Gold and silver in a different world today

Julian Phillips’ latest commentary on the gold and silver markets and geopolitical events in Europe.

The events in Greece are still being digested as the new party now has sufficient a majority to carry out its new role.  The I.M.F. has renewed its commitment to assist Greece, but with its usual terms, so the new government is likely to balk at such offers. With Greece’s debt now so large that country just cannot repay it, there seems little choice for creditors but to give this debt a major haircut. But Germany has renewed its intransigent position not to agree to such measures. The next week/month will be unstable as the political/financial battle rages.

With western democracy based on politics being separate from finances, such a battle goes to the heart of the Eurozone and not only that but to the structures operating in the western world. Which is more important, finance or politics? We will see which in the next few months.

A question that has also not yet been asked is, “Will China offer Greece financial assistance?”

With Russian debt no longer of a quality for central banks or others, after the credit downgrading to junk status by S&P, the insurgency in Ukraine, now a civil war, with Russia intervening, together with gas supplies being cut from Russia and the potential for major ruptures in the Eurozone, Russia is moving to a critical point, enhancing the growing divisions between Asia and the developed world.  The degrading of the situation in Russia can also ensure a recession in Europe, on top of its current difficulties. This is a very different world to 2014 already.

Market and ETF News

New York closed yesterday at $1,280.40 down $13.30. In Asia gold held that level. The Fix this mornin saw the gold price set at $1,279.00 down $3.75 and in the euro, at €1,132.961 down €8.58, while the euro was stronger at $1.1289. Ahead of New York’s opening gold was trading in London uncertainly, at $1,281.00 and in the euro at €1,135.69.

The silver price closed at $17.89 down 41 cents. Ahead of New York’s opening it was trading uncertainly at $17.90. It seems to want to fall quickly while the gold price is below $1,300.

There were purchases of 1.792 tonnes into the SPDR gold ETF as well as a purchase of 0.30 of a tonne into the Gold Trust on Monday. The holdings of the SPDR gold ETF are at 743.438 and at 167.84 tonnes in the Gold Trust. There was physical demand in the U.S. so the fall in the gold price is not on physical sales. Usually, when this happens, speculators and traders cannot hold the gold price down.

Julian D.W. Phillips for the Gold & Silver Forecasters and


Gold’s reaction to Greek election and note on continuing conflict in Ukraine

I’ve posted a longish commentary on  looking at gold’s reaction to the Syriza win in the Greek elections.  It rose initially and then fell back more than $20 at one time.  Click on Gold turbulent on Greek aftermath to read the full article.  It comments that the Greek election result fallout will likely create significant waves in the gold market looking ahead – while there’s always the Ukraine to spice things up further….

Happy reading – Lawrie Williams

Euro Gold Surges on ECB 1.1 Trillion ‘Bazooka’ and Greek Election Sunday

Posting from Mark O’Byrne’s website looking at the immediate aftermath of the ECB QE decision and a look at the potential for further Eurozone stability of a Syriza victory in the Greek elections.

Stocks, bonds and precious metals surged yesterday as markets cheered the latest wave of money printing on a grand scale.

Gold surged 3 per cent in euro terms (see chart below) after Mario Draghi in the ECB announced a massive quantitative easing or QE programme of over EUR 1 trillion from March 2015 to September 2016.

Listen here

The QE programme is even larger than expected at €60 billion every month rather than the €50 billion that had been expected. The euro fell another 0.9 per cent against the dollar to an 11-year low and has shed another 1% versus the Swiss franc. Gold was nearly 1% higher in dollar and sterling terms also.

Gold is headed for the third week of gains and is 4.2% higher this week and has jumped 9.3 percent this year in dollars and 17% in euro terms as stagnating economies again lead central banks to the default position of ultra loose, zero percent interest rate policies and debt monetisation – the creation of currency to buy government bonds.

Stock and bond markets, increasingly dependent on central bank largesse, ’stimulus’ and support also saw gains. European shares have jumped 1.7%, gaining ground for the seventh consecutive session as traders, banks and many market participants celebrate the ECB’s decision to buy government bonds, and after a strong session for Asian stocks overnight.

Further financial repression mean that borrowing rates for indebted and in some cases insolvent euro zone countries hit new record lows. As we saw with theSwiss franc recently, financial repression and price manipulations can only work for so long prior to being overwhelmed by market forces and the laws of supply and demand.

Gold in Euros - 30 Days (Thomson Reuters)

Silver, the poor man’s gold rose 1.4%. Among other commodities, oil prices jumped, with benchmark Brent crude futures climbing 1.3%, as news of the death of Saudi Arabia’s King Abdullah added to uncertainty in energy markets already facing some of the biggest shifts in decades.

Ultra Loose Monetary Policies and Currency Wars
The ECB moves confirms that ultra loose monetary policies are set to continue globally and currency wars and beggar thy neighbour currency devaluations are set to continue.

As ever context is important. Japan has doubled down and is now printing yen with reckless abandon in what appears to be a last ditch desperate attempt to prevent Japan falling into a Depression.

Canada, Denmark and India have all cut interest rates in recent weeks – showing that ultra loose monetary policies and currency wars are here to stay. Also, the fragile narrative of a U.S. economic recovery and rising interest rates by the Federal Reserve is now being questioned and interest rates look set to remain near zero percent in the coming months in the U.S.

Draghi’s “big bazooka” or weapon of mass delusion was bigger than expected, promising €60 billion every month, although he did not have it all his way and in the small print it is clear that Germany played a large role in crafting the final details.

Angela Merkel had made Germany’s opposition to the ECB underwriting the purchases of bonds of weaker countries well known. The Netherlands, Austria and Finland were supportive of Germany’s stance.

So, it is no surprise that beyond the headlines – which celebrate the fact that the ECB intends to expand the money supply from €2 trillion to €3.1 trillion over 18 months – the ECB will only be directly responsible for 20% of bond purchases.

“While Mr Draghi succeeded in pushing a bigger than expected purchasing package, he failed in ensuring that the risks of asset purchases would be divided equally among eurozone countries with only 20 percent of the QE subject to a regime of risk sharing,” according to the Daily Telegraph.

The balance will be generated by National Central Banks (NCBs). If they buy sovereign bonds which then default they will be liable for the losses. Germany hopes this measure will discourage less disciplined governments from issuing bonds to finance social programs that they cannot afford.

However, the fact that eurozone central banks will now buy sovereign bonds en masse – driving down the interest rates that governments need to pay – means that governments will still be able to run deficits more cheaply.

“It would be a big mistake if countries were to consider that the presence of this programme might be an incentive to fiscal expansion. That would undermine confidence,” Draghi said. “It’s not directed, certainly, to monetary financing at all. Actually it’s been designed as to avoid any monetary financing. It should increase the lending capacity of banks.”

Time will tell how well designed this bazooka is. We would add that a bank’s capacity to lend is only as effective as a consumers and businesses capacity to borrow.

The “irrational exuberance” in markets is a fitting counterbalance to the next hurdle facing the Eurozone economy and political project.

Greek Election and ‘Grexit’ Risk
The elections in Greece on Sunday look set to bring Syriza, the anti-austerity group, to power.

Greece’s pro debt forgiveness Syriza party has widened its lead over the ruling conservatives, two surveys showed yesterday, days before a snap national election. A poll by Metron Analysis to be published on Friday showed Syriza would win 36 percent of the vote, ahead of Prime Minister Antonis Samaras’ New Democracy party which would take 30.7 percent of the vote.

Syriza have made clear that they intend to take a hard line in renegotiating what they regard as an odious debt agreement which forced the losses of reckless banks onto the backs of tax payers who were then “bailed out.”

The big question is if they come to power will Greece leave the monetary union?

The resentment felt in Greece towards the Eurozone will likely result in Syriza having a strong mandate. Syriza have said that they do not intend to drag Greece out of the Euro but will not completely rule that option out. If new terms and debt write downs are not agreed, it may have no option.

From the EU’s point of view any renegotiation would open a can of worms as other “bailed out” countries such as Ireland would likely demand similar concessions. So while Greece exiting the Euro is not likely at this stage, it is possible if negotiation proves fruitless.



Syriza’s leftist leader Alexis Tsipra’s charisma is winning over the citizens of Greece that struggle with 25% unemployment plus wage and pension cuts. He promises to overturn austerity and demand a debt write-off from European partners.

The left wing anti austerity party could change the landscape of the eurozone as we know it. This uncertainty allied with concerns about ECB QE is increasing safe haven flows into gold bullion.

2015 Black Swans proliferate – Safe Haven gold investment to benefit

2015 Black Swans proliferate – Safe Haven gold investment  to benefit

Totally unanticipated ‘Black Swan’ events are already having an impact and there could be more ahead, as well as more predictable ones all affecting global economics and seei ng a return to gold as a Safe Haven.  Article now up on Mineweb also.  Go to to read a slightly edited and udated version of this articl and other news and comment on mining and metals.

Lawrie Williams

January 2015 has already been remarkable for the number of Black Swan (unanticipated) events which have hit the markets in such a short space of time.  Some of these have been totally unheralded like the Swiss National Bank’s decision to unpeg the Swiss Franc from the Euro – which really did take the markets by surprise – while others may, in hindsight have been a little more predictable.  These include the escalation of fighting in Eastern Ukraine as both sides appear to have used a recent ceasefire to boost their military arsenals and prepare for more fighting; the death yesterday of King Abdullah of Saudi Arabia – perhaps predictable in that he was 90 years old and in poor health – but nonetheless promoting new uncertainties in what is a particularly volatile part of the world; the apparent growth in strength of Boko Haram in West Africa which has the potential perhaps to spread to major gold producing areas if the rebel group is unable to be held back; the Charlie Hebdo massacre in Paris which threatens to unleash an anti-Muslim backlash throughout Europe, or stimulate copycat killings by other fanatical fundamentalists.  And all this within a three week period!  Who knows what else lies in store for us in the remaining 49 weeks that lie ahead?

There are some very predictable potentially destabilising factors coming up.  The latest opinion polls for Greek elections this weekend suggest the country is poised to put the left wing anti-austerity party, Syriza, into power, possibly with an overall majority sufficient to govern without a coalition partner.  Pre-election rhetoric suggests that Syriza, if in power on its own, would renege on Greek debt commitments and drop many of the austerity measures imposed on the nation by the IMF and Eurozone.  There are fears that this could lead to Greece’s exit from the Eurozone throwing the single currency system into disarray and a debt default could have a huge adverse impact on a number of major European banks culminating in a financial meltdown which could outdo that following  the Lehman collapse, which was seen as leading to the 2008 global financial crisis.

Further ahead, the U.K. general election could see the continued rise of right wing anti-Europe party. UKIP, or perhaps its fade back into possible obscurity should a general election see a polarisation of support for the established main political parties as has happened in the past.  A Conservative victory should start the runup to a referendum on EU membership and polls suggest now that a majority would favour a Brexit (British exit), but much could change in the two years before such a referendum is due given the huge amount of establishment propaganda which would probably be brought into play to try and keep Britain within the Community.

Meanwhile in the Middle East there is little sign of ISIL, which controls huge swathes of Syria and Iraq, including oil producing regions which give it revenue, being pushed back.  Indeed there is the prospect of ISIL-related fundamentalist Muslim militant organisations springing up elsewhere in the Middle East and North Africa, as it has with Boko Haram in West Africa.  The death of King Abdullah in Saudi Arabia brings more uncertainty into the Middle Eastern region as basically pro-Western policies there could be changed depending on the chosen new ruler and what his political leanings might entail.

But these are mostly at least semi-predictable factors.  Black Swan events are, by definition, totally unpredictable and who knows what might happen next in this respect.  But the chances are something will for which the global financial community is unprepared.

Fighting in the Ukraine is said to be escalating again for example and there is the definite possibility of much greater Russian direct involvement.  Some suggest that the recent build-up of the Ukrainian military in the disputed region will force President Putin to take a much more overt approach ‘to protect the ethnic Russian nationals’ in and around Donetsk, regardless of the economic consequences.  This has the potential to flare up into a major, and much more widespread, military conflagration, lead to a total shutdown of gas supplies through the Ukrainian pipelines.  Ukraine would run out of the wherewithal to support its troops without ever more Eurozone cash being pumped in to support it.  Russia seems to hold the military aces here.

Gold should thrive on uncertainty in terms of a big rise in safe haven demand – and we already look like having a very uncertain year ahead.  Gold may have come back from its recent interim peaks following the SNB decision in  particular and the much-heralded announcement of the ECB’s QE programme (although this turned out to be bigger than expected) and it seems to be having difficulty today holding on to the $1,300 level.  But this could be just a temporary hiatus.  As other geopolitical and economic factors come into play, there could be a huge boost – and that’s just from events which might be seen as predictable.  More Black Swans could further upset the applecart that is the global economy and lead to yet another gold price upsurge as a result.

Gold breaches $1300 – but beware potential headwinds

Gold is teetering on making a significant breakthrough through the $1300 level but there could also be some adverse factors which could bring it back down again.  Another post submitted to for publication on that site.

Lawrie Williams

While gold breached the $1300 level in overnight trading last night this is obviously way too early to call this the start of a consistent gold price uptrend, although it is obviously a very encouraging start to the year for gold bulls recently enhanced by the Swiss national Bank’s decision to drop the Swiss franc’s peg to the Euro.  The question now facing us is whether or not a sustained breakthrough can be achieved.  At the time of writing the price had fallen back into the high $1290s but was again testing the $1300 level.

The European Central Bank (ECB) is widely anticipated to announce that it is to implement a Quantitative Easing programme and buy government bonds to try and help stabilise the Eurozone economy at its meeting tomorrow.  But apart from some kind of knee-jerk reaction when the decision to do so, or kick the can further down the road, is announced we don’t see this having any serious price impact given many of these factors have already been taken into account in the recent gold price advance anyway.  Either way the Eurozone continues to have significant problems.

Greek elections come up on January 25th.  Opinion poll figures suggest the outcome is probably still too close to call, but there is a real chance that the anti-austerity, and anti-EU Syriza party may well win – but whether it might win by a sufficient majority to hold power on its own is much more uncertain.  The latest opinion polls put Syriza as gaining more ground and now ahead by between 4 and 6.5%, but whether this lead is sufficient to give it an outright majority should it win – even with the extra 50 seats in parliament given to the winning party to help it form a government under the Greek system – is far less certain.  Pundits put it a few seats short of an outright majority should this be the case.  While Greek public opinion appears to support many of Syriza’s proposals, particularly those in cutting back the current austerity programmes and reneging on the country’s debt, it also appears to favour remaining in the Eurozone and worries about that may prompt a last minute swing to the longer-established political groups and yet deliver victory to the incumbent New Democracy party and its allies.

What is particularly significant about the Greek elections, though, is that if Syriza does win it could send shockwaves through the whole of the Eurozone.  Many countries have seen the rise of ‘alternative’ political parties – not least in the UK (UKIP) and France (Front National). Britain’s highly regarded Economist Intelligence Unit points to the rise of these alternative ‘populist’ parties as having the potential to create substantial changes to voting patterns – it also cites Denmark, Finland, Spain, Sweden, Germany and Ireland as having spawned political parties which could lead to unpredictable results in their next electoral polls.  A Syriza victory would likely give a significant boost to these other populist options and potentially lead to major political instability throughout Europe and the break-up of the single currency, if not the EU itself.

Political instability is, of course, manna for the gold bulls as people rush to buy the precious metal as providing some form of stability as it virtually always has in the past.

Taken with continuing strife in the Ukraine, with major potential still for destabilising escalation which could spread to other former Soviet countries, and the huge political and military impact of fundamentalist Islamic groups in the Middle East with potential to spread to North Africa, and now also in West Africa with Boko Haram, the world is beginning to look increasingly fragmented – all positive for gold.

But there is near-term downside risk for gold too, as pointed out in the latest Precious Metals Weekly newsletter from specialist analysts, Metals Focus. The group believes that the recent positive factors are all temporary and expect that the upturn in gold will eventually lose its momentum.

Looking beyond the positive euphoria of the past few weeks, Metals Focus sees three major headwinds develop for gold, likely in the second half of the quarter. First, it is likely that US interest rate expectations will return with a potentially adverse impact on  gold in North America in particular. Second, Eurozone concerns should probably wane. Third, the current strength of physical demand, fuelled by pre-Chinese New Year buying, will eventually subside.  Should these three factors indeed concur, the consultancy believes that investor sentiment towards gold will quickly evaporate. They stress that their field research so far suggests little conviction by institutional players that there is a genuine change in trend for the price and that recent positioning favouring gold seems to be mostly opportunistic rather than strategic.

So, as usual, the path of the gold price is perhaps impossible to call with so much depending on often unpredictable geopolitical events to give it the occasional upwards or downwards spurt.  The fact that the first three weeks of the current year have seen a plethora of events and market activities which have largely benefited gold so far does suggest that we are going to see a turbulent year ahead which will likely provide, at various stages, both upwards and downwards pressures on precious metals prices.  Where this will leave them in 12-months time is anybody’s guess although we would err on the positive in our own predictions.

Gold bulls – beware of Greeks bearing gifts!

Lawrie Williams

The prospect of a Syriza victory in the Greek elections next week has been gold price supportive, but beware – it’s not a foregone conclusion.  This article will appear on  To read more up to date articles on the world’s top metals and mining news and comment website. click on

Some of the recent positive action in the gold price has been due to fear of a Syriza win in the Greek election next week and a possible new government’s potential for cutting imposed austerity measures, defaulting on its financial commitments  and , ultimately, for the country being forced out of the Eurozone.  It would be the first Eurozone domino to fall and there are worries that if Greece goes, others may follow.  The attractions of the monetary flexibility of utilising one’s own currency rather than being forced to work with a currency, the Euro, the value of which is largely controlled by nations with much bigger, and more stable, economies, is strong regardless of the actual costs incurred in making the change – which would be enormous.  For a country like Greece with its enormous tourist industry, a weaker currency – probably far weaker if it should exit the Euro – could give this very significant sector an enormous boost, albeit hugely increasing the cost of imports at the same time.

Investors seem to be assuming that  Alexis Tsipras’ Syriza party may win the election, but it is only perhaps 3-5% ahead of Antonis Samaras’ New Democracy party – the party of the ruling government although the latter has only been able to rule in coalition with the much smaller Pasok party.  That suggests that the election result is perhaps too close to call and even if the pollsters findings are borne out, Syriza would still probably have to find its own coalition partner to gain a majority in the Greek parliament, and the attitude of the coalition partner to Syriza’s proposed anti-austerity programme could be key.

Syriza leader Tsipras has also been rather more circumspect in his proposals through the campaign.  Once considered totally anti-Eurozone his more recent statements do not appear to contemplate leaving it – perhaps as a sop to the electorate which appears to be largely in favour of remaining in the European Community, although one doubts the majority are aware of the potential financial ramifications of either remaining in or out.   Meanwhile the New Democracy campaign is playing on people’s fears of ‘Grexit’ – the prospect of Greece leaving the EC should Syriza win the election.

From the gold point of view though, a Syriza victory would lead to continuing uncertainty as to exactly what path Greece would take.  Would it default on its commitments or not?  The probability is that it would providing it can find sufficient support in parliament for the policy, but then would Germany, and the other Eurozone leaders, force Greece out of the single currency system, as it has said it would, or would some kind of compromise prevail?  Continuing uncertainty over a possible Grexit would probably remain positive for gold.

On the other hand, should New Democracy win the election, which is certainly still possible, that could well knock the gold price back as it would take the Greek exit and its possible ramifications off the agenda for the time being.  So it may be best not to count on a Syriza victory yet.

However there are other things also helping drive the gold price upwards.  It appears to be following its recent pattern – the price going up in Asia overnight – it hit $1245 last night, before being brought back down a few dollars at London opening.

But there plenty of other geopolitical uncertainties sitting out there at the moment and the fact that the gold price has been moving upwards during Asian dominated hours  suggests that Chinese demand in particular is less sensitive to price than many would have us believe.  2015 looks like turning into a year of uncertainties on the geopolitical front which will be gold positive and if demand from China stays up and that from India picks up again during the current year, the supply/demand equation will also be gold positive.  But so much will continue to depend on the machinations in the futures markets as to what path gold will take throughout the year.

But overall, it’s probably best not to count on a Syriza overall success in the Greek elections.  If it is defeated the gold price could take a nasty knock.  If it wins, without an overall majority, it may be forced to mitigate its stance on ending austerity and a Greek default – and even if it wins outright, political expedience may also force it to rein in its assumed policies.  Tsipras has already been modifying his stance through the election campaign.