Gold clobbered by big ETF sales. Silver hit even harder

Gold Today –New York closed Friday at $1,212.40. London opened at $1,207 today. 

Overall the dollar was weaker against global currencies, early today. Before London’s opening:

         The $: € was stronger at $1.1408 after Friday’s $1.1414: €1.

         The Dollar index was stronger at 96.15 after Friday’s 95.98

         The Yen was weaker at 114.21 after Friday’s 113.70:$1. 

         The Yuan was stronger at 6.8034 after Friday’s 6.7990: $1. 

         The Pound Sterling was weaker at $1.2873 after Friday’s $1.2897: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    7    10

     2017    7    7            

     2017    7    6







Trading at 267.50



$ equivalent 1oz at 0.995 fineness

@    $1: 6.8034

       $1: 6.7990

       $1: 6.8037     




Trading at $1,222.94



Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East 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.]

 As you can see Shanghai has not dropped as far as New York or London. The price differential is very wide now on today’s price of $15.94 between Shanghai and London. We have no doubt that today gold, from the SPDR [GLD} is flowing across to Shanghai via HSBC the Custodian of the gold ETF.

The big question is will Shanghai pull up London and New York prices or will Shanghai be pulled down to a much narrower differential? At the moment it is New York and London that are pulling prices down, but at the cost of gold flowing eastwards.

Silver Today –Silver closed at $15.56 Friday after $16.01 at New York’s close Thursday.

LBMA price setting:  The LBMA gold price was set today at $1,207.55 from Friday’s $1,220.40.  The gold price in the euro was set at €1,069.40 after Friday’s €1.075.13.

Ahead of the opening of New York the gold price was trading at $1,212.75 and in the euro at €1,065.03. At the same time, the silver price was trading at $15.40. 

Price Drivers

The gold price breakdown on the Technical front is now being seen in their prices. Today, the gold price is holding just above $1,200 and the silver price tumbled over $1.23 in the last three business days. Where to now? It has taken around 27 tonnes of sales from the SPDR gold ETF over the last two weeks, with virtually no purchases to cause the breakdown in the gold price.

The G-20 meeting on Friday was the most dramatic one we have seen for over a decade. Instead of coming out with the usual platitudes, this one came out with divisions between the U.S. and the other major blocs, China and the E.U. There is a clear distance building up between the E.U. and the U.S. So much so that the euro could rise to $1.20 by year’s end. The E.U. has solidified a Free Trade Agreement between each other. The G-20 agreed to fight Protectionism but the U.S. was not included in that agreement.

As we have pointed out exchange rates will be affected. We would go so far as to say that an E.U. – China trade agreement would be conducted either in Euros or Yuan or both. The increasing path to isolation that appears to be being followed now will impact the dollar and heavily. We see the result of the G-20 meeting as being the entrance to a full blown multi-currency system. This is extremely positive for gold at all levels.

Gold ETFs – Yesterday saw sales of 5.324 tonnes from the SPDR gold ETF (GLD) but no change in the Gold Trust (IAU) holdings. The SPDR gold ETF and Gold Trust holdings are at 835.345 tonnes and at 210.76 tonnes respectively.

This was a hefty sale and follows two earlier sales last week of a similar size. Combine these sales with the 12 tonne sale the week before and the physical downward pressure was too much to hold the gold price above the “Golden Cross”.

Since January 4th 2016, 196.206 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 33.691 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips | StockBridge Management Alliance 



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