SPDR Gold

Two more steps towards Shanghai gold price dominance

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This report comes to you after being away from our desk for the last three days. Since then gold and silver retreated to support and remain just above it. But gold in the euro is very strong as the dollar moved up. The Technicals continue to look very good in all currencies including the dollar.

Again we reiterate the gold market is split in two parts with New York being followed by London reflecting U.S. sentiment on COMEX and the physical market in which Asia more than dominates having little to no impact on the gold price. The U.S. market has now turned up, convincingly.

We have long pointed out that if the Shanghai and western gold markets develop an effective arbitrage market, Shanghai would dominate the gold price. We are now seeing two more steps down that road. The CME Group and China Construction Bank will now begin the physical delivery of Renminbi for new futures contracts in London. The futures contracts will be listed on CME Group’s European exchange, CME Europe. China Construction Bank is Beijing’s official clearing bank in London, making the Yuan available internationally, as it pushes for formal reserve currency status. This bank has now joined the LBMA gold price setting. We expect more Chinese banks to join the precious metal price setting LBMA process in the future.

While the Yuan trading comes with a greater arbitrage of precious metals between Shanghai and London, we see the gold and silver prices moving to being in sync. in a global market in the near future

There has been a sale of 2.68 tonnes since Friday from the SPDR gold ETF but a purchase of 1.08 tonnes into the Gold Trust. The holdings of the SPDR gold ETF are at 697.322 tonnes and 162.83 tonnes in the Gold Trust.

Silver will mark time until gold rises. –

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com

Second day of big SPDR gold ETF purchases – back over 700 tonnes

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New York closed with the gold price at $$1,182.90 down from $1,187.90 yesterday. In Asia this morning gold pulled back to $1,177.50 ahead of London’s opening. London held it around that level before the LBMA price setting fixed it at $1,176.00 down $7.00. The dollar Index was stronger at 94.61 up from 94.04 and the dollar was trading against the euro at $1.1354 up from $1.1441. In the euro the fixing was €1,035.85 up from €1,034.31.  Ahead of New York’s opening gold was trading at $1,181.20 and in the euro at €1,040.52.  

The silver price closed at $16.13 down 3 cents over Wednesday’s close. Ahead of New York’s opening, silver was trading at $16.02.

Price Drivers

The fall, after hours or in Asia, while a normal part of price fluctuations, emphasizes that these markets are inefficient. But that has been the case for a long time. We do not have a global gold price reflecting the balance of demand and supply. What we do have is a gold price that reflects COMEX’s opinion of where the gold price should be. This does not reflect global demand and supply of the physical gold market.

Today, with the dollar recovering a tad, dealers marked prices down to reflect the slip in the euro against the dollar. But this is a very short term reaction, for the dollar, in our opinion, will not be allowed to get much stronger. This will contain gold price moves, based on currency exchange rates.

The reason for the fall, this morning, is the rise in the U.S. dollar which has pulled back from $1.1441 to $1.1390 before London opened. Dealers decide whether the gold price should reflect the euro’s performance against the dollar or the dollar’s performance against the euro. Tomorrow it may change.

On the U.S. physical side, we again saw large purchases into the SPDR gold ETF of 5.063 tonnes but none into the Gold Trust. This is the second day of large purchases by U.S. investors on the back of a much better Technical position. The holdings of the SPDR gold ETF are at 700.002 tonnes and 161.75 tonnes in the Gold Trust.

Gold has broken upwards for sure and is approaching overhead resistance. But this may prove less of a hurdle than appears at first sight. The data out of the States is proving disappointing with Manufacturing likely to show that, that sector may have started contracting. This is a key reason why the Treasury does not want to see a stronger dollar.

Silver will rise with gold but at a faster pace.

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com

Ramifications for gold and silver enormous

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New York closed with the gold price at $$1,187.90 up from $1,168.10 yesterday. In Asia this morning gold pulled back to $1,184 ahead of London’s opening. London held it around that level before the LBMA price setting fixed it at $1,183.35. The dollar Index was weaker at 94.04 from 94.65 and the dollar was trading against the euro at $1.1441 down from $1.1390. In the euro the fixing was €1,034.31 up from €1,029.11.  Ahead of New York’s opening gold was trading at $1,184.70 and in the euro at €1,035.31.  

The silver price closed at $16.16 up 26 cents over Tuesday’s close. Ahead of New York’s opening, silver was trading at $16.12.

Price Drivers

The Technical position now looks good. What is positive for gold are the reasons why gold looks strong. We see them as extremely important structurally. We cannot cover these reasons in this daily report as there is not enough space [see newsletters]. What we can say is that a structural change has taken place in the dollar and its relationship to other currencies that will affect the global monetary system for many years to come. It has not been heralded by the media but it doesn’t need to be. The ramifications for gold and silver are enormous.  

On the U.S. physical side, we saw large purchases into the SPDR gold ETF of 7.743 tonnes but only a small amount of o.4 of a tonne into the Gold Trust. It seems U.S. investors, watching the Technical position are now moving into physical gold as well as continuing to cut short positions while increasing long positions. The holdings of the SPDR gold ETF are at 694.939 tonnes and 161.75 tonnes in the Gold Trust.

Bear in mind that the ongoing demand for physical gold from the Far East continues. We hear reports of lower demand for gold in India, but find this difficult to accept as smuggled gold comes in unseen and immeasurable at a 10% discount to ‘official’ gold as they are ex-duties. Indians are unfazed by buying such gold, so it is logical that ‘official’ imports of gold should suffer. Nevertheless projections of 900 to 1,000 tonnes will be imported into India through ‘official’ channels this year.

In China the continuing rise in Chinese middle classes continues unabated at a projected 10% growth per annum. The People’s Bank of China continues to add to its reserves at levels it deems worthy of publication, although most believe agencies for the central bank are continuously buying gold for China. It is worthy of note that PBoC purchases do not have to be reported via the Shanghai Gold Exchange. So, total imports to China remain opaque, probably higher than reported.

Silver will rise with gold but at a faster pace.

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com

Today’s gold and silver market morning

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New York closed with the gold price at $$1,168.10 up from $1,162.40 yesterday. In Asia this morning gold rose to $1,173 ahead of London’s opening. London then pulled it back to $1,164 ahead of the LBMA price setting. But physical demand dominated and the gold price was set at $1,173.70 today up from $1,154.40 at yesterday’s LBMA morning gold setting. The dollar Index was almost unchanged at 94.65 from 94.76 and the dollar was trading against the euro at $1.14070 down from $1.1390. In the euro the fixing was €1,029.11 up from €1,013.35.  Ahead of New York’s opening gold was trading at $1,167.00 and in the euro at €1,022.97.  

The silver price closed at $15.90 up 5 cents over Friday’s close. Ahead of New York’s opening, silver was trading at $15.86.

Price Drivers

Now we have the convincing breakout we were waiting for as Asia and London lifted the gold price over $1,173. We disclose our new targets in our newsletters.

On the U.S. physical side, we saw no sales or purchases into or from the SPDR gold ETF but a relatively large 1.09 tonne addition to the Gold Trust. We say large because it was nearly a 1% addition to the Trust. The holdings of the SPDR gold ETF remain at 687.196 tonnes and 161.71 tonnes in the Gold Trust.

We seem to be a lonely voice that is negative on the dollar exchange rate going forward, but are borne out by a dollar that has fallen back from its peak of $1.07 to $1.14 today! This is adding to higher dollar gold prices.

A new piece of information that will affect the global economy came out yesterday, from the IEA on the oil market. They see an oversupply situation remaining in the oil market well into 2016. This may keep inflation low [and delay rate hikes still further?] but will put savings into the consumer’s hands across the world, if these prices feed through to the consumer. In many countries where exchange rates on the local currencies have fallen heavily, it won’t, but will ease the burden of weakening currencies. If rate hikes are postponed further, so will equity & bond bear markets. But it solves no global monetary problems.

The attack on ‘Frackers’ in the U.S. through ongoing low oil prices continues and will until that production is lowered heavily. In addition the Shi’ite oil producers will see Iranian oil come onto the market to put more downward pressure on the oil price. The Sunni producers [Saudi Arabia and producers on the west of the Persian Gulf] will continue to keep production as high as they can as part of the ongoing antagonism between the two sides of Islam. So low oil prices are here to stay.

Silver will likely rise with the gold price through the $16 area.

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com

Gold an immediate beneficiary should bear market in equities become reality

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New York closed Monday with the gold price at $$1,162.40 up from $1,157.30. In Asia this morning gold fell back to $1,156 ahead of London’s opening. The gold price was set at $1,154.40 down from $1,164.20 at the LBMA gold setting. The dollar Index was almost unchanged at 94.76 from 94.72 and the dollar was trading against the euro at $1.1390 down from $1.1379. In the euro the fixing was €1,013.35 down from €1,023.11.  Ahead of New York’s opening gold was trading at $1,154.65 and in the euro at €1,013.74, and subsequently moved up $10 or so after New York trading came in.  

The silver price closed at $15.85 up 1 cent over Friday’s close. Ahead of New York’s opening, silver was trading at $15.67.

Price Drivers

Gold broke above $1,160 hitting over $1,170 at one point. We are seeing the gold price consolidating around that level now but psychologically the gold market has now changed. While there were no sales or purchases of gold into or from the SPDR gold ETF or the Gold Trust the gold price appears to be on the attack not the defense. The holdings of the SPDR gold ETF remain at 687.196 tonnes and 160.62 tonnes in the Gold Trust.

Today, we continue to watch to see if there is follow-through to take it higher. We do not expect a fall of significance in the gold price from here.

We believe the change of mood in the market is still due to the impact of a slowing global economy, which will impact the exchange rate of the U.S. dollar. With U.S. monetary authorities holding the dollar’s exchange rate down to current levels, the gold price will move against all global currencies and not just in the opposite direction to the dollar. We may be watching this as a structural change in gold’s performance.

With New York dominating the gold price, a perception that a recession is on the horizon within the next three years is fuelling the probability of an equity market fall. With Price/Earnings ratios at extremely high levels now in New York, any rate hike at all will frighten such investors. We have no doubt that with the U.S. investor is largely out of the gold market, so not in a position to sell gold to cover margin calls. Hence, the attraction of gold will be immediate, should a bear market in equities [and bonds] become a reality.  At that time, we believe that bullion prices will outperform shares in gold mining or silver mining companies, at least initially.  Financial markets have set a pattern of discounting such events well in advance. This is an additional worry for global financial market investors.

Silver will continue volatile against the gold price both ways. This is consistent with its historic performance.

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com

Gold and silver market morning: Gold price rising in dollar and euro

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New York closed Friday with the gold price at $$1,157.30 up from $1,139.90. In Asia this morning gold rose to $1,165 ahead of London’s opening. The gold price was set at $1,164.20 up from $1,151.50 at the LBMA gold setting. The dollar Index was down at 94.72 from 94.82 and the dollar was trading against the euro at $1.1379 down from $1.1362. In the euro the fixing was €1,023.11 up from €1,013.47.  Ahead of New York’s opening gold was trading at $1,167.00 and in the euro at €1,025.57.  

The silver price closed at $15.84 up 14 cents over Thursday’s close. Ahead of New York’s opening, silver was trading at $16.00.

Price Drivers

Are we seeing gold break out above $1,160. We are now watching to see if there is follow-through to take it higher. So far that level is holding. If we see more convincing rises, gold will have broken upwards and heading for its next target.

There were no sales or purchases of gold into or from the SPDR gold ETF or the Gold Trust. The rise in the gold price came from COMEX.  This leaves the holdings of the SPDR gold ETF at 687.196 tonnes and 160.62 tonnes in the Gold Trust.

It is extremely important to note that this was not only the gold price rising in the dollar, but the dollar falling against gold! It also rose well in the euro too.

The economic state of nations is not critical to the gold price. It is the exchange rate resulting from that scene that is. But with interference in exchange rates by the different authorities in various ways, distortions have occurred in their values. At the same time confidence in those values has waned. We are therefore moving into an era where these distortions impact on confidence in the monetary system. The gold price moves against currencies, so we are told, but we are seeing the start of an era of currencies moving against gold. This development is seen in so many currencies, outstandingly against the Ruble, other emerging currencies, as well as the euro and the dollar. With a bull market in the dollar seemingly fading in the face of U.S. monetary authorities wishes, we expect to see more progress on the gold price front, in the dollar.

U.S. investors have a history of buying on the rise as the profit motive is so well entrenched. In the Far East where massive demand dominates the fundamentals of the gold market, we see buying happen when a fall is overdone or when a bottom is established. Far Easterner investors buy gold and silver to protect against financial adversity, as well as to keep their savings out of sight of the nation’s authorities.

Silver is steadier today but if gold advances we see silver sprinting ahead.

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com

Gold: stabilising factor in monetary realignment. Silver: no market for widows and orphans!

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New York closed with the gold price at $$1,145.60 down from $1,146.80 yesterday. Ahead of London’s opening the price moved down to $1,142 as recorded in London. China is open today. The gold price was set at $1,143.30 down from $1,147.90 at the LBMA gold setting. The dollar Index was down at 95.15 from 95.47 and the dollar was trading against the euro at $1.1305 down from $1.1254. In the euro the fixing was €1,011.32 down from €1,019.87.  Ahead of New York’s opening gold was trading at $1,144.75 and in the euro at €1,012.61.  

The silver price closed at $16.02 up from $15.80 up 22 cents over yesterday’s close. Ahead of New York’s opening, silver was trading at $15.67.

Price Drivers

The Shanghai Gold Exchange reopened today after the week long holiday, but its activity has not yet fed through to the gold price as developed world markets continue to dominate gold prices. In London and New York the current consolidation pattern is almost complete and a strong move either way is close. These days, with High Frequency Trading, this means high volatility. With the liquidity of the physical gold market falling uncomfortably we do expect dealers to turn their attention to physical prices from COMEX prices, as conditions tighten in the physical market.  The result may well be a move of greater proportions than we have seen for some time!

There were sales of 1.787 tonnes from the SPDR gold ETF but no activity in the Gold Trust. This leaves the holdings of the SPDR gold ETF at 687.196 tonnes and 160.62 tonnes in the Gold Trust.

Further to our comment on the Yuan steadily moving into a strong position in international trade, yesterday, China has announced it has opened a payments clearing system for the Yuan. Why is this important? Because we are seeing an acceleration of the pace of the internationalization of the Yuan. This will, eventually change the monetary system into a multi-currency system. With this comes a disruption in currency markets, which we then see as needing gold as a calming asset. Such a change in Gold’s role will lead to growing demand for it, at a time when its availability is lessening considerably. Most thought this path would be a decade long one, but as we now see, the next couple of years will see that happen, if this pace keeps up.

Silver pulled back strongly this morning by 30 cents. This well describes just how volatile the silver price can be. If demand comes in on COMEX for silver again it will sprint higher very quickly. This is no market for widows and orphans.

In Switzerland silver is treated as a commodity attracting 8% Value Added Tax, making physical dealings come with a much higher risk than gold, there.

Julian D.W. Phillips for the Gold & Silver Forecasters- www.goldforecaster.com and www.silverforecaster.com

A greater role for gold in future monetary system?

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New York closed with the gold price at $$1,146.80 up from $1,135.70 yesterday. While China was closed and ahead of London’s opening the price moved up to $1,150. China reopens tomorrow. When London opened the gold price slipped slightly to $1,148.60 after which it was set at $1,147.90 up from $1,136.90 at the LBMA gold setting. The dollar Index was down at 95.47 from 95.89 and the dollar trading against the euro at $1.1254 up from $1.1217. In the euro the fixing was €1,019.87 3.55 up from €1,013.55.  Ahead of New York’s opening gold was trading at $1,149.75 and in the euro at €1,020.41.

The silver price closed at $15.80 up 18 cents over yesterday’s close. Ahead of New York’s opening, silver was trading at $15.90.

Price Drivers

A piece of news that goes straight to the heart of the dollar’s hegemonic position in the global monetary system was released yesterday. China’s Yuan overtook Japan’s yen to become the fourth most-used currency for global payments in August. The Yuan was second for global issuance of letters of credit by value with a 9.1% share, compared with 80.1% for the U.S. dollar. This confirms that the Yuan is a ‘well-used currency’, which is part of the definition the IMF needed to be included as one of the Special Drawing Rights basket of currencies. In November the I.M.F. will review whether it will be included. The list currently comprises the U.S. dollar, euro, yen and the British pound.  Each step forward by the Yuan is an incursion into the dollar’s dominance of the global monetary scene. The persistent acquisition of gold by China both in its reserves and by Chinese citizens [The People’s Bank of China told us to consider gold owned by its citizens as part of its gold holdings implying that if needs be it would be acquired/confiscated by the PBoC] points to a greater role for gold in the monetary system in the future, in a multi-currency system.

Yesterday saw more short covering increases in long positions on COMEX taking the gold price through $1,140 resistance to $1,150 this morning. There are more shorts to be closed! The next level of resistance is close. If that falls, it’s a game-changer in the U.S. for the gold price.  

While the paper gold market is seeing action, the U.S. physical gold market remains lackluster. Consequently, there were no increases in the holdings of the SPDR gold ETF or the Gold Trust. This leaves the holdings of the SPDR gold ETF at 688.983 tonnes and 160.62 tonnes in the Gold Trust.

Silver continues to outperform gold and is likely to keep doing so in the future. As we said yesterday, “If gold does breakout to the upside we may see a sprint higher by the silver price.” We are seeing the beginning of that now.     

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com

Upwards pressure on gold and silver prices despite Chinese holiday

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New York closed with the gold price at $$1,135.70 down $1.60 yesterday. China remains closed until Thursday in its ‘Golden Week’ holiday. When London opened the gold price rose to $1,140.00 after which it was set at $1,136.90 up from $1,134.35 at the LBMA gold setting. The dollar Index was up at 95.89 from 95.58 and the dollar trading against the euro at $1.1217 down from $1.1268. In the euro the fixing was €1,013.55 up from €1,006.70.  Ahead of New York’s opening gold was trading at $1,138.45 and in the euro at €1,114.93.  

The silver price closed at $15.62 up from $15.24 or over $1 in two days. Ahead of New York’s opening, silver was trading at $15.70.

Price Drivers

There continues to be upward pressure on the gold and silver prices, despite Shanghai being closed. It is impossible not to draw the conclusion that the physical gold market is separate from the New York COMEX market and London prices. This is because gold and silver prices are made in New York, primarily by dealers and traders reflecting sentiment on COMEX. The perception there reflects expectations for rise in interest rates as well as for the dollar. While the dollar remains in a bull market, we are of the opinion that the Treasury will not permit it to rise to the point the U.S. suffers more on the international competitive front. This is supported by the reality that the peak of $1.07 against the euro and peak on the dollar index, close to 100, have not even been approached since then, surprisingly. After the jobs report the dollar fell a full two cents against the euro and remains close to that level even now.

Record short gold positions continue to be closed and long gold positions opened on COMEX since last Friday.  

But against this positive background we saw a sale of 0.221 of a tonne from the SPDR gold ETF and a sale of 0.03 from the Gold Trust. This leaves the holdings of the SPDR gold ETF at 688.983 tonnes and 160.62 tonnes in the Gold Trust. We see this sale as small relative to the volumes being traded currently, so will not influence the gold price. Additions to the gold ETFs in the U.S. in the last two weeks point to a positive attitude to gold growing in the U.S. slowly but surely now.

The Technical picture is now moving to a critical point which may see a strong move this week.

Silver continues to outperform gold having risen over a dollar in the last two days. If gold does breakout to the upside we may see a sprint higher by the silver price. –

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com

COMEX ‘almost ignores’ gold and silver supply and demand fundamentals

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New York closed with the gold price at $$1,137.30 up from $1,114.30 on Friday. China remains closed until Thursday in its ‘Golden Week’ holiday. When London opened the gold price slipped to $1,135.00 after which it was set at $1,134.35 up from Friday’s $1,106.30 at the LBMA gold setting. The dollar Index was down at 95.58 from 96.30 and the dollar trading against the euro at $1.1268 down from $1.1165. In the euro the fixing was €1,006.70 up from €990.86.  Ahead of New York’s opening gold was trading at $1,133.00 and in the euro at €1,107.60.  

The silver price closed at $15.24 up from $14.56 or 68 cents over Friday in New York. Ahead of New York’s opening, silver was trading at $15.31.

Price Drivers

After what has been labeled a’ disastrous’ jobs report on Friday when only 142,000 job increases were reported against a 200,000 expectation the gold price leapt $25 in 15 minutes in New York despite there being no physical gold purchases into the two U.S. based gold ETFs. [This leaves the holdings of the SPDR gold ETF at 689.204 tonnes and 160.65 tonnes in the Gold Trust.]

After the jobs report the dollar immediately fell two cents against the euro although the gold price in the euro also rose €20 at the same time. With little gold actually traded we see just how large the influence of COMEX and dealers in gold is in the market place where demand and supply are almost ignored. The same is true in the silver market. As we have pointed out in our newsletter before, it will take the arrival of the Shanghai gold price setting to change the pricing of gold. With a Chinese physical price and a New York ‘COMEX’ price moving away from each other, arbitrageurs will trade between the two smoothing out price differential. This will cause a structural change in the gold price. The ‘Yuan Gold Fix” is scheduled to begin before the end of the year.

With China still closed, we did expect attempts to crush the gold price through small physical selling, but the jobs report appears to have put paid to that now. The Technical picture is now moving to a critical point which may see a strong move this week.  

The jobs report has made a re-appraisal of the future state of the U.S. and global economies necessary. If such reports continue to disappoint, it is certain financial markets will become even more volatile. While equity markets rose today, it was not on the prospects of a rosy future, but because better yields in equity markets against those in fixed interest markets will continue for the

next two or three months. Deleveraging will slow and the threat of more turmoil remains when interest rates eventually do rise.

Silver is rose a remarkable 68 cents on little trade in the Silver Trust, as dealers whipped prices higher to protect themselves.  

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.xsilverforecaster.com

Gold price drops as Chinese on holiday

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New York closed on Thursday with the gold price at $1,114.30 down from $1,116.00. With China closed and the pre London opening seeing the gold price fall to $1,110 we find it difficult to accept such a fall when no market is open. When London opened the gold price slipped again to be set at $1,106.30 at the LBMA gold setting. The dollar Index was at 96.30 at the time and the dollar trading against the euro at $1.1165. In the euro the fixing was €990.86 down from €998.48.  Ahead of New York’s opening gold was trading at $1,107.3 and in the euro at €992.12.  The silver price closed at $14.56 up 2 cents over Thursday in New York. Ahead of New York’s opening, silver was trading at $14.43.

Today sees the announcement on the jobs report with 200,000 jobs expected. The caveat is that both in August and September these figures are subject to revision, subsequently. More importantly, the make-up of the jobs report is a clearer guidance to what lies ahead. We know that Manufacturing jobs [permanent] continue to fall as manufacturing continues to be drained to Asia. The big jump is expected in the services industry [temporary] with a smaller amount in the construction industry set to grow.  Wage increases are at 0.1% higher a sign that there is no pressure on employers to raise wages, which confirms that job security is not that solid. The Fed is looking for a consumer who sees his job being secure, wages rising and disposable income rising too. This has not happened yet. It may not happen for a long time to come still. The U.S. looks at these numbers to see if they point to a stronger dollar via an interest rate hike and then push the gold price down thereafter. With Janet Yellen confirming a rate rise before year’s end just how important is that proposed rise if the data does not support it?

The gold ETF SPDR in the U.S. saw a purchase of 1.787 tonnes but nothing into or out of the Gold Trust yesterday, but this was insufficient to halt its fall.  This leaves the holdings of the SPDR gold ETF at 689.204 tonnes and 160.65 tonnes in the Gold Trust. The trading range of the gold price has fallen below the bottom end of support which was on $1,100. We may see a strong move shortly, either way.

We are particularly waiting to see if the London and U.S. market reflects the closure of China until the 7th October. So far it has, as the gold price has dropped in the last two days. With U.S. investors being buyers of gold into the U.S. based ETFs this week, it is clear that the speculators and traders hold sway over prices.  

Silver is back is sagging as gold slips and faster than gold falls. Expect more of the same today. Julian D.W. Phillips for the Gold & Silver Forecasters  – www.goldforecaster.com and www.silverforecaster.com

 

GLD purchase halts gold price slide

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New York closed Wednesday with the gold price at $1,116.00 down $11.40 from $1,127.40. With China closed for the next week the gold price held at New York’s close overnight. The dollar was a little stronger at €1.1175 this morning in London and the dollar index a little higher at 96.27. In London’s morning the LBMA gold price was set at $1,114.20 down from $1,122.50. In the euro this was €998.48 down from €1,001.16.  Ahead of New York’s opening gold was trading at $1,113.10 and in the euro at €997.58.  

The silver price closed at $14.54 down 10 cents over Wednesday in New York. Ahead of New York’s opening, silver was trading at $14.52.

Price Drivers

With China closed for the next week, the market price of gold could easily be distorted by traders in New York. However, the gold ETF SPDR in the U.S. saw a healthy purchase of 3.276 tonnes and a purchase of 0.36 of a tonne into the Gold Trust yesterday, but this was insufficient to lift the gold price, but certainly halted its fall.  This leaves the holdings of the SPDR gold ETF at 687.417 tonnes and 160.65 tonnes in the Gold Trust. The trading range of the gold price is at the bottom end of support at $1,114. We may see a strong move shortly, either way.

The IMF and the World Trade Organization has issued another warning on the global economic front. They see global economic growth falling from current levels. This may well place additional pressures on emerging nation’s exchange rates and interest rates in addition to the pressures already on large corporates across the world. It is only a matter of time before banks pull the plug on some of these. So be ready for more bouts of global, financial market volatility.

We pointed to the possibility of a series of financial markets falls yesterday, similar to 2008. Then the gold price fell from $1,200 to below $1,000, before turning around and soaring to a record $1,921. At that time the U.S. was very long of gold, which was sold off to cover margin calls and provide liquidity to cover shortages. Some believe that we will see the same again soon. The difference between then and now is that the U.S. holdings of gold were not rebuilt after the massive sell-off in April 2013. Since then on balance their holdings have fallen lower. The implication is that gold should not have a very heavy sell-off as we saw in 2008, despite U.S. investors search for sources of easily liquidatable holdings. The subsequent turning to gold may happen much quicker. Before that, we should see markets very volatile.

Silver is back in sync with the gold price and should continue to stay so today.

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com

 

Indian smuggled gold volumes may have increased

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New York closed Tuesday with the gold price at $1,127.40 down from $1,131.80. Asia saw prices slip back $2 this morning. The dollar was unchanged at $1.1225 this morning in London and the dollar index a little higher at 96.07. In London’s morning the LBMA gold price was set at $1,122.50 down from $1,124.60. In the euro this was €1,001.16 up from €1,000.49.  Ahead of New York’s opening gold was trading at $1,123.50 and in the euro at €1,002.05.  

The silver price closed at $14.64 up 5 cents over Tuesday in New York. Ahead of New York’s opening, silver was trading at $14.65.

Price Drivers

The trading range of the gold price is sitting on support at the lower end of the narrowing price pattern, at $1,123, so within this pattern it should be stronger today, we feel.

The IMF has issued a warning that we could see corporate failures in the emerging world.

With the Shanghai Gold Exchange closed tomorrow and for the next ‘Golden’ week, an opportunity arises for another ‘bear raid’ on the gold price. But Chinese demand will reappear after that week including the demand that could not be met because of the holiday.

The Indian wedding season starts tomorrow, ahead of the festival season that continues from now until the end of November. While there is a discount on gold prices of $7 this does not necessarily mean that demand is falling. Some believe this indicates an oversupply, but there is a situation in the country that is not measurable and will affect prices. With the ongoing 10% duty level on gold, smuggling has flourished. The World Gold Council guestimated two years ago that this is around 250 tonnes. Since then the smuggling has continued, likely getting more professional as the profits continue. Volumes must have increased over that time. It is therefore likely that discounts also persist on smuggled gold, forcing legal imports to be priced lower. Official imports may well decline but be replaced by smuggled gold finding its way onto the shelves. Official imports of gold are around 670 tonnes so far this year pointing to around 1,000 tonnes by year’s end. Despite smuggled gold being impossible to quantify, it cannot be ignored. Factoring in a decline in official imports we would certainly expect real Indian demand to be around 1,100 tonnes or higher for 2015.

Again on Tuesday, there were no purchases or sales from either the SPDR gold ETF or the Gold Trust. This leaves the holdings of the SPDR gold ETF at 684.141 tonnes and 160.29 tonnes in the Gold Trust.

Silver is back in sync with the gold price and should continue to be so today.

Julian D.W. Phillips for the Gold & Silver Forecasters- www.goldforecaster.com and www.silverforecaster.com

Gold and silver moving as monetary assets as global markets fall

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New York closed Monday with the gold price at $1,131.80 barely changed on the previous close. Asia saw prices slip back to $1,127 yesterday. The dollar was weaker at $1.1224 and the dollar index a little lower at 95.96. In London’s morning the LBMA gold price was set at $1,124.60 sitting at midpoint of its consolidation pattern. In the euro this was €1,000.49 down €13.  Ahead of New York’s opening gold was trading at $1,127.10 and in the euro at €1,004.50.  

The silver price closed at $14.59 down a heavy 49 cents over Monday in New York. Ahead of New York’s opening silver was trading at $14.57.

Price Drivers

With the gold price back in consolidation mode it is forming a pattern of higher lows, showing a few strong hormones today. On Monday, there were no purchases or sales from either the SPDR gold ETF or the Gold Trust. This leaves the holdings of the SPDR gold ETF at 684.141 tonnes and 160.29 tonnes in the Gold Trust.

What we are seeing now is a set of global markets fearful of a breakdown in prices. As prices fall, not just in commodities, but equity markets, we become very aware of the massive levels of debt that is sitting in the hands of individuals, corporates, governments’ et al. Because of this we see occasional collapses of value as this becomes recognized.

For example, Glencore, the mining giant and broker has seen its share prices buckle in Australia today. With debt twice the level of its market capitalization, its situation well expresses the fears sensitizing the markets at all levels. The commodities sector does not look as though it is going to recover for a very long time. This includes U.S. oil companies trying to persuade their regulators that their debt levels are sustainable as oil prices could fall further.

With Asia slowing still, sluggish growth in the U.S and barely visible growth in the E.U., while Japan is back in deflation, the ability to repay debt is now a global concern.  At what point does this buckling become contagious?

In this context it is different for gold and silver. While they continue to consolidate they are moving as a monetary asset [both cash internationally and a global asset].  To us it is reminiscent to 2008 when gold fell back from its high of $1,200 as markets collapsed, before moving up to its peak of $1,921. The big questions remains, “Are we about to see a situation similar to 2008?” Certainly global market moods are pointing that way.  

Silver fell heavily on the disappointment that gold did not stay above $1,140. We see it returning to moving closely with gold today.       

Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com

Chinese retail sector growth gold positive

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New York closed with the gold price at $1,125.40 down $7.60 yesterday. Gold rose $1.60 in Asia and London held it there. The dollar strengthened to $1.1149 from $1.1171 and the dollar index continues to climb at 96.22 up from 95.96. In London’s morning the LBMA gold price was set at $1,124.60 down $4.70. In the euro this was €1,010.06 up from €1,009.57.  Ahead of New York’s opening gold was trading at $1,125.35 and in the euro at €1,008.60.  

The silver price closed at $14.81 down 38 cents on Tuesday in New York. Ahead of New York’s opening silver was trading at $14.80.

Price Drivers

There was a purchase of 1.193 tonnes of gold into the SPDR gold ETF but none into the Gold Trust on Tuesday. This leaves the holdings of the SPDR gold ETF at 675.799 tonnes and 159.30 tonnes in the Gold Trust. Gold continues to consolidate within the pennant formation. While the dollar is strengthening still, the gold price is edging up in both the dollar and the euro.

The recent turmoil in global markets has left a background of fear against which the slightest negative news about China sets markets down in a tailspin. For gold the story is different. Repeatedly the Chinese government tells us all that the transition away from a manufacturing/exporting nation to one of internal consumption will lead to slower growth. Growth in the retail sector remains at double digit levels, which for gold is positive. To this end we fully expect to see the year end with record annual imports of gold [totaling retail & institutional amounts together].

The difference between the record 2013 numbers and those expected this year is very important. In 2013 the demand was fuelled by the drop in price from $1,450 in April of that year then slowed later in the year. This year the demand has been high throughout the year on a weekly basis both as a result of spendable income on gold going further and the steady expansion of the Chinese middle classes in terms of numbers and wealth. Certainly higher gold prices will reduce demand as the spendable income on gold remains growing slowly and will buy less when prices are higher. – Against a backdrop of fear and the gold price close to its lows, the mood for gold amongst institutions has improved.

Silver fell back yesterday, while gold rose removing its strength relative to the gold price. We expect silver prices to move closer to the moves in the gold price today.

Julian D.W. Phillips for the Gold & Silver Forecasters – www.silverforecaster.com and www.goldforecaster.com

Big gold sale out of GLD but not sufficient for price breakdown

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Monday saw a substantial sale of gold from the SPDR gold ETF of 3.577 tonnes but none from the Gold Trust. This again leaves the holdings of the SPDR gold ETF at 674.606 tonnes and 159.30 tonnes in the Gold Trust. This was sufficient to push the gold price down slightly, but not sufficient to cause a breakdown in the gold price. It continues to consolidate within the pennant formation. The dollar is strengthening still, which was the main driver of the gold price slightly lower.

In India, the gold season is starting to pick up ahead of the festival season in October. But yet again the massive demand in Asia is not feeding through to the gold price. COMEX continues to dictate prices, but the U.S. physical demand including COMEX demand is very small relative to Asia. It is a 10th of the level of the gold demand east of Greece, but due to the structure of the markets globally this demand is not reaching gold prices. Asia is happy to see this as prices continue at bargain levels. Will it change any time soon? We believe it will, once the current barriers to a demand/supply related global price are overcome. –

While many believe it is the developed world engineering this state of affairs to protect the dollar’s international role, it would be equally to the advantage of China to sell small amounts in the U.S. or London to ensure prices stay low. There just is not enough information on this in the public domain to say who is keeping prices low. But until demand globally reaches into COMEX for physical demand, sufficient to take up any additional liquidity supplied by the major banks, this situation will persist.

Julian D.W. Phillips for the Gold & Silver Forecasters – www.silverforecaster.com and www.goldforecaster.com