gold market

Gold and silver recovering above $1,320

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Gold Today –Gold closed in New York at $1,325.60 on Friday after Thursday’s close at $1,313.30.  London opened at $1,327.

    • The $: € was weaker at $1.1165 down from $1.1182 Friday.
    • The dollar index was weaker at 95.65 from 95.79 Friday.
    • The Yen was slightly stronger at 103.28 from Friday’s 103.57 against the dollar.
    • The Yuan was slightly stronger at 6.6770 from 6.6823 Friday.

 

  • The Pound Sterling was stronger at $1.3328 from Friday’s $1.3267.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
     2016  09  5

2016  09 2

 SHAU

SHAU

 284.84

282.69

 285.24

282.50
Dollar equivalent @ $1: 6.6770

$1: 6.6823

 $1,326.87

$1,315.81

 $1,328.73

$1,314.93

Shanghai took the gold price higher by a small amount and London held it there at the open.

The Yuan was slightly stronger against the dollar which weakened slightly across the board. The pound continued to strengthen as you can see.

LBMA price setting:  The LBMA gold price setting on Monday was at $1,328.30. On Friday it was at set at $1,311.50.

The gold price in the euro was set on Monday at €1,189.91 up strongly on Friday’s €1,172.34.

New York is closed today but at the time New York usually opened, the gold price was trading at $1,327.10 and in the euro at €1,188.84.  At the same time, the silver price was trading at $19.48.

Silver Today –The silver price closed in New York at $19.39 up 52 cents, on Friday after $18.87 Thursday.  

Price Drivers

We wish those of our readers who are in the U.S. enjoy their holiday today, ready for a stronger gold market on their return. In our next issue of the Gold Forecaster we will discuss just what strategy will tremendously increase your returns in a time when gold prices are rising and just how to maximize returns, when it is not.

While New York is on holiday the jump in gold prices seen last Friday persists. The disappointing jobs report shook markets on Friday seemingly postponing a rate increase until the end of the year. Meanwhile the dollar continues to weaken against the major currencies, with the exception of the Japanese Yen.

There were no significant moves in the U.S. physical market showing that it is exchange rate moves which continue to affect gold and silver prices.

Meanwhile demand in India is on the rise as the gold and festival seasons begin. We keep seeing statistics for Indian demand related mainly to ‘official’ imports. We find these almost impossible to accept, because the Indian gold market is no longer dominated by ‘official’ imports.

Smuggling, three years ago, was thought to be at around 250 tonnes per annum on top of ‘official’ imports. Since then professional smugglers have improved efficiencies and market penetration. In addition the government has increased their profit margins by 1% by imposing a further Tax of that amount. During the gold manufacturer’s strikes, their front doors were closed and their back doors were open and manufacturing continued no doubt with the assistance of smuggled gold imports.

So when we see ‘official figures marked down and reports of dropping demand coming through we take these with a pinch of salt.

After a very good Monsoon, gold buyers are putting profits back into their pockets. With no tax payable on agricultural profits, much of those find their way into property and into gold as an ‘alternative’ financial system. It’s the Indian way of life resulting from many, many years of political corruption and bureaucratic abuse on the gold trade there.

So we would suggest that you add a minimum of 250 tonnes to the ‘official gold figures annually to see what the real annual Indian demand really is.

Gold ETFs – In New York Friday there were no sales from of purchases into the SPDR gold ETF but a small sale from the Gold Trust of 0.05 of a tonne leaving their respective holdings at 937.89 tonnes and 225.39 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen by 364.165 tonnes.

Silver – The silver price jumped on the relatively small move in the gold price on Friday and this has carried through to London on Monday. A jump, of just under 3% in silver prices was seen while gold rose 1% on Friday.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold and silver blasted down by HFT

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Gold Today –Gold closed in New York at $1,321.10 on Friday after Thursday’s close at $1,322.50.  London is closed today.

    • The $: € was at $1.1187 from $1.1293 Friday.
    • The dollar index was at 95.60 from 94.63 Friday.
    • The Yen was at 102.14 from Friday’s 100.45 against the dollar.
    • The Yuan was weaker at 6.6687 from 6.6560 Friday.

 

  • The Pound Sterling was at $1.3107 from Friday’s $1.3200.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  29

2016  08  26

 SHAU

SHAU

 283.32

284.19

 283.68

284.44
Dollar equivalent @ $1: 6.680

$1: 6.6687

 $1,319.20

$1,325.49

 $1,320.87

$1,326.66

As you can see Shanghai followed New York with lower prices and the lowest Yuan we have ever seen.

LBMA price setting:  There was no gold price setting today as London was closed. On Friday the setting was at $1,324.90.

The gold price in the euro was set on Friday at €1,173.20.

Ahead of the opening in New York the gold price was reported as trading outside the markets at $1,320.00 and in the euro at €1,182.37 up from €1,175.48.  

Silver Today –The silver price closed in New York at $18.64 Friday UP from $18.56 Thursday.  

Price Drivers

All currencies are weaker today than the dollar which jumped strongly after Janet Yellen’s comments indicating that a rate hike case is now stronger. Of course, the media tries to put us back on tenterhooks for a September rate hike and will continue to do so until it is seen and then do the same before the next rate hike or the next meeting of the FOMC. It is understandable as it is the main global financial story and, as we now see, in the stronger dollar. Will the dollar rise through 100 on the Index? We think not, simply because neither the Fed nor the Treasury wants this.

But, once again, there was no physical content to the fall in the gold price. No sales took place from either the SPDR gold ETF or from the Gold Trust. This makes the fall in the gold and silver price vulnerable. On Friday the gold price did begin to recover fast and hit $1,336 after hitting a low of $1,322. But then it was slammed down again quickly in a short time back to $1,322 where it closed. All of this fall was due to High Frequency Trading. But no buyers came in to take it back higher after the expiry on the months Options and Futures. The best way to summarize the action is that dollar strength hit all currencies and gold, but not silver!

Ahead of New York’s opening while London was closed prices were marked down by the off-market traders who decided not to have a holiday. They took it to $1,316, but it rose again to $1,320 before New York opened.

This engineered fall has taken the gold price down a relatively long way, leaving it in a position where we expect some strong volatility and wide price moves this week.

We must remember that we are moving into the busiest quarter of the year for gold. This is certainly not the time to drive gold prices down unless you believe that the physical gold market is completely disjointed from the ‘paper’ gold market of COMEX.

Gold ETFs – In New York yesterday there were sales of 1.781 tonnes  from the SPDR gold ETF but a purchase of 0.30 of a tonne into the Gold Trust. This left their respective holdings at 956.588 tonnes and 224.90 tonnes.

Silver –Silver prices rose 9 cents on Friday confirming that silver prices were not affected by the ‘paper bear raid’. On Monday ahead of New York’s close the silver price held at $18.61.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold and silver prices steady in the euro weak in the dollar  

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Gold Today –Gold closed in New York at $1,346.10 on Tuesday after Monday’s close at $1,339.40.  London opened at $1,341.

    • The $: € was almost unchanged at $1.1262 from $1.1268.
    • The dollar index was almost unchanged at 94.96 from 94.94 Tuesday.
    • The Yen was slightly weaker at 100.76 from Tuesday’s 100.25 against the dollar.
    • The Yuan was weaker at 6.6330 from 6.6270 Tuesday.
  • The Pound Sterling was slightly stronger at $1.3014 up from Tuesday’s $1.2934.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  17

2016  08  16

 SHAU

SHAU

 287.60

287.48

 287.39

288.47
Dollar equivalent @ $1: 6.6330

$1: 6.6270

 $1,348.61

$1,349.27

 $1,347.63

$1,353.92

Again Shanghai was higher than New York’s closing but London decided to walk its own road at the opening, opening lower at $1,341. The reason London pulled gold prices down before the opening in London was the continuing ‘strength of the euro/weakness of the dollar, as you can see in the euro gold prices below.

LBMA price setting:  $1,342.75 after Tuesday 16th August’s $1,349.10.

The gold price in the euro was set at €1,191.65 down €5.32 from Tuesday’s €1,196.97.

Ahead of the opening in New York the gold price stood at $1,343.75 and in the euro at €1,197.42.  

Silver Today –The silver price closed in New York at $19.80 on Tuesday down from $19.81 on Monday.  Ahead of New York’s opening the price was trading at $19.68.

Price Drivers

Yesterday saw more tonnage bought into the U.S. gold ETFs, but this had no effect on gold prices.  Gold had hit $1,354 during the day in both London and New York, but pulled back on little to no selling volume thereafter. It is reported that Stanley Drukenmiller has sold his holdings of SPDR gold ETF Call Options and this after his condemnation of the actions of central banks, justifying holding gold in May, not so long ago. We doubt he would have exited gold after that position statement.  More likely he would have found another way to hold gold. We would have expected him to change to allocated gold in physical form, if he was a serious long-term holder.

After all the SPDR gold ETF shareholders [which is what you buy when you buy into the ETFs] don’t own gold, the company owning SPDR does. And that rather defeats the purpose of owning such holdings. After all if central banks get into trouble one of the most likely sources of gold for them lies in SPDR gold holdings. So, it makes far more sense to own the gold directly out of reach of central banks in an allocated form [just holding it outside the country is insufficient to protect from confiscation] as no doubt Mr. Drukenmiller knows.

The market appears to be holding back ahead of the publication of the Minutes from the last Fed meeting for signs that a rate hike is in prospect. The markets have indicated that there is a 50% chance of a rate hike in December, not September, this year. But productivity in the U.S., a major factor in the decision remains at low levels and current data has been weak. As we said last yesterday, “On several fronts, developed world and emerging world bonds, equity markets and on the currency front, any lifting of U.S. interest rates would catapult these markets down, while the dollar would be catapulted higher. So the weight of responsibility on the U.S. Fed grows by the day. We at Gold Forecaster do not expect such a rise in rates for a long, long time because of this risk.”

Gold ETFs – In New York on Tuesday there were purchases of 1.781 tonnes into the SPDR gold ETF (GLD) and 0.96 of a tonne into the Gold Trust (IAU). This left their respective holdings at 962.228 tonnes and 223.85 tonnes.

Silver –Silver prices stumbled heavily pulling back from $20 to the mid-$19. Should gold rise through $1,360 you will see silver run ahead well over $20.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold and silver back to support as ‘gold season’ approaches

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Gold Today –Gold closed in New York at $1,336.40 on Friday after Thursday’s close at $1,358.10.  London opened at $1,330.

    • The $: € was up at $1.1096 from $1.1135.
    • The dollar index rose to 96.30 from 95.67 Thursday.
    • The Yen was weaker at 102.41 from Thursday’s 101.48 against the dollar.
    • The Yuan was weaker at 6.6616 from 6.6409 Thursday.

 

  • The Pound Sterling was weaker at $1.3042 down from Thursday’s $1.3297.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  8

2016  08  4

 SHAU

SHAU

 286.78

289.78

 286.54

289.08
Dollar equivalent @ $1: 6.6616

$1: 6.6409

 $1,339.00

$1,357.22

 $1,337.88

$1,353.94

The Yuan lurched lower as the dollar strengthened after the excellent Jobs report on Friday. While the PB of C is cautious on moving the Yuan higher, they are finding the dollar strength should not become the Yuan’s strength.

LBMA price setting:  $1,330.00 after Thursday 4th August’s $1,351.15.

The gold price in the euro was set at €1,200.04 down €13.71 from Thursday’s €1,213.75.

Ahead of the opening in New York the gold price stood at $1,333.35 and in the euro at €1,202.84.  

Silver Today –The silver price closed in New York at $19.70 on Friday down from $20.41 on Thursday.  Ahead of New York’s opening the price was trading at $19.72.

Price Drivers

The excellent Jobs report on Friday of a 255,000 increase, well above estimates, has put a rate hike back on the table, some say for September with others saying not until December. We agree with experts like Bill Gross who states that Janet Yellen is very aware of the global picture. After all the U.S. economy is doing well, but is integrated into the global economy to the extent that the global economy can drag the U.S. economy down. The U.S. is the main global economy but is not nearly so strong as to drag the rest of the world up with it. But markets are reading it as having to power to do just that.

Consequently, gold and silver were pulled back to support on Friday. Bearing in mind the big tonnage bought into the SPDR gold ETF at the end of last week, the gold price was pulled back too far. With it now resting on support as the formation of a pennant shape is beginning, we expect bargain hunters to see the price as attractive now.

Has the Jobs report change future prospects of the U.S. and global economy? We feel more data is needed before one can come to such a conclusion. Deflation across the world remains a main concern for all nations, including the U.S. This swings the spotlight onto inflation. Inflation levels remain far too low leaving prospects for gold positive.

We are now only three weeks away from the start of the “Gold Season”!

Gold ETFs – In New York on Thursday/Friday there were purchases of 10.688 of a tonne bought into the SPDR gold ETF (GLD) and 0.75 of a tonne into the Gold Trust (IAU). This left their respective holdings at 980.336 tonnes and 220.40 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen by 403.121 tonnes.

Silver –Silver prices have absorbed the Jobs report like gold and should recover today.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance [Gold Storage geared to avoid its confiscation]

 

Surprise sale from GLD and strong U.S. jobs report knocks gold price back

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Gold Today –Gold closed in New York at $1,359.10 on Thursday after Wednesday’s close at $1,364.00.  In Asia the gold price also fell slightly further as you can see below  

  • The $: € slipped to $1.1075 down from $1.1066.
  • The dollar index was almost unchanged at 96.15 from 96.17 yesterday.
  • The Yen was slightly weaker at 100.55 from at 100.00 against the dollar.
  • The Yuan was slightly weaker at 6.6883 from 6.6820 yesterday.
  • The Pound Sterling fell to $1.2942 down from $1.2968 with more falls expected next week as the B. of E. adds further easing of interest rates!

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  8

2016  07  7

 SHAU

SHAU

 291.58

294.54

 292.05

294.43
Dollar equivalent @ $1: 6.6883

$1: 6.6847

 $1,355.97

$1,370.54

 $1,358.16

$1,369.96

The fall in the Yuan is now on a gently continuous basis. It is being engineered in such a way that it has, to date, not alarmed the markets, which are consumed by the fall in sterling at the moment. For there to be a U.S. outcry on the Yuan’s weakening, as seen in the past, would lack credibility when we see the current turmoil in the markets.

LBMA price setting:  $1,356.10 down from Thursday 7th July’s $1,367.10.

The gold price in the euro was set at €1,225.25 down €7.21 from Thursday’s €1,232.45.

Ahead of the opening in New York the gold price stood at $1,347.80 and in the euro at €1,223.00.  

Silver Today –The silver price closed in New York at $19.67 yesterday down from $20.09 the day before.  Ahead of New York’s opening the price was trading at $19.50.

Price Drivers

Whenever you get that feeling that the way higher is free of obstacles, profit taking usually kicks in or a simple pause or consolidation comes in. That’s what’s happening now. While we had not seen any physical gold sales out of the gold ETFs we follow until now, the appearance of one dampens euphoria. Today, is an expression of that.

But when we look at the Technicals, the picture tells us that the price restraint will not last for long at all. Indeed, today may be seeing all that restraint disappear.

In the U.S. a much stronger than expected jobs report caused some wild fluctuations in the gold price with a knee jerk drive down to the $1,335 level before an almost equally rapid climb back to the $1,350s from whence the fall started.

On the fundamental side, we see Chinese demand starting to recover now. The news out of China that auto sales are up 19% confirms that Chinese middle class numbers are burgeoning, despite an overall slowdown economically. We focus on the middle classes because they drive Chinese demand for physical gold. With an estimated eventual 500 million Chinese middle classes on the way, the demand for gold will completely overwhelm available supplies.

In India markets are becoming euphoric, as the monsoon is now covering the entire country promising a strong rise in gold demand from that country too. With the U.S. demand for physical gold at levels last seen when gold was headed to its peak, the only restraint we see on the gold price is an Indian propensity to hold back when prices are rising strongly. They prefer to buy either on the fall or when a base is established.  But such caution is overwhelmed when it comes to your wife’s demands when a daughter’s wedding comes up [September to May].

In China gold investors buy when the disposable income is there, with the only restraint being how much that money can buy. This diminishes as prices rise, falling by the same percentage basis that gold prices rise.

Gold ETFs – In New York yesterday there was a sale of 4.158 tonnes from the SPDR gold ETF leaving its holdings at 978.286 tonnes. But there were no purchases or sales from or to the Gold Trust leaving its holdings at 213.19 tonnes.

What is a surprise, but shouldn’t be, is the sight of a sale of gold from the SPDR gold ETF. It’s not a small sale either. We are used to holders of the shares of this fund buying to hold for the long term, so the sight of the first sale of any significance for months, causes a surprise to all. But for there to be either a trader of a stale bull in this fund should be considered as a ‘normal’ market event.

Since January 4th this year, the holdings of these two gold ETFs have risen by 394.69 tonnes.

Silver –Silver prices are still pausing, but we expect for only a short while before moving higher, again.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance [Gold Storage geared to avoid its confiscation]

Gold and silver consolidating – may then move higher

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Gold Today –Gold closed in London at $1,364.oo on Wednesday after Tuesday’s New York close at $1,355.60.  In Asia the gold price held at close to its previous close, as you can see below. We continue to see the Yuan trend lower..  

  • The $: € slipped to $1.1066 down from $1.1058.
  • The dollar index was almost unchanged at 96.17 from 96.19 yesterday.
  • The Yen was slightly weaker at 101.00 from at 100.41 against the dollar.
  • The Yuan was slightly stronger at 6.6820 from 6.6900 yesterday.
  • The Pound Sterling fell to $1.2968 down from $1.2987! It fell to $1.2798 at one point this morning.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  7

2016  07  6

 SHAU

SHAU

 294.54

294.80

 294.43

295.00
Dollar equivalent @ $1: 6.6847

$1: 6.6900

 $1,370.54

$1,370.60

 $1,369.96

$1,371.53

Shanghai saw gold prices hold higher than both London and New York, but only slightly [$4]. We cannot read too much into this difference due to the current market volatility in both currency and gold prices.

LBMA price setting:  $1,367.10 down from Wednesday 6th July’s $1,370.00.

The gold price in the euro was set at €1,232.45 down €5.46 from Tuesday’s €1,237.91.

Ahead of the opening in New York the gold price stood at $1,362.35 and in the euro at €1,229.67.  

Silver Today –The silver price closed in London on Monday at $20.09 up from $19.95 the day before.  Ahead of New York’s opening the price was trading at $19.90.

Price Drivers

While global financial markets are slightly calmer today, we see them digesting the worrisome information coming out of the impending crises areas. None of the information has changed but global financial markets need to get a sense of proportion and measure each factor within this context. For instance the Italian Banking crisis can drag out through the summer and could gain the green light for the Italian government to inject funds into them. Then it appears that in the short to medium term, the crisis would evaporate.

To give background to the E.U. systemic problems, we note that France, Italy and Germany have elections coming up. The political problems of Europe could spill over into the financial worlds easily. On top of that, the structure of the E.U. will come under intolerable strain if just one country exits the E.U.

Gold ETFs – In New York yesterday there was a tiny sale of 0.277 of a tonne from the SPDR gold ETF leaving its holdings at 982.444 tonnes. But there was a purchase of 1.76 of a tonne into the Gold Trust taking its holdings up to 213.19 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen by 398.848 tonnes.

Silver –Silver prices are pausing, but we expect for only a short while before moving higher, again.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance [Gold Storage geared to avoid its confiscation]

Large GLD purchase strengthens gold price

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Gold Today –Gold closed in New York at $1,269.30 on Thursday, falling slightly in London at the opening on Friday morning.

The $: € moved from $1.1299 to $1.1346 overnight. The dollar index is standing at 94.20 up from 93.89.

China remains on holiday

LBMA price setting:  $1,266.60 up from Thursday 9th June’s $1,258.35.

While the dollar is not rising significantly, the E.C.B. and many other central bankers want to see it rise. The Fed doesn’t want to see this and behind the scenes continues to discourage any rise. But the forex markets are not seeing any acceptance of this. The central banks keep enacting policies to weaken their currencies to gain trade competitiveness and the U.S. appears constant in its actions to see the dollar keep current levels or weaken it. As such, there is a currency war and it is unlikely to go away. This makes for fragile foreign exchanges.

The Fed expressed concern that the ‘Brexit’ referendum could affect the Fed’s perception of future rate rises. How? If the vote is for an exit, capital will try to flow out [Pounds 65 billion and more has already left the island’s shore and this number should rise ahead of the vote] substantially.

The question is, “Will the ‘Dollar Premium’ be revisited from its 1971 stay? This will disrupt foreign exchanges far more than it did in 1971.

If the vote is to stay, forex volatility will soar as funds flow back to Britain quickly. The Fed is likely to wait for forex markets to settle before it takes any action.

The gold price in the euro was set at €1,120.98 up from yesterday’s €1,108.19

Ahead of New York’s opening, the gold price was trading at $1,268.40 and in the euro at €1,122.33.

Silver Today –The silver price closed in New York at $17.30, up from Thursday’s $17.05 a rise of 25 cents. Ahead of New York’s opening the silver price stood at $17.29.

Price Drivers

As we know China wants to use the Yuan in its international trade and get away from the U.S. dollar as much as it can. The international trade by China is seeing the use of the Yuan climb steadily, rising 5% over the last year. We expect this number to rise at a much accelerated pace in the future.

It makes little sense to invoice in the dollar then convert into Yuan when one can pay and be paid in Yuan immediately. The costs of the transactions drop significantly, as do the dollar exchange rate risks. More than that, as the Yuan exchange rate falls [as appears to be the policy for the foreseeable future] exporters find such trade more profitable. Importers too would prefer to pay in Yuan passing the risks to their suppliers. But the main benefit of using the Yuan in such trade is to move away from any influence the U.S. may have on China’s business.

This undermines the dollar still further, as the global reserve currency. Every increase in the use of the Yuan is a decrease in the use of the dollar and consequently justifies holding the Yuan in nation’s forex reserves and lessening the amount of dollars held by other nations. Over time this will benefit gold and silver prices as gold steps in where disruptions surface in such trade.

Indeed, the prospects of oil prices holding at current levels, O.P.E.C. moving to a point where they accept currencies other than the dollar for their oil and a rising use of the Yuan points to a considerable smaller usage of the dollar in global trade than has been the case until now.

Gold ETFs – On Thursday the holdings of the SPDR & gold Trust rose as 6.238 tonnes was purchased into the gold ETF, leaving its holdings at 887.383. No purchases or sales were made in the Gold Trust leaving its holding at 196.90 tonnes.

This purchase, in one day, was sufficient to move the gold price in the U.S. and this price is holding in London ahead of New York’s opening.

Silver –After the rise in the silver price of the last few days, we expect a pause in the price as it consolidates.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

ECB stimulus: Gold and silver up, Euro still stays strong

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Gold Today –Gold closed in New York at $1,265.50 on Wednesday, falling in London at the opening on Thursday morning.

The $: € moved from $1.1346 to $1.1340 overnight. The dollar index is standing at 93.89 up from 93.71.

LBMA price setting:  $1,258.35 up from Wednesday 8th June’ $1,252.40.

With the European Central Bank’s Mario Draghi beginning his next phase of monetary stimulus the concept of ‘helicopter money’ comes to fruition. A fear that, when one has deflation [and actions to stimulate inflation that fail point to heavy deflation] and such a stimulative policy going on, deflation accelerates because of the excessive supply of new money. A look at the Weimar Republic’s hyperinflation showed how the two joined forces to accelerate inflation. While we don’t think that today’s action will lead to hyperinflation, such policies do eventually result in considerable economic damage.  We believe that the road to that result has begun. Gold and silver prices are the natural beneficiaries as currency values decline heavily.

But the U.S. will act to prevent a strong dollar from resulting as this will hurt the recovery there. The weapons to keep the dollar strong against the euro will prove insufficient eventually, if ‘helicopter money’ issuance grows much more.

The gold price in the euro was set at €1,108.19 up from yesterday’s €1,101.69

Ahead of New York’s opening, the gold price was trading at $1,260.30 and in the euro at €1,113.78.

Silver Today –The silver price closed in New York at $17.05, up from Wednesday’s $16.40 a rise of 65 cents. Ahead of New York’s opening the silver price stood at $16.99.

Price Drivers

Mario Draghi made it abundantly clear that Monetary policy can do only so much and that structural reform must be undertaken to make monetary stimuli work well. The decision to buy Corporate Bonds, we feel, is going too far, as this will bring such yields down to zero and likely below into negative territory.

The evidence of QE both in Japan and the Eurozone to date has been disappointing in terms of delivering economic growth. There is a good case to say that at least it has staved off deflation, which will grow again, if stimulation is halted. Hence, such current stimulus is only a temporary solution, at best.

It is unlikely that there will be a synthesis of structural reform policies within the E.U. in the near or foreseeable future due to the structure of the E.U.  The bubbles that are being formed in the bond markets will burst, the moment interest rates are hiked.

Gold ETFs – On Wednesday the holdings of the SPDR & gold Trust stood still, once again, leaving the holdings of the SPDR at 881.145 and those of the Gold Trust at 196.90 tonnes.  There is media talk that gold is being bought. We can accept that this is so in the E.U. but U.S. demand is quiet as they analyse the way forward for the U.S. The gold price is rising

Silver –The silver price is going full pelt upwards. When gold pulls back silver pauses, when gold rises slightly silver will sprint ahead.

 

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

 

Gold and silver boosted by weak U.S. jobs report

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Gold Today –Gold closed in New York at $1,243.90 on Friday, and stood at $1,240 in Shanghai on Monday morning, but then moved to $1.243 in London’s Morning.

The $: € moved from $1.1240 to $1.1353 over the weekend.

LBMA price setting:  $1,240.55 up from Friday 31st May’s $1,221.25.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  06  06

2016  05  31

 SHAU

SHAU

 262.48

257.60

 262.51

257.26
Dollar equivalent @ $1: 6.5671

$1: 6.5901

 $1,243.17

$1,215.80

 $1,243.32

$1,214.20

Last week’s rise in the gold price was reflected in Shanghai today, clear evidence that the Yuan gold Fixes are following U.S. and London prices, at the moment.

We are watching closely to see if Janet Yellen’s comments today will also be reflected in Shanghai gold prices following the U.S. prices. We continue to see the slight but steady fall in the Yuan against the U.S. dollar but last Friday’s fall of the dollar caught Shanghai by surprise. We do expect the rise that followed the dollar’s fall to fade away again as the Yuan continues to fall.

The gold price in the euro was set at €1,092.714 down from a week last Friday’s €1,086.52.

Ahead of New York’s opening, the gold price was trading at $1,244.55 and in the euro at €1,096.23.  

Silver Today –The silver price closed in New York on a week last Friday at $15.99, up from Thursday’s $16.32 a fall of three cents. The silver price jumped to $16.40 on Friday a level it began at this week.

Ahead of New York’s opening the silver price stood at $16.47.

Price Drivers

We were travelling for the last week, which allowed us to gain a clearer perspective on the gold and silver prices. In the last week these were lackluster though the week until the jobs report came out. That galvanized the market which jumped around 3%. The rise came because of the impact on the $:€ exchange rate which tumbled to today’s level of $1.1353.

Today sees Janet Yellen again comment on the U.S. economy and we expect her to try to calm markets after the poor jobs report on Friday. It is now two months of relatively poor numbers on this front and the perception is that the U.S. economy is cooling. The global economy certainly is, as evidenced by the poor German factory orders index, which fell by 2% last month. The fall covered a wide range of products.

After factoring in a rate rise, markets reacted brutally to the disappointment of not seeing one. The dollar tumbled and gold and silver jumped over 2%. This emphasized that the gold and silver markets, in line with other major markets, are reacting to the moves of the dollar. We were among the first, if not the first to call the end to the dollar bull market. Since we made that call the dollar index has not approached the 100 level and is now likely to weaken still further, particularly against the euro.

Before we went travelling last week we had included a comment by Mr Abe of Japan who came out openly and warned of a potential “Lehman” moment in the global economy, if nations do not do something to stimulate growth. We expect his comment will be taken more seriously as the days roll by. Certainly if we continue to see evidence of a slowing global economy the ratio of debt to GDP will grow, placing most countries in line to see a crisis of one sort or another.  

The jump in gold and silver prices was due to the falling dollar, but we expect physical demand to follow through over time. Over last week this happened, but we do expect to see more rises this week, in the U.S.A.

Gold ETFs – On Friday the 31st May the holdings of the SPDR & gold Trust were at 868.662 and 198.89 tonnes, respectively.  On Friday 3rd June they stood at 881.436, a rise of 12.774 tonnes over the week. In the Gold Trust we saw a fall of 1.99 tonnes, leaving the Trust’s holdings at 196.90 tonnes.

Silver –The silver price has not moved much since Friday’s $16.39 but we expect the silver market to need to digest the Friday’s job numbers too. More reactions should be seen in the week, if Janet Yellen fails to convince the market that all is well in the U.S. economy.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Sales from GLD for first time in weeks rocks prices

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Gold Today –Gold closed in New York at $1,228.00 on Tuesday, down from Monday’s $1,249.60, a fall of $21.60. On Wednesday morning in Asia it fell to $1,224 while the U.S. dollar was stronger against the euro.

LBMA price setting:  $1,220.75 down from Monday’s $1,242.65.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  05  25

2016  05  24

 SHAU

SHAU

 259.64

263.32

 258.68

262.98
Dollar equivalent @ $1: 6.5640

+$1: 6.5600

 $1,230.30

$1,248.50

 $1,225.75

$1,246.89

The movements in the gold price were a reflection of the stronger dollar against the euro, but against other currencies the dollar was weakening.  While we may well see more falls in the gold price we are getting very close to support.

We are seeing a strong sterling at $1.47 and yet a weak euro at $1.1143 and a steady Dollar Index at 95.55 slightly up from yesterday’s 95.47. With the failure of the G-7’s intention to not use exchange rates for international trade for competitive reasons, it seems that we are moving towards all nations looking out for their own interests, exclusively on the currency front.

The signal that this was on the cards really came when the U.S. dollar index hit 100 at its peak and then failed to get there again. As we have said many times, neither the Fed nor the U.S. Treasury wants a strong dollar and are taking action to ensure it does not happen.

At the same time, due to the gold market’s propensity to move gold the opposite way to the dollar, we saw a floor put under the gold price. Since then the number of U.S. institutional investors in gold and silver has jumped dramatically. The volume of their gold purchases through the shares of gold ETFs has soared, but their recent impact on the gold price has been close to zero.

When gold prices, and by extension, silver prices fail to respond to such high demand it allows buying to stay at massive levels, which in turn will, in time, lead to a shortage of supply, which cannot be sustained at low prices. Prices have to react eventually.

The gold price in the euro was set at €1,096.12 down from Tuesday’s €1,112.39.

Ahead of New York’s opening, the gold price was trading at $1,223.65 and in the euro at €1,098.13.  

Silver Today –The silver price closed in New York on Tuesday at $16.23, lower than Monday’s $16.40 a fall of eleven cents. Nevertheless it remains well over $15.00 and looks as though it will hold there, while waiting for gold to turn, before it sprints again.

Ahead of New York’s opening the silver price stood at $16.29.

Price Drivers

Yesterday saw the gold price knocked down once again, but this time from gold ETF selling, as well as exchange rate movements.  There is no doubt that the gold price bears little relation to demand and supply factors.

The seasonal factors in the gold market are in play, for sure. In India we have moved out of the ‘marriage season’ into the period where the main gold buyers turn to farming ahead of the Monsoon. This will last until the crops are sold and the festive season begins in September. This seasonal influence has been tempered by urbanization in India, which continues at a fast pace.

We are moving towards the European holiday season too. August is the big holiday period where businesses in the gold industry are at their low point ahead of the end of the holiday season in September.

This period in the year is called the “Doldrums” in the gold world.

The June to September period is the time when the main influences on the gold price are macro-economic and currency factors. Don’t necessarily think that this means that gold prices will go lower. The point at which gold hit its peak, in this decade, was during this time of the year.

What is also for sure is that currency factors are disturbing, in terms of the structure of the global currency market. This implies a large potential for gold price volatility. We suggest that gold market followers look at gold only in their own currencies and that investors take positions in weakening currencies alongside their gold positions.

Gold ETFs – Tuesday, for the first time in weeks, saw selling from the SPDR gold ETF (GLD). We saw sales of 3.592 tonnes from the SPDR gold ETF but nothing into the Gold Trust (IAU). This leaves their holdings at 868.662 and 199.43 tonnes in the SPDR & Gold Trust, respectively.

While, large volumes of buying are having no impact, yesterday saw selling having an impact on gold prices, which, while they were also moving against exchange rates, did fall on this selling.

Silver –The silver price may try to go lower still but has a resilience to it that makes downward falls difficult to hold at lower levels.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold price weakens despite huge GLD purchases. Credibility gap opening.

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Gold Today –Gold closed in New York at $1,252.50 on Friday, up from Thursday’s $1,254.60, a fall of $2.10. On Monday morning in Asia it held at $1,252.50 while the U.S. dollar was relatively unchanged against the euro.

LBMA price setting:  $1,250.40 down from Friday’s $1,256.50.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  05  23

2016  04  20

 SHAU

SHAU

 264.36

264.82

 263.96

264.46
Dollar equivalent @ $1: 6.5610

+$1: 6.5442

 $1,253.24

$1,258.64

 $1,251.34

$1,256.93

We are seeing a drop in the volatility of the gold price in Yuan. If we look at the changes in the U.S. dollar exchange rate the swings in the dollar gold price are explained. Exchange rates are morphing into gold price changes, but they are in reality exchange rate changes.

Neither London or New York are moving away from the Yuan gold price, once you take out the swings in exchange rates. But how do these prices remain steady in the face of such strong buying in New York [This is where the SPDR  shares are bought, but the physical buying for the fund by HSBC happens in London.]

But London prices were weaker this morning implying that heavy physical selling over and above normal selling is taking place there to hold prices down.  Something has to give if such buying continues, for even the Chinese Bank ICBC Standard can’t export gold from China to compensate for U.S. buying.

What can happen is that Central Banks and buyers of gold for Asia are standing back momentarily and not competing with western demand, returning only on the days when western demand goes quiet. This is certainly how Shanghai prices can lead the way.

The dollar index is up slightly at 95.33 down from yesterday’s 95.30. The dollar is also stronger against the euro at $1.1209, than Thursday’s $1.1219.

The gold price in the euro was set at €1,115.53 down from Thursday’s €1,118.42.

Ahead of New York’s opening, the gold price was trading at $1,248.85 and in the euro at €1,114.05.  

Silver Today –The silver price closed in New York on Thursday at $16.51, higher than Thursday’s $16.48 a rise of three cents. Ahead of New York’s opening the silver price stood at $16.33.    

Price Drivers

The G-7 meeting failed to produce a statement on currency intervention, leading to the conclusion that the previous statement from the G-7 on this subject has been silently discarded. The warning from the U.S. against a Japanese intervention in the Yen exchange rate emphasizes that there is friction on this subject between the U.S. and Japan. The U.S. Treasury and Fed do not want to see an appreciating dollar, a policy that was reinforced by such a statement.

This implies, once again, not just the end to a dollar bull market, but a preference for a weaker dollar.

Exchange rate friction is the first signal of a move towards protectionism. The imposition of huge tariff increases on steel into the U.S. reinforced this thought. We expect this to be a growing trend leading to division amongst trade blocs.

Gold ETFs – Friday saw purchases of 8.913 tonnes into the SPDR gold ETF but nothing into the Gold Trust. This leaves their holdings at 869.256 and 199.43 tonnes in the SPDR & Gold Trust, respectively.  

Friday’s purchases were huge, clearly by large institutions. Nevertheless, the gold price fall was simply halted, while the volume purchased should have been sufficient to lift the gold price strongly. Many people are asking why, if such large volumes of buying are having no impact, are there no reports of selling. They feel that the separation of COMEX prices from the realities of the physical markets in gold is destroying the credibility of the gold price.

Silver –The silver price may try to go lower still.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold and silver on the back foot for now

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Gold Today –Gold closed in New York at $1,257.30 on Wednesday, from Tuesday’s $1,279.00, a fall of $21.70. On Thursday morning in Asia it fell to $1,254.00, after the minutes of the Fed were published yesterday and the dollar rebounded.

LBMA price setting:  $1,253.75 down from Wednesday’s $1,270.90.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  05  19

2016  04  18

 SHAU

SHAU

 265.15

268.71

 264.47

268.15
Dollar equivalent @ $1: 6.5646

+$1: 6.5540

 $1,256.30

$1,275.22

 $1,253.08

$1,272.57

None of the main global gold markets dominated the others as they all moved with the dollar. As you can see from the above, the fall in the Yuan was far less than that of New York or London as the Yuan continued to show weakness, softening the fall in the Yuan. The fall was most clearly seen in the dollar which has risen strongly in the last two days.

The trading pattern of gold is reflecting exchange rates and not so much the balance of supply and demand for gold. This is what gold should do, but with the influence of dealers moving prices down in the expectation of sellers, the price does exaggerate its moves, as a measure of value, to some extent.

The dollar index is almost up strongly at 95.36, up from yesterday’s 94.83. The dollar is also stronger against the euro at $1.1194, stronger than Wednesday’s $1.1275.

The gold price in the euro was set at €1,118.42 down from Wednesday’s €1,126.47.

Ahead of New York’s opening, the gold price was trading at $1,250.00 and in the euro at €1,116.67, and then slipped a further few dollars after the open.

Silver Today –The silver price closed in New York on Wednesday at $16.84 lower than Tuesday’s $17.23 a fall of 39 cents of 2.26%. Ahead of New York’s opening the silver price stood at $16.50. But then slipped further in percentage terms bringing the gold:silver ratio up to over 76 for the first time since mid-April.

Price Drivers

The publication of the Fed minutes yesterday galvanized the markets, including precious metal markets. As with all patterns that we saw yesterday, where gold and silver prices come into balance, any news can have a disproportionate impact, either way. This happened today with gold prices dropping $25 in the strong move we were forecasting.

It was the dollar that precipitated the move as it bounced to $1.1225 against the euro. As you can see above it was seen solidly in the dollar index. Why? The Fed minutes mentioned the “stabilization” of the dollar, as part of the factors that points to a potential rate hike in July.

The Fed is fully aware that the publication of the minutes would have a market impact as it has done. We see this as part of a process of ‘testing the water’ to see what would happen with a rate hike.

For instance, what does “dollar stabilization mean? To us it means that the dollar rise has been contained and will not threaten the U.S. economy because it will not rise further. The market reaction was to make it rise but not to anywhere near its peaks. Today and for a while, the dollar may continue to bounce and the Fed will be watching this carefully.

They were also concerned because of, “Unanticipated developments associated with China’s management of its exchange rate.” As you can see above the Yuan is continuously falling in small steps, something they need to do to counter the fall in the euro and Yen in particular.

They do not want a strong dollar and this is important enough to postpone a rate hike, if it is seen.

Meanwhile gold is on the back foot for now. Who are the main beneficiaries of this fall? It’s the east, China mainly, as the west slows its buying and makes available more gold for the eastern interests.

Gold ETFs – Wednesday saw no purchases or sales into or from the SPDR gold ETF or the Gold Trust. This leaves their holdings at 855.886 and 198.38 tonnes in the SPDR & Gold Trust, respectively.  

Silver –The Silver price pulled back sharply and needs more time to find its bottom still.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Enormous impact of ICBC’s Barclays London gold vault purchase

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Gold Today –Gold closed in New York at $1,274.40 on Monday up from Friday’s $1,273.70. On Tuesday morning in Asia it held at $1,275, as most exchange rates were close to yesterday’s levels.

LBMA price setting:  $1,270.10 down from Friday’s $1,281.00.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  05  17

2016  04  16

 SHAU

SHAU

 268.64

268.68

 267.85

269.39
Dollar equivalent @ $1: 6.5475

+$1: 6.5492

 $1,276.16

$1,276.02

 $1,272.40

$1,279.39

Yesterday and today saw global gold markets moving closely together. A glance across the currency world as well as the gold world shows a tightening of the trading range of currencies and the continued consolidation of gold. We are seeing a sideways movement in prices ahead of a very strong move, soon.

The dollar index is almost unchanged at 94.54 barely changed from yesterday’s 94.53. The dollar is also slightly stronger against the euro at $1.1323 again barely changed from Monday’s $1.1325.

The gold price in the euro was set at €1,121.70 down from Monday’s €1,131.13.

Ahead of New York’s opening, the gold price was trading at $1,273.05 and in the euro at €1,124.70.  

Silver Today –The silver price closed in New York on Monday at $17.14 higher than Friday’s $17.10. Ahead of New York’s opening the silver price stood at $17.09.

Price Drivers

In what would seem to be the most remarkable piece of news to hit the gold market since the start of the Shanghai Gold Fix: After buying the Deutsche Bank lease to their 1,500 tonne gold vault China’s ICBC has now bought the Barclays gold vault in London. We can’t properly cover the full impact of this news in this daily report, but do so in our newsletters. But think about it. The 1,500 tonne capacity Deutsche Bank vault was not enough. The Barclays vault has a capacity of 2,000 tonnes. The total 3,500 tonnes capacity represented by the two vaults is around the size of Italy’s, Germany’s, France’s gold reserves. It is just under half of the gold reserves of the U.S.A., of over 8,000 tonnes, which accounts for over 70% of the U.S. foreign exchange and gold reserves. It’s massive in the context of the gold world. We have written on this before in our newsletters but will now add a clear picture of what we see lying ahead, in the next issues.

A question we would like the answer to is, “What volume of client gold are they now managing and what plans do they have for their own holdings in London?” The existing client’s gold stored in the vaults will not be affected and we doubt the service will. But they are in a position to be the dealer for these clients and will act accordingly. This confirms their market-making role. But it also describes their increasing control over the London gold market.

What is for sure is that any investor in gold and silver badly needs to understand the Shanghai Gold Exchange and Chinese gold markets if they want to understand the gold market.

It is no longer about COMEX’ views on the U.S. economic scene!

Gold ETFs – Monday saw purchases of no purchases or sales of gold bought into the SPDR gold ETF or the Gold Trust. This leaves their holdings at 851.132 and 198.38 tonnes in the SPDR & Gold Trust, respectively.  

With the absence of more gold purchases into the gold ETFs the market pulled prices back. Perhaps dealers were marking prices higher in anticipation of more buying, but, because it didn’t come, prices are tight and prepared for sellers or buyers.

As an aside, HSBC has a global footprint, but was originally the Hong Kong and Shanghai Banking Corporation. Its restructuring plans and action to date is to have a more Asian focus. HSBC is the custodian of the SPDR gold ETF holding its gold. The influence of China in the gold world is becoming dominant.

Silver –The Silver price continues to hold over $17.00 waiting for gold to move.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold Demand Just Had Its Strongest-Ever First Quarter

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By Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors

It makes a great deal of sense to own gold. Billionaire hedge fund manager, Paul Singer

This year’s first quarter is one for the history books. Not only did gold appreciate at its fastest pace in 30 years, but demand for the yellow metal was the strongest it’s ever been on record.

Let me repeat that: the strongest it has ever been.

Demand surged 21 percent from the same period a year ago, according to the latest World Gold Council (WGC) report. Most of this demand was driven by investment, with net inflows into gold ETFs reaching 363.7 tonnes, a seven-year high.


click to enlarge

Meanwhile, demand for bars and coins shot up 55 percent year-over-year, from 11.8 tonnes to 18.3 tonnes. Appetite for American Eagle coins jumped 68 percent.

Bad News Is Good News for Investors Who Have Diversified with Gold

Uncertainty over the world economy, not to mention central bank policy, continues to act as a major catalyst for demand, heating up the Fear Trade. With many countries currently locked in a global race to see who can devalue their currencies the fastest, investors are seeking better, more reliable stores of value, and gold is happy to oblige.

former libertarian vice presedential nominee wayne allyn root whose latest book is the power of relenetless

This was the message shared by Wayne Allyn Root, the “Capitalist Evangelist,” whose presentation I had the pleasure to see at the MoneyShow last week in Las Vegas. The week before last I said I would be speaking at the event, which was founded in 1981 by my dear friend Kim Githler, and I had no idea how popular Root really was. A businessman, politician and author, Root was the vice presidential candidate for the Libertarian party in 2008 and this year endorsed Donald Trump for president. At the MoneyShow, he packed the room with 1,400 people. Whole crowds turned out to hear him sermonize on entrepreneurship, individual rights and the importance of owning tangible assets such as precious metals and rare coins as a hedge against inflation and today’s uncertain financial markets. Owning gold, he said, is no longer a luxury but a necessity.

One of Root’s most interesting data points is just how much purchasing power the dollar has lost since 1913, the year the Federal Reserve was created: A million dollars then is worth about $25,000 today. Gold, on the other hand, has not only held its value but appreciated. One million dollars in gold in 1913 would now be worth more than $60 million.

Get educated on diversifying into gold!

Other huge names that presented at the MoneyShow included Gary Shilling, Art Laffer and Craig Johnson, a Piper Jaffray CFA and President of the Market Technicians Association. I had an enjoyable dinner with Craig, who called the current rally a “FOMO” rally. (I only recently learned, from my niece, that FOMO stands for “fear of missing out” and is widely used on social media.)

Another illuminating presentation I’d like to mention was conducted by IBD’s Amy Smith, who convincingly spoke on how the 2016 elections might change the stock market. The most actionable takeaway was that most blue chip stocks have typically done well no matter who occupies the White House, confirming my own attitude that, at the end of the day, it’s the policies that matter, not the party. The most compelling example she used was Netflix, whose stock has been a steady climber throughout both Bush 43 and Obama’s presidencies.

A reasonable, well-positioned portfolio, then, consists of strong, entrepreneurial names; gold (I always recommend a 10 percent weighting: 5 percent in gold stocks, 5 percent in physical bullion); and short-term, tax-free municipal bonds, which have historically done well even in times of economic turmoil, such as the tech bubble and the financial crisis.

Follow the Smart Money

The smart money is indeed flowing into gold right now. Earlier this month I shared with you the fact that hedge fund manager Stanley Drukenmiller, notable for having one of the best money management track records in history, cited gold as being his family office fund’s number one allocation. Druckenmiller is joined by billionaire Paul Singer, whose hedge fund oversees $28 billion. In his letter to clients last month, Singer wrote: “It makes a great deal of sense to own gold… Investors have increasingly started processing the fact that the world’s central bankers are completely focused on debasing their currencies.”

About a third of global debt right now comes with a negative yield.

Elsewhere in the letter, Singer suggested that gold’s phenomenal first quarter, in which the metal rose 16.5 percent, is “just the beginning.” Further loss of confidence in central bankers’ ability to jumpstart growth could take the metal even higher.

This is the assessment of Paradigm Capital, who wrote in a recent report that “a standard gold price rally, a percentage exceeded or achieved in four of five major upcycles since 1976, would take us to around $1,800 ounces over the next three to four years.”

Register Today for Our Next Gold Webcast!

I invite all of you to register today for our next webcast, titled “All Eyes on Gold: What’s Attracting Investors to the Yellow Metal.” I’ll be discussing the chief factors driving gold demand right now, how historical and seasonal patterns affect gold and why the metal can be an integral part of your portfolio. The webcast will be held on June 8, starting at 4:15 PM Eastern time (3:15 PM Central time).

This is an exciting time for gold. I hope you’ll join me!

Falling greenback boosts dollar gold and silver prices!  

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Gold Today –Gold closed in New York at $1,247.30 up from $1,239.40 on Wednesday. On Thursday morning in Asia it rose to $1,258, after the dollar weakened and before the LBMA price setting.

LBMA price setting:  $1,256.60 up from Wednesday’s $1,244.75.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  04  28

2016  04  27

 SHAU

SHAU

 260.04

260.06

 261.88

259.90
Dollar equivalent @ $1: 6.4798

$1: 6.5060

 $1,248.21

$1,243.28

 $1,257.04

$1,242.59

The Shanghai Gold Fixings are now showing just how currency moves are affecting the gold price. Overnight the dollar has weakened in a host of currencies including the Yuan. Please note that this rise in the gold price is not Yuan strength but dollar weakening. As a result, while there were only slight moves inside China in the Yuan gold Price, in dollar terms the moves were compounded by the weak dollar.

International investors should note that the same is true in their own currencies. Outside of the U.S. it is not the dollar price that counts, but the gold price in their own currencies that counts!

We see the dollar’s bull market is over and this will be reflected in the dollar price of gold constantly. Gold always measures the value of currencies not the other way around!

The dollar index is lower today, at 93.88 down from Wednesday’s 94.39. The dollar is weaker against the euro at $1.1345 from Wednesday’s $1.1314.

The gold price in the euro was set at €1,100.19 down from Wednesday’s €1,100.19.

Ahead of New York’s opening, the gold price was trading at $1,255.50 and in the euro at €1,106.70.  

Silver Today –The silver price closed in New York higher at S17.28 on Wednesday up from Tuesday’s $17.21. Ahead of New York’s opening the silver price stood at $17.32.

Price Drivers

The Fed mentioned the improvement in labor numbers, despite a slowing in economic activity. This appears contradictory or does it indicate that labor number improvements are peaking in the U.S.? The Fed is data led, so we cannot draw any definitive conclusions from the statement.

The Fed may not have highlighted international vulnerabilities, but we would ascribe that more to the dollar being under control and either moving sideways or weakening, from now on. Nevertheless, it remains a prime concern.

Underpinning the global economy is not only artificial intelligence’s reduction of jobs globally at an accelerating pace, but the continuous shift of wealth and manufacturing to the east. This is barely mentioned in the media and is unlikely to slow, so long as wage and cost disparities between east and west continue.   

The undermining of dollar hegemony is adding to uncertainties. The crucial reason the dollar gained its position was that all had to pay for oil with U.S. dollars. Now it is reported that not only will China have a Yuan oil contract in Shanghai, but Russia is finalizing a Ruble oil market. The biggest supplier and the future biggest user of oil, will impact the use of the dollar.

The process of less use of the dollar may well not be a short term happening, but over time it will structurally change the monetary world and gold and silver will benefit considerably.

Gold ETFs – Yesterday saw no sales or purchases of gold to or from the SPDR gold ETF and the Gold Trust. This leaves their holdings at 802.654 and 187.56 tonnes in the SPDR & Gold Trust respectively.  

Silver – The silver price will continue to show robust behavior but following gold directionally. It promises to outperform gold in the future.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

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Silver chomping at the bit as currency world in turmoil

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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

GoldForecaster.com | SilverForecaster.com | 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