Gold price consolidating again

 Gold Today –New York closed at $1,235.60 on the 16th February after closing at $1,239.30 on the 17th February. London opened at $1,234.00 today.

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

         The $: € was stronger at $1.0619: €1 from $1.0645: €1 on Friday.

         The Dollar index was slightly stronger at 100.87 from 100.69 on Friday. 

         The Yen was weaker at 113.17:$1 from Friday’s 112.85 against the dollar. 

         The Yuan was weaker at 6.8783: $1, from 6.8654: $1, Friday. 

         The Pound Sterling was stronger at $1.2462: £1 from Friday’s $1.2407: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    2    20

     2017    2    17

      2017    2    16

SHAU

SHAU

SHAU

/

275.61

275.34

/

275.89

274.79

$ equivalent 1oz @  $1: 6.8783

      $1: 6.8654

$1: 6.8603

  /

$1,248.64

$1,248.35

/

$1,249.91

$1,245.85

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.]

 Shanghai was trading at 275.30 Yuan towards the close today. This equates to $1,244.90, but allowing for the different quality of gold being traded [0.9999 fineness] it stands at $1,239.90. Shanghai is in line with both London and New York.

If we look back to the time when the SGE started to make speculation more expensive, earlier this year, we see that the price differentials between London, New York and Shanghai have narrowed and when Shanghai is not leading the way the three markets remain in line. This implies that the efforts of arbitrageurs appear to be succeeding in smoothing prices out. This makes the global gold price a reliable one with speculators losing their power to shift the gold price heavily without additional physical gold action.

Consequently, we expect in the future to see fewer violent swings in the gold price between markets. We do see that gold prices are reflecting exchange rate moves, which is what gold should do.

LBMA price setting:  The LBMA gold price was set today at $1,235.35 down from Friday’s $1,241.40.  

The gold price in the euro was set higher at €1,163.12 after Friday’s €1,166.29.

Ahead of the opening of New York the gold price was trading at $1,236.35 and in the euro at €1,163.90.  At the same time, the silver price was trading at $18.02. 

Silver Today –Silver closed at $18.00 at New York’s close Friday against $18.08 on the 16th February

Price Drivers

The week has started in a quiet mood with no startling gold related news moving prices. Sales from the U.S. based gold ETFs have held back prices below $1,240, but we don’t see them as precipitating a fall in the gold price today. We expect to see more consolidation today.

The august Alan Greenspan has said, “The European Central Bank (ECB) has greater problems than the Federal Reserve. The asset side of the ECB’s balance sheet is larger than ever before, having grown steadily since Mario Draghi said he would do whatever it took to preserve the euro.  I have grave concerns about the future of the Euro itself.  Northern Europe has, in effect, been funding the deficits of the South; that cannot continue indefinitely. The Eurozone is not working.” Greenspan said Brexit is almost certainly set to trigger a collapse of the ECB despite the UK not having signed up to take on the currency.

Alan Greenspan says that investors are back to safe havens including precious metals because there is no trust in the banking system. And he said countries cannot continue to borrow in the way that they have been signaling that quantitative easing is not working. He added: “I view gold as the primary global currency.

Alan Greenspan is not selling anything, is not given to extreme statements, but is an ex-Chairman of the U.S. Federal Reserve.

Central banks in all nations have to control their national currency. The more currencies face loss of confidence the more control over their own citizen’s money is needed. Within their own jurisdiction central banks almost cannot be held to account. That’s why Japan can sustain its horrendous debt, most of it is owned by their own citizens.

Outside it they are in danger [as we see in Greece today].  So, when Alan Greenspan himself makes the above statements we should be looking to gold, particularly those who have to live with the euro, before they can’t!

Gold ETFs – Friday saw sales of 2.37 tonnes from the holdings of the SPDR gold ETF and sales of 0.65 of a tonne from the Gold Trust.  Their respective holdings are now at 841.169 tonnes and 201.38 tonnes. 

Since January 4th 2016, 241.939 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 31.858 tonnes have been added to the SPDR gold ETF and the Gold Trust.

 Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

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Discussion of Positive Role for Gold Scorned by Fed Supporters

By Clint Siegner*

Michael Hiltzik, with the Los Angeles Times, recently published a column titled “The Worst Idea in the Presidential Debate: a Return to the Gold Standard.” He thinks “a return to the gold-standard would be so not right that it’s not even wrong.” It’s another way of saying the idea is so bad it defies analysis. Nevertheless, he tries anyway.

He’s terribly smug given his essential argument is for how great centrally planned monetary policy is. The collapse of the Soviet Union and other managed economies revealed the pitfalls of putting a handful of bureaucrats in charge of markets. But his point of view represents what most people are getting from the financial press, Wall Street, and Washington DC. Let’s have a look at Hiltzik’s main points then take them apart.

False Claim #1: The economic science is settled.

Fiat Money vs Gold

Mr. Hiltzik takes a page out of the playbook of climate activists. He wants people to believe that only wingnuts, Luddites, and Republican presidential candidates are still talking about gold. He cites a 2012 survey of economists supposedly “drawn from the entire spectrum of economic theory.” None thought a return to a gold standard was a good idea. Case closed.

One assumption is clearly wrong. The entire spectrum is not represented. None of today’s prominent Austrian school economists are included on the panel. You won’t find names like Mark Skousen, Hans-Herman Hoppe, Robert Murphy, or Joseph Salerno. But you will find Barry Eichengreen, who has criticized the Fed for not being interventionist enough, and Austan Goulsbee, who served as chief on Obama’s Council of Economic Advisors.

The truth is there are plenty of economists who question the stewardship and discretion of Congress, the president, and, especially, Federal Reserve bankers. Heck, even Alan Greenspan is criticizing the fed and talking about an important role for gold these days.

Richard Nixon closes Gold Window

Lots of people, not just economists, wonder if the Fed’s promise to foster higher prices forever is really working out for ordinary folks. Millions of Americans stand to get hurt by unlimited borrowing and money creation.

Following Nixon’s final abandonment of gold redeemability in 1971, all restraint vanished.

That is why presidential candidates talk about reforms. Last week, a 53-44 majority of senators voted for the Audit the Fed bill. It wasn’t enough to defeat the Democratic filibuster, but clearly frustration with the status quo is widespread.

Proponents of unlimited money creation and politburo style management of our currency and markets are the true wingnuts.

False Claim #2: A gold standard favors the wealthy, at the expense of everyone else.

Hiltzik tells us “As far back as the 19th century, it was well understood that the ‘stability’ provided by linking currencies and exchange rates to a fixed value of gold benefited only one economic class – creditors…” In other words bankers and the wealthy, people in a position to loan money, supported gold. The move to fiat currency benefitted everyone else.

Apparently Hiltzik isn’t familiar with the origins of the Federal Reserve. It is privately held by the largest banks (i.e. lenders) in the United States. It was devised, in secret, by the most prominent bankers and politicians of the early 20th century, and they certainly didn’t do it to help the poor. They did it to help themselves.

Since the formation of the Federal Reserve, the banking sector quadrupled as a percentage of GDP. Meanwhile, the wealth gap has been growing, and that trend accelerated dramatically about the time Nixon closed the gold window.

The current system is an unmitigated disaster for virtually everyone outside of Washington DC and Wall Street. Consider the following charts from Zerohedge detailing just how awful the recent trillions of dollars in money creation and unlimited expansion in government has been for Americans at large:

ZeroHedge Charts

Since Hiltzik seems to care about the common man, he should join the large and growing movement of people who want a return to sound money. The idea is so right for these times.