Gold and Silver range narrowing ahead of strong move!   

Gold Today –New York closed at $1,169.10 yesterday after closing at $1,176.50 on the 5th December. London opened again at $1,171.00 today.

 Overall the dollar is slightly stronger against global currencies today.

         The $: € was slightly stronger at $1.0728: €1 from $1.0739: €1 yesterday.

         The Dollar index was weaker at 100.50 from 100.32 yesterday. 

         The Yen was slightly weaker at 114.15: $1 from yesterday’s 114.04 against the dollar. 

         The Yuan was slightly weaker at 6.8839: $1 from 6.8802: $1 yesterday. 

         The Pound Sterling was weaker at $1.2614: £1 from yesterday’s $1.2754: £1.

 Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2016  12    7

      2016  12    6

      2016  12    5










$ equivalent 1oz @  $1: 6.8839

      $1: 6.8802

$1: 6.8832







Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle Eat eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 Once again Shanghai prices are pretty stable sitting around $21 higher than New York and $19 above London’s opening [allowing for the difference in the quality of gold priced in the different markets].

With Chinese prices stable at higher levels, it appears that when speculators sell without the backing of physical gold sales prices in Shanghai ignore New York’s prices. Shanghai therefore appears less dependent on the other global gold markets as it walks its own physical gold road. Once U.S. ETF sales halt we should see Shanghai prices take a more dominant role.

Statistics report that London and New York see 95%+ global gold turnovers. But all but between 1 & 5% of this does not involve physical transactions. Shanghai is a physical market requiring physical delivery.

LBMA price setting:  The LBMA gold price setting was at $1,171.25 this morning against yesterday’s $1,171.15. 

The gold price in the euro was set higher at €1,092.63 after yesterday’s €1,091.09.

Ahead of the opening of New York the gold price was trading at $1,171.85 and in the euro at €1,093.70.  At the same time, the silver price was trading at $16.78.

 Silver Today –Silver closed at $16.71 at New York’s close yesterday from $16.89 on the 5th December. 

 Price Drivers

Traders and speculators tried to push prices lower yesterday, but in the absence of any physical selling. This didn’t work, but gold prices did fall momentarily to $1,157 before recovering. This also pulled silver prices down too. But the fact that prices recovered and now remain just above $1,170 tells us that in the absence of more physical selling from the U.S. based gold ETFs the gold price is finding support here.

We reiterate that dealers will mark prices down if they see ETF selling of gold. This is the main driver of the gold price, at the moment. Once sales from the gold ETFs come to a halt and U.S. buying begins we see a repeat, or more, of the gold price movements that we have seen from the start of the year until Trump’s election. This saw gold prices rise over 30%. We expect greater rises if U.S. physical gold buyers return to the market.

2017 is likely to see an election in Italy. Should the opposition win, a referendum on whether Italy remains in the E.U., will take place. If Italy votes to leave the E.U. the number of member states will shrink but the euro will not collapse, because the euro will then represent nations that are stronger economically, so the euro should strengthen thereafter. Nevertheless the future of the E.U. will be questionable as it will be facing further fragmentation. This will contribute to unstable currency markets with gold gaining more importance as a reserve asset. A return to national currencies of nations leaving the E.U. will then happen, widening the new multi-currency system that’s on its way now. This will lessen the importance of national currencies and increase the importance of gold reserves globally.

In the U.S. it seems that the President-elect continues to move forward with the finesse of a charging hippopotamus. As each day passes it seems more likely that he will initiate a trade war with China and other nations. He is starting on US. companies with production facilities outside the U.S.

Gold ETFs – Yesterday, there were no sales from the SPDR gold ETF (GLD) but a sale of 0.6 of a tonne from the Gold Trust (IAU) holdings, leaving their respective holdings at 869.897 tonnes and 198.69 tonnes. 

Since January 4th this year, 267.578 tonnes of gold has been added to the SPDR gold ETF and to the Gold Trust. 

 Silver –Silver pulled back while the gold price barely moved. We see silver being sensitive even to an indication that gold may fall further.  

 Julian D.W. Phillips | | StockBridge Management Alliance 


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