Julian Phillips looks at both short term and long term gold and silver price drivers
New York closed at $1,174.00 up $3.10, again in very thin volumes, with Asia virtually absent. Today sees the dollar weaker at $1.1267 down a cent and a half against the euro with the dollar index weaker at 95.41 down from 96.29. The LBMA Gold Price was set at $1,181.00 well above the trading levels seen in the market before the price setting and up $7.60 with the equivalent euro price at €1,049.96 down €4.97. Ahead of New York’s opening, gold was trading in London at $1,182.30 and in the euro at €1,049.07.
The silver price rose slightly to $16.02 down 8 cents in New York. Ahead of New York’s opening it was trading at $16.13.
Again we saw very thin trading in London and New York. Asian demand was almost absent from the market. With this support gone, prices are likely to fall but not by that much. Traders and speculators may be brave and try to knock the prices of gold and silver down today, but are fearful that because currency moves are dominating precious metal prices and not two-way traffic, any appearance of Asian demand would have a disproportionate effect on prices burning short traders badly. Potential volatility remains in the wings of the markets.
What we find worthy of note today is the announcement by HSBC [Hong Kong and Shanghai Bank] is cutting jobs in the west and turning their attention to Asia. Two influences primarily, have been mentioned as the reason for this. The first is that with global cash flow changing [in 2000, 80% of global cash flow went to the developed world and now it is to change by 2020 to 35% with 65% to the emerging world] in Asia’s favor HSBC wants part of it. The second reason is through factors like ‘artificial intelligence’ which is a global destroyer of jobs going forward. Both these factors will affect gold and silver as they bring considerable uncertainty to the long term future of the developed world and to its monetary system.
Artificial intelligence’s destruction of jobs is one of the world most serious threats to jobs and yet perhaps the most underreported major global factors by the media. It is projected that in the region of 47% of jobs in the U.S. will fall to its blade and 50% in the E.U. over time.
With Asia convinced of the need for gold at all levels of the monetary system, in particular in the global monetary system, the dependence on currencies to the exclusion of gold, we believe, is coming to an end.
Yesterday saw no changes in the holdings of the SPDR gold ETF or the Gold Trust. The holdings of the SPDR gold ETF are at 708.698 tonnes and at 167.01 tonnes in the Gold Trust.
Silver is indicating that its holders expect a further fall today. But what we said above about gold applies to silver too.