the influence of marginal supplies to dominate prices, so ‘over-demand’ is doing the same in the gold market.

Some will retort that COMEX dominates gold prices due the huge volumes traded there. We again point out that COMEX trades paper and is essentially a financial market and only trades around 5% of its contracts in physical gold that will be delivered.  COMEX traders need to trigger real physical sales or purchases to back up their ‘paper’ transactions to move gold prices. If there are no deliveries of gold on COMEX there can be no impact of COMEX on the gold price. 95%+ of gold contracts on COMEX are closed out before a physical delivery of gold happens.

The silver price is as quick to recover as it is to fall.


Julian Phillips is founder and editor of and