Negative real interest rates give gold strong support

By Frank Holmes – CEO and Chief Investment Officer US Global Investors

7 Reasons to Be Bullish on Emerging Europe

In case you haven’t already noticed, inflation has been steadily creeping up since July. In February, the most recent month of available data, consumer prices advanced at their fastest pace in five years, hitting 2.7 percent year-over-year. March data won’t be released until next week, but I expect prices to proceed on this upward trend, buttressed by rising mortgages and costs associated with health care and energy.

One of the consequences of strong inflation is that real rates—what you get when you subtract the current consumer price index (CPI) from the nominal rate—have turned negative. And when this happens, gold has typically been a beneficiary. This is the Fear Trade in action.

Take a look below. Gold shares an inverse relationship with the real 10-year Treasury yield, which is influenced by consumer prices. When inflation is soft and the yield goes up, gold contracts. But when inflation is strong, as it is now, it can push the Treasury yield into subzero territory, prompting many investors to move into other so-called safe haven assets, including gold.

Gold Expected to Continue Benefiting from Low to Negative REal Rates
click to enlarge

Again, I expect consumer prices to continue rising, especially if President Donald Trump gets his way regarding immigration and trade. Slowing the stream of cheap labor from Mexico and other Latin American countries, coupled with raising new tariffs at the border, should have the effect of making consumer goods and services more expensive. Although it might sting your pocketbook, faster inflation could be constructive for gold investors.

$1,475 an Ounce Gold this Year?

In its weekly precious metals report, London-based consultancy firm Metals Focus emphasized the importance of negative real rates on the price of gold, writing that “real and even nominal rates across several other key currencies, including the euro, should also remain negative for some time.” The European Central Bank’s deposit rate currently stands at negative 0.4 percent, not including inflation, and Sweden’s Riksbank, the world’s oldest central bank, will continue its negative interest rate policy as it awaits stronger economic growth. Meanwhile, the Bank of Japan left its short-term interest rate unchanged at negative 0.1 percent at its meeting last month.

This is all beneficial for gold. Discouraged by the idea of negative rates eating into their wealth, many savers might be compelled to invest in gold, which enjoys a reputation as an excellent store of capital.

Based on the near-term outlook for real rates, as well as uncertainty over Brexit, rising populism in Europe and Trump’s trade and foreign policies, Metals Focus analysts see gold testing $1,475 an ounce this year. If so, that would put the yellow metal at a four-year high.

Central Banks Still Have an Appetite for Gold

Since 2010, global central banks have been net buyers of gold as they move to diversify their reserves away from the U.S. dollar. Although 2016 purchases fell about 35 percent compared to 2015, they still remained high on a historical basis, thanks mostly to China and Russia.

These purchases are likely to continue this year, according to Metals Focus, though at a slower rate as many banks get closer to meeting their target reserves amount.

Central Banks Have Been Net Buyers of Gold Since 2010
click to enlarge

Because gold accounts for only 2.3 percent of China’s reserves, as of March, the Asian country might very well keep up with its monthly purchases for some time. (The U.S., by comparison, has nearly 75 percent of its reserves in gold.)

I’ve pointed out before that it’s reasonable for investors to pay attention to what central banks are doing. They’re diversifying their assets and, in a way, hedging against their very own policies. It would be prudent for every household to do the same. As such, I recommend a 10 percent weighting in gold, with 5 percent in bullion (coins and jewelry), the other 5 percent in quality gold stocks.

Correction and Update: Writing for US Gold Bureau

Corrected link to US Gold Bureau below.  Apparently the one I published originally won’t work.

Just to let readers know that I will be writing occasional original articles for Austin, TX based US Gold Bureau.  The articles, by agreement with US Gold Bureau, will not appear here.  The US Gold Bureau website https://invest.usgoldbureau.com is blocked from being viewed by computer users who do not have North American IP addresses as US Gold Bureau only provides its services in North America so isn’t interested in accesses from elsewhere.  However,  because lawrieongold has strong North American readership it may be worthwhile for my North American readers to log on to the US Gold Bureau site.  There is a work-around for those without North American IP addresses, if interested, through setting up and utilizing the Tor Browser which can be configured to make it appear you have an IP address anywhere in the world.

My first article on the US Gold Bureau site, is titled: What the FBI Investigation Into the Trump Campaign Could Mean for Gold.  If you have a North American IP address you should be able to read it by clicking on the link.

A second article looking at the importance of Swiss gold imports and exports and their significance in terms of global gold flows is also up on the site:  Switzerland is Key to Global Gold.  Again you’ll need an american IP address  – or a work-around – to access it.

Gold knocked back by positive private sector jobs data

 Gold Today –New York closed at $1,256.30 yesterday after closing at $1,253.20 Monday. London opened at $1,255.00 today. 

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

         The $: € was weaker at $1.0670 after yesterday’s $1.0657: €1.

         The Dollar index was weaker at 100.57 after yesterday’s 100.61

         The Yen was weaker at 110.70 after yesterday’s 110.47:$1. 

         The Yuan was weaker at 6.8892 after yesterday’s 6.8836: $1. 

         The Pound Sterling was weaker at $1.2428 after yesterday’s $1.2437: £1.

The Shanghai Gold Exchange has been closed since the weekend due to a Chinese public holiday, but reopened today and was trading between 280 and 280.5 towards the close.

This translates into $1,264 and $1,266.41. New York is trading at a $5.11 discount to Shanghai and London opened at a $6.41 discount to Shanghai.

LBMA price setting:  The LBMA gold price was set today at $1,252.50 from yesterday’s $1,258.65.  

The gold price in the euro was set at €1,173.96 after yesterday’s €1,183.16.

Ahead of the opening of New York the gold price was trading at $1,252.70 and in the euro at €1,173.05. At the same time, the silver price was trading at $18.27. 

Silver Today –Silver closed at $18.31 yesterday after $18.22 at New York’s close Monday.

Price Drivers

While the gold price retreated today in both the dollar and euro it had remained above $1,250, but some positive US private sector  jobs data knocked it back below this level. It had appeared to be building a base, still, waiting for news that would make it move but when the news came out it was gold negative – at least initially.

The gold price is like a mirror for the different currencies and their financial systems.

It is an inefficient market in that it does not reflect such on a day to day basis. It reflects the situation over time and has to contend with all sorts of interference from speculators banks and governments. But, over time, it is an unbiased, accurate reflection of a nation’s financial condition through its exchange rate against gold.

That’s why we found the letter to shareholders from Jamie Dimon, CEO of JP Morgan is an important one for gold prices in the U.S. $.

While saying the U.S. is an exceptional country, he added, “it is clear that something is wrong.” He included in his letter, “…. It is understandable why so many are angry at the leaders of America’s institutions, including businesses, schools and governments. …This can understandably lead to disenchantment with trade, globalization and even our free enterprise system, which for so many people seems not to have worked. We need trust and confidence in our institutions.”  

The questions to be asked by gold are, “Are the U.S. institutions prepared to adjust their own priorities to rectify the situation? Internationally, just how will the U.S. “become great again”?

Within the U.S. in a globalized world, with a massive Chinese economy rising, will the U.S. have sufficient influence to continue to dominate the global economy, in a multi-currency system, or is it inevitable that its role as the global reserve currency will wane?

Over time, gold will reflect the actions taken to rectify the situation, not the good intentions!

In each country, its currency’s value against the gold price will reflect its financial condition against gold. In the last week, for instance, South Africans that own gold have seen the Rand price of gold rise in double digit percentages, while the Rand sank, demonstrating our point well.

Gold ETFs – Yesterday saw no purchases or sales into or from the SPDR gold ETF or the Gold Trust.  Their respective holdings are now at 836.765 tonnes and 199.85 tonnes. 

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Gold resistance now support

Gold Today –New York closed at $1,253.20 yesterday after closing at $1,247.30 Friday. London opened at $1,258.20 today. 

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

         The $: € was stronger at $1.0657 after yesterday’s $1.0670: €1.

         The Dollar index was stronger at 100.61 after yesterday’s 100.48

         The Yen was stronger at 110.47 after yesterday’s 111.34:$1. 

         The Yuan was unchanged at 6.8836: $1. 

         The Pound Sterling was weaker at $1.2437 after yesterday’s $1.2508: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    4      4

     2017    4      3

     2017    3    31    

SHAU

SHAU

SHAU

/

/

279.24

/

/

280.70

$ equivalent 1oz @    $1: 6.8836

       $1: 6.8831

      

  /

/

$1,261.83

/

/

$1,263.91

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.]

 Today the Shanghai Gold Exchange remains closed and will be closed until Wednesday for “Tomb Sweeping Day”. Hence there are no prices to report. As a result yesterday and today’s prices reflect New York and London’s prices only.

LBMA price setting:  The LBMA gold price was set today at $1,258.65 from yesterday’s $1,246.25.  

The gold price in the euro was set at €1,183.16 after yesterday’s €1,169.42.

Ahead of the opening of New York the gold price was trading at $1,258.45 and in the euro at €1,181.92. At the same time, the silver price was trading at $18.36. 

Silver Today –Silver closed at $18.22 yesterday after $18.21 at New York’s close Friday.

Price Drivers

With Shanghai closed yesterday and today, the gold price jumped up and away from support into the higher $1,250’s this morning. This was primarily driven by a nearly four and a half tonne purchase into the gold ETF. So many times, in the past, we have seen such points of inflection result in ‘bear’ raids. But this time it was the bulls which came in.  And they came in with physical demand.

Some believe that it is COMEX that makes prices and until Shanghai’s influence grew to the current point, this was so, but with the phenomenal growth in physical volumes, then Shanghai making it expensive to speculate in volume and increasing the risks of doing so in the process, the evidence in 2017 is that the influence of COMEX on gold prices is waning.

Imagine, if oil prices were determined by speculation in ‘paper’ oil on COMEX, while physical demand and supply were trading at significantly different prices, how long would it be before the credibility of COMEX disappeared? In the gold market on COMEX one cannot hold a contract until maturity and then expect physical delivery. One can only settle the prices in cash, for 99.96% of contracts. Physical delivery on COMEX requires notifying the exchange of that expectation and then findinga physical supplier before the contract can be finalized. In other words, COMEX is a cash market, not a gold market!

What we do expect to see is that other exchanges are switching from basing contracts on the LBMA price setting to Shanghai’s Fixings. Dubai and other exchanges have done it, we expect others to follow. In addition sellers and buyers of physical gold will follow suit and ignore the London/New York prices if they fell out of line with Shanghai, a primarily physical market. Certainly, with higher Shanghai prices suppliers will prefer to sell into Shanghai and base sale prices to London or elsewhere on Shanghai prices!

South Africa rated as ‘Junk’

Further to our story on South Africa’s President Zuma’s cabinet re-shuffle, the S&P ratings agency has downgraded South African debt to Junk status. We expect the other rating agencies to follow. The Rand has fallen further to $1: 13.87. We expect further falls.  As a result the South African mining industries hope that President Zuma stays in office for a long time, taking the Rand even lower and increasing their profits. Alas, his tenure may be short going forward. But this is Africa, so let’s see!

Gold ETFs – Yesterday saw purchases of 4.441 tonnes into the SPDR gold ETF but no sales or purchases from or into the Gold Trust.  Their respective holdings are now at 836.765 tonnes and 199.85 tonnes. 

The purchases into the SPDR gold ETF at the point where demand and supply are so closely in balance was the catalyst that caused gold to jump out of consolidation into a rising market. If further purchases follow we expect to see strong rises higher.

Since January 4th 2016, 235.585 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 25.529 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

World Top 20 Gold: Countries, Companies and Mines

Herewith a series of tables, all gleaned from Metals Focus’ Gold Focus 2017 report released last week, which between them confirm that Peak Gold is not with us quite yet, although probably getting very close.

Table 1.  Top 20 Gold Producing Nations 2015/2016 (Tonnes)

Rank Country 2015 Output 20 16 Output %  Change
1 China 460.3 463.7 +1%
2 Australia 279.2 287.3 +3%
3 Russia 268.5 274.4 +2%
4 USA 215.5 225.7 +5%
5 Peru 170.6 166.0 -3%
6 South Africa 165.1 165.6
7 Canada 157.7 162.1 +3%
8 Mexico 131.7 128.4 -2%
9 Indonesia 114.2 109.5 -4%
10 Brazil 95.4 96.8 +1%
11 Ghana 95.4 95.6
12 Uzbekistan 85.5 86.7 +1%
13 Papua New Guinea 58.1 60.4 +4%
14 Argentina 63.8 59.6 -7%
15 Tanzania 53.2 55.3 +4%
16 Kazakhstan 51.0 52.6 +3%
17 Colombia 49.2 51.8 +5%
18 Mali 49.2 50.1 +2%
19 Burkina Faso 38.6 41.6 +8%
20 Chile 42.5 40.7 -4%
  Others 57.5 58.1 +1%
  Total 3,220.2 3,255.4 +1%

Source: Metals Focus

Table 2.  Top 20 Gold Producing Companies 2015/2016 (Tonnes) (1 tonne= 32150.7 troy ounces)

Rank Country 2015 Output 2016 Output %  Change
1 Barrick Gold 190.3 171.6 -10%
2 Newmont Mining 156.6 162.9 +4%
3 AngloGold Ashanti 122.8 112.8 -8%
4 Goldcorp 107.8 89.4 -17%
5 Kinross Gold 78.9 83.3 +6%
6 Newcrest Mining 77.4 76.7 -1%
7 Gold Fields 67.2 66.7 -1%
8 Polyus Gold 54.8 61.2 +12%
9 Navoi MMC (est) 61.0 61.0
10 Agnico Eagle Mines 52.0 51.7 -1%
11 Sibanye Gold 47.8 47.0 -2%
12 China National Gold 41.5 42.1 +1%
13 Yamana Gold 38.9 39.5 +2%
14 Randgold Resources 37.7 39.0 +3%
15 Shandong Gold 36.0 37.1 +3%
16 Zijin Mining 37.2 36.1 -3%
17 Harmony Gold 33.3 33.2
18 Glencore 30.0 31.9 +7%
19 Freeport McMoran 35.5 30.8 -13%
20 Fresnillo 23.7 29.1 +23%

Source: Metals Focus,

Table 3.  World’s 20 Largest Producing Gold Mines 2016 (tonnes of gold)

Rank Mine Name Country Operator 2015 Output 2016 Output %  Change
1 Muruntau Uzbekistan Uzbek Govt. 61.0 61.0
2 Pueblo Viejo Dominican Rep Barrick 29.7 36.3 +22%
3 Goldstrike USA Barrick 32.8 34.1 +4%
4 Grasberg Indonesia Freeport 38.3 33.0 -14%
5 Cortez USA Barrick 31.1 32.9 +6%
6 Carlin USA Newmont 27.6 29.4 +7%
7 Olimpiada Russia Polyus 23.6 29.3 +24%
8 Lihir PNG Newcrest 25.0 28.1 +12%
9 Batu Hijau Indonesia Amman Mineral 21.0 26.7 +27%
10 Boddington Australia Newmont 24.7 24.9 +1%
11 Cadia Valley Australia Newcrest 19.8 23.5 +19%
12 Super Pit Australia Newmont 19.9 23.3 +18%
13 Loulo-Gounkoto Mali Randgold 19.6 22.0 +12%
14 Kupol Russia Kinross 21.6 20.7 -4%
15 Yanacocha Peru Newmont 28.6 20.4 -29%
16 Kibali DRC Randgold 20.0 18.2 -9%
17 Canadian Malartic Canada Osisko 17.8 18.2 +2%
18 Tarkwa Ghana Gold Fields 18.2 17.7 -3%
19 Kumtor Kyrgyzstan Centerra 16.2 17.1 +6%
20 Sukari Egypt Centamin 13.7 17.1 +26%

Source: Metals Focus, Lawrieongold

To read additional comment on the above, Lawrieongold readers should click on the following links:

 Top 20 Gold Producing Nations See Small Gain in Output in 2016

World Top 20 Gold Miners and Mines

 

 

 

 

Trump’s Obamacare repeal fail could spell doom for other initiatives – Blanchard

Here’s comment from theCEO of one of the USA’s biggest gold dealers suggesting that President Trump’s failure to push his health care changes through Congress could suggest he may also have difficulties in persuading Congress to agree some of his other proposed key reforms – notably on taxation and infrastructure.  The end result could be strong growth in the precious metals markets he avers.

After a post-election equities march to record highs dubbed by some as “the Trump rally,” the new president’s failure to deliver on Obamacare repeal and replacement may spell similar doom for his tax reform initiative, says the CEO of Blanchard & Co, which claims to be America’s largest precious metals investment firm, and gold is poised for significant gains if that happens.

“President Trump’s tax reform plan has been largely predicated on the savings the federal government would have seen had Congress been able to repeal and replace Obamacare,” says Blanchard and Company President and CEO David Beahm. “The stock market rally above 21,000 was largely driven by Wall Street’s expectation that corporate tax cuts were a given, but I think those prospects are looking much less certain today.”

As the equities markets begin to shed some of the gains they’ve seen since Trump’s election victory, and as political analysts begin to advance the comparison between Watergate in the early 1970s and the FBI’s ongoing investigation into the ties between associates with the Trump campaign and Russian hacking into the U.S. election, a new geopolitical uncertainty begins to take shape that will impact the markets even more.

“Two of the big historic drivers for the price of gold have been risk and global geopolitical uncertainty, and over the last 25 years dating to the first Gulf War, the Middle East has been the hotbed for a lot of that uncertainty,” Beahm said. “Now that we have a sitting President in the middle of a growing FBI investigation placing the world’s top superpower into a potential storm of geopolitical uncertainty, this could certainly unhinge equities markets and drive gold much higher.”

Until there’s some clarity that an investigation into the president and his team has concluded and found no wrong doing, the markets are likely to be volatile and risky. But gold should see increased investor demand to hedge stock risk, and the precious metals complex could see strong growth as a result, Beahm said.

Gold holding higher levels. Set for a further rise?

Gold Today –New York closed at $$1,255.30 yesterday and at 1,247.90 on the 24th March, after closing at $1,246.20 on the 23rd March. London opened at $1,253.00 today. 

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

         The $: € was unchanged at $1.0863: €1 from $1.0798: €1 Friday.

         The Dollar index was slightly stronger at 99.17 from 99.73 Friday. 

         The Yen was slightly weaker at 110.29:$1 from Friday’s 111.20 against the dollar. 

         The Yuan was stronger at 6.8804: $1, from 6.8877: $1, Friday. 

         The Pound Sterling was stronger at $1.2554: £1 from Friday’s $1.2490: £1.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    28

     2017    3    27       2017    3    24

    2017     3   23

SHAU

SHAU

SHAU

SHAU

/

280.04

277.99

277.93

/

280.61

277.94

278.38

$ equivalent 1oz @    $1: 6.8804

      $1: 6.8758

      $1: 6.8877

 $1: 6.8860

  /

$1,266.79

$1,255.35

$1,255.39

/

$1,267.18

$1,257.12

$1,257.42

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.]

 At the close in Shanghai today, the gold price was standing at Yuan 280.60, which directly translates into $1,268.48. But allowing for the difference in fineness of gold being traded this equates to a price of $1,263.48. This more than $8.18 higher than the New York close and $10.48 higher than London.

Shanghai is steady at higher levels today as the Trump/Republican defeat continues to be digested. As you can see there was a $15 jump in the price yesterday, which we expect to filter through to London and New York this week.  The margins are more than enough for arbitrageurs to profit from, so the process may be quick.

LBMA price setting:  The LBMA gold price was set today at $1,253.65 from Friday’s $1,244.00.  

The gold price in the euro was set at €1,154.01 after Friday’s €1,151.53.

Ahead of the opening of New York the gold price was trading at $1,257.55 and in the euro at €1,157.75. At the same time, the silver price was trading at $18.16. 

Silver Today –Silver closed at $18.10 at New York’s close yesterday against $17.74 on the 24th March.

Price Drivers

With the failure of Trump and the Republicans to pass the repeal of the Obamacare bill Friday makes this week a week of digestion of the fact and reaction to it.

For gold, before London opened on Monday Shanghai had already reacted through the western night. It was at $1,257 when we first looked during Shanghai’s day on Monday and is currently holding that level now.   If it holds above $1,250 it will have broken through overhead resistance, which will become support, which appears to be happening now.

This week see the monthly options expiry which while being a short term influence demonstrates the net long or short position of the paper market. It looks as if we will see higher gold prices from it as the short and longs net out.

The Healthcare Bill is not just about healthcare or about Donald Trump but about the ability of the Republican majority to turn what has been political gridlock for the last two terms into decisive government. Because the bill failed to pass the markets are confirming our view that despite the hype about President Trump’s ‘get things done’ ability, the government remains in political gridlock, with the majority disunited. We expect him to switch to election promises that he believes will pass to he can regain some lost political momentum.

We are seeing a lower dollar and expect lower equities in the days to come [where the rise since his election accounts for 14% of the rise in the Dow] and higher gold.

Gold ETFs – Friday saw purchases 0f 1.776 tonnes into the SPDR gold ETF and purchases yesterday of 2.665 tonnes but no change in the holdings of the Gold Trust.  Their respective holdings are now at 835.285 tonnes and 198.72 tonnes. 

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Peak Gold:  Not there yet!

The first paras of a new article posted on the info.sharpspixley.com website

There have been a number of commentators out there telling us that the global gold mining industry has already reached peak output (Peak Gold), but according to Jeff Christian, one of the most astute gold analysts out there, we have not actually reached this yet.  Jeff runs the New York based CPM Group metals analysis consultancy which is due to release its Gold Yearbook 2017 later this week.*

Jeff differentiates between what he calls Peak Gold and Peaking Gold.  The former he describes as the concept that the world is running out of mineable gold deposits, which he refers to as ‘hokum’. There are many well known projects and deposits, he says, and also estimates and geologically based scientifically supported views that there is plenty of gold in mineable deposits yet to be discovered around the world. Some are in remote places that have not been adequately explored, like eastern Russia and much of China, the Tibetan plateau, the inner Amazon. Some are likely in plain sight, but may be uneconomic to mine, or too costly to develop, with current technology and at current metal prices.

He goes on to comment that any failure to find new gold orebodies reflects human missteps, not a lack of geological deposits. When you take current exploration expenditures and (a) deflate them for inflation and (b) adjust them for fluctuations in the quality and quantity of data parsing, you find that the amount of real money being spent on exploration for metals in general and gold in particular actually is a fraction of what it was in the glory days of discoveries in the 1980s and early 1990s. Furthermore, an increasing proportion of ‘exploration’ expenditures is being sucked up in costly computer modeling programs. Computer models are based on past discoveries. Just as  the pharmaceuticals industry is suffering from a dearth of new drug discoveries because it has shifted from laboratory work to computer generated concepts and models, so too the mining exploration industry is consigning itself to only discovering deposits similar to ones discovered in the past. If you only look for those types of deposits, you will not find new ones. So, the failure the find new gold deposits is not a geological paucity of deposits, but rather a function of human behavior.

In terms of ‘Peaking Gold,’ CPM Group sees gold mine production as having actually risen by 2.5 million ounces, or 2.8%, in 2016, and to rise by another 500,000 ounces, or 0.6%, in 2017.  The Group sees production peaking in the 2017- 2019 period, and then declining………..

To read full article click on:

LAWRIE WILLIAMS: Peak Gold: Not there yet! – CPM Group

 

Gold – Facing a Critical Day

 Gold Today –New York closed at $1,246.20 yesterday after closing at $1,247.80 on the 22nd March. London opened at $1,243.00 today. 

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

         The $: € was weaker at $1.0798: €1 from $1.0787: €1 yesterday.

         The Dollar index was weaker at 99.73 from 99.77 yesterday. 

         The Yen was slightly weaker at 111.20:$1 from yesterday’s 111.15 against the dollar. 

         The Yuan was weaker at 6.8877: $1, from 6.8860: $1, yesterday. 

         The Pound Sterling was unchanged at $1.2490: £1 from yesterday’s $1.2490: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    24

     2017    3    23       2017    3    22

SHAU

SHAU

SHAU

/

277.93

278.38

/

278.38

278.46

$ equivalent 1oz @  $1: 6.8877

      $1: 6.8860

$1: 6.8845

  /

$1,255.39

$1,257.69

/

$1,257.42

$1,258.05

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.]

 At the close in Shanghai today, the gold price was volatile between 277.6 and 278.6 Yuan, but standing at Yuan 278 as we wrote this, which directly translates into $1,255.39. But allowing for the difference of gold being traded this equates to a price of $1,250.39. This more than $9.19 higher than the New York close and $12.39 higher than London.

LBMA price setting:  The LBMA gold price was set today at $1,244.00 from yesterday’s $1,247.90.  

The gold price in the euro was set at €1,151.53 after yesterday’s €1,156.75.

Ahead of the opening of New York the gold price was trading at $1,245 00 and in the euro at €1,153.15 At the same time, the silver price was trading at $17.62. 

Silver Today –Silver closed at $17.58 at New York’s close yesterday against $17.53 on the 22nd March.

Price Drivers

It looked as though gold had broken through $1,250 before the opening of New York yesterday, but this was not to be, so it seems. Overhead resistance kicked in again at $1,250. So what lies ahead in the next few days for gold?

  1. The first is the monthly options expiry which demonstrates the net long or short position of the paper market. In itself, in the short term, it does influence prices. At the moment the longs seem to be better weighted implying higher prices.
  2. The Healthcare Bill is not just about healthcare or about Donald Trump but about the ability of the Republican majority to turn what has been political gridlock for the last two terms into decisive government. If the bill fails to pass today, it implies that despite the hype about President Trump’s ‘get things done’ ability, the government remains in political gridlock, with the majority disunited. That implies a lower dollar, lower equities [where the rise since his election accounts for 14% of the rise in the Dow] and higher gold.

Either way these two factors go, will see the gold price move strongly, one way or the other.

And that’s ignoring one of Italy’s Finance minister’s call that if Marie le Pen wins the French Presidency the E.U. will fall apart and the euro will collapse.  But then politics is always dramatic full of sound and fury….

So today is critical for all financial markets and for the ability of President Trump ‘to make America great again’.

Gold ETFs – Yesterday saw no purchases or sales into or from the SPDR gold ETF but a purchase of 0.3 of a tonne into the Gold Trust.  Their respective holdings are now at 834.396 tonnes and 198.72 tonnes. 

Since January 4th 2016, 232.086 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 22.03 tonnes have been added to the SPDR gold ETF and the Gold Trust.

 Julian D.W. Phillips –  GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Gold market volatility reducing?

Gold Today –New York closed at $1,247.80 yesterday after closing at $1,244.60 on the 21st March. London opened at $1,246.30 today. 

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

         The $: € was stronger at $1.0787: €1 from $1.0802: €1 yesterday.

         The Dollar index was unchanged at 99.77 from 99.77 yesterday. 

         The Yen was stronger at 111.15:$1 from yesterday’s 111.48 against the dollar. 

         The Yuan was weaker at 6.8860: $1, from 6.8845: $1, yesterday. 

         The Pound Sterling was stronger at $1.2490: £1 from yesterday’s $1.2472: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    23

     2017    3    22       2017    3    21

SHAU

SHAU

SHAU

/

278.38

275.97

/

278.46

275.98

$ equivalent 1oz @  $1: 6.8860

      $1: 6.8845

$1: 6.8968

  /

$1,257.69

$1,244.58

/

$1,258.05

$1,244.62

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.]

 At the close in Shanghai today, the gold price was trading at 278.65 Yuan, which directly translates into $1,258.64. But allowing for the difference of gold being traded this equates to a price of $1,253.64. This more than $5.84 higher than the New York close and $7.34 higher than London.

You will note how Shanghai prices have been steady after jumping with London and New York’s ‘discounts’ narrowing a great deal. We attribute this to arbitrageurs or western dealers making sure their prices are not out of line. Why do we stress this? It shows the lessening impact of western new items and COMEX actions. It ensures that gold prices are more currency related. We believe it is already reducing the volatility in global gold markets.

LBMA price setting:  The LBMA gold price was set today at $1,247.90 up from yesterday’s $1,246.10.  

The gold price in the euro was set at €1,156.75 after yesterday’s €1,154.76.

Ahead of the opening of New York the gold price was trading at $1,251 35 and in the euro at €1,160.48 At the same time, the silver price was trading at $17.66. 

Silver Today –Silver closed at $17.53 at New York’s close yesterday against $17.52 on the 21st March. Silver prices will follow gold higher today.

Price Drivers

Over the last day gold prices have stabilized at just below $1,250 a point of overhead resistance that has turned the gold price back in recent weeks. It will move through $1,250 today.

As eastern demand is robust now with the Indian wedding season underway and Chinese demand picking up the gold price building strength is tackling $1,250 before more gains.  

Greece

Greece’s bailout story is back on stage as talks deadlocked between the Greek government and the E.U. Will we see a replay of the brinkmanship seen when the new government came in? By the very nature of the two, yes, we will. All expect Greece to cave in, in the end. But what is common in most money dramas across the world is that when drastic action is needed is that it comes when markets are closed at weekends, so governments can surprise their people before they can do anything. Right now as a precaution Greek depositors are withdrawing deposits so as not to be caught in a bail-in as happened in Cyprus.

Of course, they could presume that nothing will happen to the banks and do nothing. History is full of such victims. Likewise in the gold world, when structural changes come they are sprung on us so we are trapped.

Gold ETFs – Yesterday saw no purchases or sales into or from the SPDR gold ETF but a purchase of 0.6 of a tonne into the Gold Trust.  Their respective holdings are now at 834.396 tonnes and 198.42 tonnes. 

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Shanghai now the world’s gold hub

 

Gold Today –New York closed at $1,244.60 yesterday after closing at $1,234.60 on the 20th March. London opened at $1,247.00 today. 

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

         The $: € was weaker at $1.0802: €1 from $1.0793: €1 yesterday.

         The Dollar index was weaker at 99.77 from 100.06 yesterday. 

         The Yen was stronger at 111.48:$1 from yesterday’s 112.86 against the dollar. 

         The Yuan was stronger at 6.8845: $1, from 6.8968: $1, yesterday. 

         The Pound Sterling was stronger at $1.2472: £1 from yesterday’s $1.2380: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    22

     2017    3    21       2017    3    20

SHAU

SHAU

SHAU

/

275.97

276.75

/

275.98

276.93

$ equivalent 1oz @  $1: 6.8845

      $1: 6.8968

$1: 6.9051

  /

$1,244.58

$1,246.60

/

$1,244.62

$1,247.41

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.]

 At the close in Shanghai today, the gold price was trading at 278.50 Yuan, which directly translates into $1,258.23. But allowing for the difference of gold being traded this equates to a price of $1,253.23. This more than $13.63 higher than the New York close and $6.23 higher than London.

The gold price in Shanghai jumped 2.50 Yuan today, but the rise was greater when translated into the weak dollar. As you can see, London and New York are trying to catch up with Shanghai as the price differentials narrow.  That’s why the concept of a ‘Chinese gold price premium’ distorts the reality of what’s happening. China is no longer a distant sub-market of London, while India continues to be so, as that country with its gold taxes and political interference cannot function nearly as well as Shanghai with its highly developed, huge, physical market. As we have pointed out in the past, Shanghai has become the world’s gold hub. It would therefore be more accurate as description to describe New York and London trading at a ‘discount’ to Shanghai.

LBMA price setting:  The LBMA gold price was set today at $1,246.10 up from yesterday’s $1,232.05.  

The gold price in the euro was set at €1,154.76 after yesterday’s €1,139.94.

Ahead of the opening of New York the gold price was trading at $1,245.45 and in the euro at €1,154.58 At the same time, the silver price was trading at $17.49. 

Silver Today –Silver closed at $17.52 at New York’s close yesterday against $17.42 on the 20th March. Silver prices continue rising but not quite as fast as gold’s dollar prices.

Price Drivers

Gold is responding to a weak dollar, but also to buying by the U.S.

Chinese demand kicked in overnight too, helping the gold price rise. Chinese continues to dominate gold prices pulling gold prices higher in the developed world.

The wave of euphoria after the election of Trump in the U.S. and world markets is faltering. U.S. equity markets are pulling back as the promised ‘firing from the hip’ at the establishment alongside huge tax cuts and infrastructure spending, have not yet happened. With President Trump finding it hard going to do away with Obamacare, the potential hurdles that lie ahead look like slowing down his program and markets are responding to that. The dollar is slipping through support and may well go much lower.

Gold ETFs – Yesterday saw purchases of 4.145 tonnes into the SPDR gold ETF but no change in the Gold Trust.  Their respective holdings are now at 834.396 tonnes and 197.82 tonnes. 

Since January 4th 2016, 231.186 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 21.13 tonnes have been added to the SPDR gold ETF and the Gold Trust.

 Julian D.W. Phillips – GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

 

3.85 tonne withdrawal from GLD has little gold pricing effect

 Gold Today –New York closed at $1,234.60 yesterday after closing at $1,228.80 on the 17th March. London opened at $1,231.70 today. 

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

         The $: € was weaker at $1.0793: €1 from $1.0765: €1 yesterday.

         The Dollar index was weaker at 100.06 from 100.16 yesterday. 

         The Yen was weaker at 112.86:$1 from yesterday’s 112.74 against the dollar. 

         The Yuan was stronger at 6.8968: $1, from 6.9051: $1, yesterday. 

         The Pound Sterling was weaker at $1.2380: £1 from yesterday’s $1.2419: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    21

     2017    3    20       2017    3    17

SHAU

SHAU

SHAU

/

276.75

275.49

/

276.93

275.78

$ equivalent 1oz @  $1: 6.8968

      $1: 6.9051

$1: 6.9068

  /

$1,246.60

$1,240.62

/

$1,247.41

$1,241.92

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.]

 At the close in Shanghai today, the gold price was trading at 276.50 Yuan, which directly translates into $1,246.97. But allowing for the difference of gold being traded this equates to a price of $1,241.97. This more than $12.37 higher than the New York close and $10.27 higher than London.

The price differential between the three centers is narrowing again as China continues to dominate gold prices. Even a nearly 4 tonne sale from the SPDR gold ETF did not change U.S. prices. As you can see above, Shanghai’s gold prices are steady at higher levels uninfluenced by London or New York at the moment.

LBMA price setting:  The LBMA gold price was set today at $1,232.05 down from yesterday’s $1,233.00.  

The gold price in the euro was set at €1,139.94 after yesterday’s €1,146.34.

Ahead of the opening of New York the gold price was trading at $1,233.15 and in the euro at €1,141.07 At the same time, the silver price was trading at $17.43. 

Silver Today –Silver closed at $17.42 at New York’s close yesterday against $17.38 on the 17th March. Silver prices continue rising slowly in line with gold’s dollar prices.

Price Drivers

Turning back to the G-20 statement we note that the G-20 maintained its call for competitive devaluations and FX market instability to be avoided. While it goes against brazen devaluations for the sake of gaining competitive advantage, protectionism will alter trade balances, which will affect exchange rates. Behind such international plays, nations do attempt to keep their exchange rates low and lower. So while brazen currency wars are to be avoided, they will continue indirectly. Hence, the concerns surrounding trade with the G-20 statement calling for protectionism to be resisted not included in the statement

Markets are still expecting the enormous policy implementation of new tax rates and infrastructure spending. These are certain to have far more impact on global financial markets than any policy decisions President Trump has made to date. Likewise any implementation of Trade tariffs. These will ripple out and over precious metal markets. At this point ahead of these announcements we see them being positive for gold.

Gold ETFs – Yesterday saw sales of 3.849 tonnes from the SPDR gold ETF (GLD) but no change in the Gold Trust (IAU).  Their respective holdings are now at 830.251 tonnes and 197.82 tonnes. 

 Julian D.W. Phillips –  GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

China continuing to pull gold upwards

 Gold Today –New York closed at $1,228.80 Friday after closing at $1,226.30 on the 16th March. London opened at $1,232.75 today. 

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

         The $: € was weaker at $1.0765: €1 from $1.0754: €1 Friday.

         The Dollar index was weaker at 100.16 from 100.38 Friday. 

         The Yen was stronger at 112.74:$1 from Friday’s 113.44 against the dollar. 

         The Yuan was stronger at 6.9051: $1, from 6.9068: $1, Friday. 

         The Pound Sterling was stronger at $1.2419: £1 from Friday’s $1.2343: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    20

     2017    3    17       2017    3    16

SHAU

SHAU

SHAU

/

275.49

275.34

/

275.78

275.79

$ equivalent 1oz @  $1: 6.9051

      $1: 6.9068

$1: 6.8967

  /

$1,240.62

$1,241.76

/

$1,241.92

$1,243.79

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.]

 At the close in Shanghai today, the gold price was trading at 277.50 Yuan, which directly translates into $1,249.98. But allowing for the difference of gold being traded this equates to a price of $1,244.98. This more than $16.18 higher than the New York close and $12.22 higher than London.

The price differential between the three centers is widening again as China once again is leading the way on gold prices. But you will note that Chinese gold prices have barely changed in the last two days leading to the conclusion that Shanghai is making the gold price but exchange rate changes are changing prices in other currencies. The dollar continues to weaken taking gold prices higher there.

LBMA price setting:  The LBMA gold price was set today at $1,233.00 up from Friday’s $1,228.75.  

The gold price in the euro was set at €1,146.34 after Friday’s €1,144.51.

Ahead of the opening of New York the gold price was trading at $1,232.10 and in the euro at €1,145.71 At the same time, the silver price was trading at $17.40. 

Silver Today –Silver closed at $17.38 at New York’s close Friday against $17.32 on the 16th March. Silver prices have begun rising slowly in line with gold’s dollar prices.

Price Drivers

When we look at the G-20 meetings we are always underwhelmed. But this last one contained more significance as the U.S. refused to support, in the final communiqué, the words that implied all were agreed against ‘protectionism. President Trump has made it clear that he will ‘make America great again’ putting its interests over its trading partners. This is very definite ‘protectionism’. His highest profile targets are Mexico, China and now Germany. His objection is that there are Trade deficits with each of these countries. He wants a Trade Balance that has no deficit. This has great implications for gold prices.

The U.S. has had a Trade deficit for as long as we can remember. It has been described as the ‘exorbitant privilege’ [of being able to pay for goods with printed paper and not through the sale of its goods] So why is the elimination of the Trade deficit of importance to the new administration? Yes, it will bring jobs back to the U.S., but seen through monetary eyes it is a step away from dollar hegemony to a dollar that can stand internationally on its own valuation through a balance, or surplus, on its Balance of Payments.  

It is preparation for a multi-currency monetary system in which Trump hopes the dollar will stay as strong as it is now. Protectionism through tariffs will go a long way to ensure this objective. This is why we see tariffs on oil imported into the U.S. in the future. It will stabilize the ‘fracking’ oil companies and move them away from international oil price dependency.  This would be gold positive!

Evidence of Trump acting on a hard line on this came over the weekend with his meeting with Chancellor Merkel of Germany.

Gold ETFs – Friday saw sales of 2.962 tonnes from the SPDR gold ETF but no change in the Gold Trust.  Their respective holdings are now at 834.100 tonnes and 197.82 tonnes. 

Since January 4th 2016, 230.89 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 20.834 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips –  GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

PDAC Take-Away. Optimism for gold and mining in general

Another excerpt from a posting by me on the Sharps Pixley website.  Although unable to attend this year’s PDAC due to my recent stroke, one is able to get a good impression of the general air of optimism overhanging this year’s Mecca for the juniot mining and exploration sector. Attendance was up and gold, as usual, was leading the way for the junior explorer in particular.

But beware the scammers and the pump-and-dumpers.  Good stories abound, but few will stand up to detailed scrutiny!  To get a heads-up on just a tiny number of those setting out to fleece the unwary investor I suggest you subscribe for free to the Inca Kola News daily blog. While this looks primarily at Latin American mining, it also highlights, with no pulled punches and some sometimes rather forthright language, some of the more unsavoury elements of the Canadian junior mining scene.  Forewarned is forearmed.

Here follow the first few paras of the Sharps Pixley article:

The annual Prospectors and Developers Association of Canada (PDAC) Convention is truly something special.  Although unable to attend this year I have been watching reports on the event with considerable interest as it is very much a bellwether of the mineral exploration sector – and that is itself a great indicator of the strength, or otherwise, of the global mining industry and where it is headed.  This year’s PDAC took place from March 5th-8th inclusive.

I had been attending the PDAC since 1977 and it has always been one of the industry’s highlights.  Back then the whole event took place in the Royal York Hotel and attendance rose to around 7-8,000 at its peak before it transferred to the nearby Toronto Convention Centre, since when it has grown enormously to become what is probably the world’s biggest annual mining event.  Numbers of attendees peaked four years back at around 32,000 when the industry – and gold mining in particular – had been riding high, although had been beginning to turn down.

Gold exploration and mining has always been the principal driver of PDAC sentiment – and attendance.  At the time of the 2013 PDAC Convention the gold price was at just under $1,600 on its way down to a low of around $1,060 by December 2015, and numbers attending the event had fallen accordingly, but this year 22,000 delegates were expected, in line with the 2016 figure, and in the event 24,161 passed through the doors indicating a more optimistic outlook for the industry……………..

To read the full article click here 

Lies, Damn Lies, Fake News, Fake Views and Gold

Excerpt from my latest article on the Sharps Pixley website:

So much of the data we are fed by governments and quasi-governmental outfits like the US Fed are so massaged in favour of trying to maintain a positive sentiment among the great unwashed that they cannot be seen as comparable with supposedly the same stats from the the past.  I am indebted once again to Grant Williams (no relation) who points some of these anomalies out in great detail in his latest Things than make you go hmm… newsletter entitled ‘Fake Views Part II’ bringing the oft-quoted  “There are three kinds of lies: lies, damned lies, and statistics” into mind.  Interestingly the quote is often attributed to Mark Twain but he himself is said to have attributed it to British Prime Minister Benjamin Disraeli who may have been ahead of his time in forecasting statistical manipulation as political spin!

To illustrate his point Grant draws heavily on data and charts provided by yet another member of the Williams clan, John Williams (again no relation to Grant or myself) who runs the fascinating ShadowStats website which calculates government data the way it used to be calculated before the current era of using statistics as political weaponry.  This has distorted the figures used by US government entities, on which many, or most, of their economic decisions are justified, beyond recognition.  Indeed a significant part of the problem is that those making these decisions no longer question government-provided economic data but automatically assume its accuracy.

Take the cost of living for example.  If one goes by Fed figures CPI is growing at an annual rate of around 1.8-2% – a figure few consumers would recognise as applying to them!  If one calculates the Cost of Living index the way it was calculated back in 1980, inflation is actually rising on that basis at the much more recognisable figure of nearer 9% per annum – see the Shadowstats chart below:

To read the full article click here

Gold to progress as Trump policies may slow to a plod

 Gold Today –New York closed at $1,226.30 yesterday after closing at $1,220.00 on the 15th March. London opened at $1,227.00 today. 

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

         The $: € was weaker at $1.0754: €1 from $1.0709: €1 yesterday.

         The Dollar index was weaker at 100.38 from 100.72 yesterday. 

         The Yen was unchanged at 113.44:$1 from yesterday’s 113.44 against the dollar. 

         The Yuan was stronger at 6.9068: $1, from 6.8967: $1, yesterday. 

         The Pound Sterling was stronger at $1.2343: £1 from yesterday’s $1.2266: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    3    17

     2017    3    16       2017    3    15

SHAU

SHAU

SHAU

/

275.34

270.98

/

275.79

271.58

$ equivalent 1oz @  $1: 6.9068

      $1: 6.8967

$1: 6.9124

  /

$1,241.76

$1,219.32

/

$1,243.79

$1,222.02

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.]

 At the close in Shanghai today, the gold price was trading at 275.90 Yuan, which directly translates into $1,242.46. But allowing for the difference of gold being traded this equates to a price of $1,237.46. This more than $11.16 higher than the New York close and $10.46 higher than London.

As you can see the price differentials between the three centers has been narrowing considerably. With today being a day when the gold markets are taking a breather after the rise we expect the differentials to continue to narrow as Shanghai pulls gold prices higher across the world.

LBMA price setting:  The LBMA gold price was set today at $1,228.75 up from yesterday’s $1,225.60.  

The gold price in the euro was set at €1,144.51 after Friday’s €1,142.64.

Ahead of the opening of New York the gold price was trading at $1,230.55 and in the euro at €1,146.51 At the same time, the silver price was trading at $17.37. 

Silver Today –Silver closed at $17.32 at New York’s close yesterday against $17.31 on the 15th March. Silver prices have barely moved over the last day as the primarily American investors in silver have hardly reacted to exchange rate moves in currencies. This is where silver and gold are distinctly different in that silver prices are dollar based in American markets, so are not vulnerable to global swings in currency values, except indirectly via the gold price. Silver prices constantly follow the direction of gold price but not to the same extent.

Price Drivers

Today currency and precious metal markets are taking a breather as they digest the fed’s future path and its impact on the dollar. But the euro is strengthening significantly against the dollar.

We were in doubt as to whether the dollar’s previous bull run was resuming, but after the Fed’s action we continue to see the dollar’s bull market as over. The Fed’s action will affect the currency [and gold and silver] markets for some time to come [months] as it is a structural path that was not expected by markets. Markets expected a considerably more hawkish Fed statement. We cannot see this before the end of the year, if the U.S. economy becomes more robust than it is now.

On top of this we are now seeing more of President Trumps policies unfolding as he ‘muscles-up’ the U.S. government and defense departments at the expense of the State Department, etc. But we await his infrastructure spending plans.

But it is clear that his road through the Senate is going to be difficult. It is also clear that his implementation of his policies will run the same gauntlet. The exuberance of expectations is losing steam now the market sprint will likely slow to a plod. This points to a weaker dollar and better gold prices, we feel.

Gold ETFs – Yesterday saw sales of 2.369 tonnes from the SPDR gold ETF but purchases of 0.6 of a tonne into the Gold Trust.  Their respective holdings are now at 837.062 tonnes and 197.82 tonnes. 

Since January 4th 2016, 233.852 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 23.796 tonnes have been added to the SPDR gold ETF and the Gold Trust.

 Julian D.W. Phillips –  GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance