Silver chomping at the bit as currency world in turmoil

Gold Today Gold closed in New York at $1,225.20 down from $1,243.20 on Thursday. On Friday morning in Asia, it picked up and rose even more in London to be set at $1,229.75 at the LBMA price setting down from $1,240.30 on Thursday.

The dollar index is lower at 94.79 down from 94.95 on Thursday. The dollar is weaker against the euro at $1.1277 up from $1.1256 yesterday.

The gold price in the euro was set at €1,090.49 down from €1,101.90 Thursday.

Ahead of New York’s opening, the gold price was trading at $1,230.55 and in the euro at €1,091.20.  

Silver Today –The silver price closed in New York at $16.13, down 10 cents on Thursday’s close. Ahead of New York’s opening the silver price stood at $16.22.

Price Drivers

Both the dollar and the euro have stabilized slightly and gold is narrowing its trading range, promising to tighten further before another strong move either way.

But the currency world remains in turmoil. Quantitative easing continues in the E.U. from the E.C.B. [despite objections now coming from Germany] with more to come.

In Japan we see a sad scene developing as Japan is about to inject more stimuli into their economy too, despite clear signs that Abenomics is not succeeding. We don’t use the word failing, because Japan has to keep stimulating so that word isn’t used, even though it is the visible reality. If such an admission came from government the damage may be considerable. With negative interest rates already in place the Japanese investor is turning to gold.

Next Tuesday sees the arrival of the Shanghai Yuan gold Fix. With China the largest buyer of physical gold at individual, institutional and government level, in the world on a daily basis, this event is a structural change in the world of gold.

To date the world has always measured the rises and falls of the gold price in the U.S. dollar, despite the fact that in every country, locals use their local currency to buy or sell gold, leaving it both rising and falling depending on the individual currency’s performance.

We expect that the first action in the morning from the 19th onwards will be to ‘translate’ the gold price back into the dollar, to see if it has risen or fallen. But in the process we will be forced to see what move the Yuan has had against the dollar.

We have seen reports that the price will be smoothed out by arbitrageurs, but this ignores the fact that exports of gold are not permitted from China, while imports are.  So gold can be bought in London and New York by Asia but the reverse cannot happen. But we are of the opinion that China can provide a smoothing out ‘facility’. The acceptance of the Chinese Bank ICBC as a London ‘market maker’ means that it will be both a buyer and a seller of gold [and has been so for more than three months to date].

The factors when added together, show just how much ability to dominate the global gold price China has. There are other features behind China’s gold market structural reforms that will bear heavily on the global gold market and price that are present too.

Gold ETFs – We saw more large sales of 3.27 tonnes after yesterday’s big sales of 5.053 tonnes of gold from the SPDR gold ETF but nothing in or out of the Gold Trust on Thursday. This leaves their holdings at 806.815 and 188.04 tonnes in the SPDR & Gold Trust respectively.  Once again these sales would account for the fall in the price in New York, with the price recovering in London to $1,230.

Silver – The silver price is chomping at the bit waiting to run and rising at the first sign of small recovery in the gold price.

Julian D.W. Phillips | | StockBridge Management Alliance


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Global Gold Price (1 ounce)
  Today yesterday
Franc Sf1,191.23 Sf1,200.00
US $1,230.55 $1,246.75
EU €1,091.20 €1,102.05
India Rs.82,022.31 Rs. 83,052.25
China Y 7,971.75 Y 8,070.46


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