At the moment in global financial markets and the media there is a search for certainty. What number of interest rate hikes will there be, etc. The Fed has warned us all that their decisions are ‘data led’. Translated, this means, “they don’t know, they need to see what is going to happen first!” So there can be no certainty. The financial and monetary climates have changed considerably in 2016 already. Even the U.S. recovery appears to be weakening now. All other global economies will face a weaker environment than the U.S.
Monetary policy is not backed by effective government action bringing even more uncertainty to bear on the scene. No national economy is an island, but part of a global economy that will affect each one. With conflicting interests among all nations the global economy is rudderless. The shift of wealth from west to east has been heavily underestimated. The unseen damage to the developed world is now feeding through.
Gold has been held back in the last three years, but is in the process of breaking out as these last weeks have shown. What’s more, the gold price [unreasonably] is made in the U.S. on barely any physical volume. But the last few weeks have seen U.S. investors turning robustly to physical gold and, by extension, silver. It’s time global investors seriously looked at gold investments!
In earlier Market Mornings and explored in depth in our newsletters, we pointed out how exchange rates would drive markets this year. The plunge in the dollar against all currencies validates these forecasts, catching the financial world by surprise and changing the climate for gold and silver dramatically.
Thursday saw another large purchase of 3.57 tonnes into the SPDR gold ETF! The Gold Trust saw another 0.91 tonnes added to the Gold Trust. The holdings of the SPDR gold ETF are now at 693.621 tonnes and at 171.47 tonnes in the Gold Trust. These purchases have altered the weight of influence in the U.S. gold market with physical demand taking over from speculative paper gold influences and sweeping away resistance, taking gold prices higher, as speculative short positions are closed long positions opened. There is a great deal more of this still to come.
The gold and silver markets and currencies
The New York gold price closed Thursday at $1,155.70 up from $1,142.10 up $13.60. In Asia on Friday, it held there ahead of London’s opening and then the LBMA set it at $1,158.50 up from $1,146.25 up $12.25 with the dollar index down slightly at 96.62 from 96.66 on Thursday. The dollar was weaker against the euro at $1.1196 down from $1.0980 against the euro. The gold price in the euro was set at €1,034.74 up from €1,025.27. Ahead of New York’s opening, the gold price was trading at $1,159.20 and in the euro at €1,035.18.
The silver price in New York closed at $14.86 up 21 cents at Thursday’s close. Ahead of New York’s opening, the silver price stood at $14.90. Silver is now outperforming gold.
Julian D.W. Phillips for the Gold & Silver Forecasters- www.goldforecaster.com and www.silverforecaster.com