French result hammers gold and silver

Gold Today –New York closed at $1,285.90 Friday after closing at $1,279.20 Thursday. London opened at $1,271.20 today. 

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

         The $: € was significantly weaker at $1.0843 after Friday’s $1.0695: €1.

         The Dollar index was weaker at 99.18 after Friday’s 99.94

         The Yen was weaker at 110.108 after Friday’s 109.18:$1. 

         The Yuan was barely changed at 6.8865 after Friday’s 6.8867: $1. 

         The Pound Sterling was weaker at $1.2787 after Friday’s $1.2833: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    4    24

     2017    4    21

     2017    4    20    

SHAU

SHAU

SHAU

/

285.10

285.30

/

285.11

285.23

$ equivalent 1oz @    $1: 6.8865

       $1: 6.8867

       $1: 6.8837

      

  /

$1,287.64

$1,289.11

/

$1,287.69

$1,288.79

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.]

 The Shanghai Gold Exchange was trading at 285.00 towards the close today. This translates into $1,282.23. New York closed at a $3.67 premium to Shanghai’s Friday close. London opened at a discount of $11.03 after hearing the results of the French elections.

As you can see Shanghai has been remarkably stable over the last few days as the international scene has produced a lot of action. Over the weekend the Chinese government has pressured North Korea to abandon its nuclear programs. This removes the chance of a U.S. China confrontation and war. The consequences of a renewed North-South Korean war would need a major incident to trigger it. Will it happen?

Before London fell gold prices were marked down, not traded down by $13.00. We would expect these prices to recover when real dealing begins. But so far London has not led the way, Will New York?

LBMA price setting:  The LBMA gold price was set today at $1,271.80 from Friday’s $1,281.50.  

The gold price in the euro was set at €1,171.84 after Friday’s €1,198.00.

Ahead of the opening of New York the gold price was trading at $1,270.25 and in the euro at €1,171.10. At the same time, the silver price was trading at $17.80. 

Silver Today –Silver closed at $18.96 Friday after $18.01 at New York’s close Thursday, but dropped sharply on the French election result.

Price Drivers

The dollar index is weaker primarily against the euro, on the Macron victory in France.  Technically gold is sitting on support, while still consolidating.

Jack Mar on Artificial intelligence

Jack Mar of Alibaba, has been the first high profile person to state an obvious regarding artificial intelligence solutions and robotics impacting the workforce.  That has been going on for decades now and is capable of producing major social shocks in the future. We have reported that this could cost the world 50% of jobs. No nation will escape this trend. In history [France, Russia] the impoverishment of the people was responsible for revolutions. Certainly the world is unprepared for such events.  Gold will benefit from the coming disruptions.

Trump Tax reform

President Trump has announced that on Wednesday the principles of his Tax Reformation will be unveiled. This is needed to bolster his political momentum, which has faltered since his failure to repeal Obamacare. The reformation will only be implemented in a few months, though.

France

The Macron victory with Marine le Pen in the run-off in two weeks time is being read as Macron will be President. The parties that were defeated told their supporters to support Macron. This takes France leaving the Eurozone and the euro off the table. But amazingly Macron does not have a political party behind him. So his effectiveness is by no means certain.

Marine Le Pen is for leaving the E.U. and euro. If we are right and whether or not France might leave the E.U. is the fundamental issue, Macron will be President, which is why the euro is strong and a great deal of fear of the breakup of the E.U. is off the table. It does not make the E.U. strong, but it does keep the status quo. The E.U. continues to remain weak in its structure. Italy, for instance is more than capable of leaving the E.U. with its current problems.

Gold ETFs – Friday saw purchases of 4.44 tonnes into the SPDR gold ETF but no change in the Gold Trust. Their holdings are now at 858.69 tonnes and at 204.36 tonnes respectively.

Since January 4th 2016, 261.696 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 51.64 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Advertisements

Largish sale from GLD but gold price still consolidating

 Gold Today –New York closed at $1,281.20 yesterday after closing at $1,279.20 Wednesday. London opened at $1,281.00 today. 

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

         The $: € was stronger at $1.0695 after yesterday’s $1.0766: €1.

         The Dollar index was stronger at 99.94 after yesterday’s 99.46

         The Yen was weaker at 109.18 after yesterday’s 109.03:$1. 

         The Yuan was weaker at 6.8867 after yesterday’s 6.8837: $1. 

         The Pound Sterling was weaker at $1.2787 after yesterday’s $1.2833: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    4    21

     2017    4    20

     2017    4    19    

SHAU

SHAU

SHAU

/

285.30

286.11

/

285.23

285.75

$ equivalent 1oz @    $1: 6.8867

       $1: 6.8837

       $1: 6.8854

      

  /

$1,289.11

$1,292.45

/

$1,288.79

$1,290.8

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.]

 The Shanghai Gold Exchange was trading at 285.10 towards the close today. This translates into $1,282.64.

All three global gold markets are in line with each other. At this moment in time, we don’t see that the three are leading or following each other, but the closeness of prices tells us that arbitrageurs are doing a very professional job of smoothing out the gold markets across the world. New York closed $1.44 below Shanghai’s closing yesterday and today. London opened at a $1.46 discount to Shanghai in line with New York. This is the closest we have ever seen them.

LBMA price setting:  The LBMA a.m. gold price was set today at $1,281.50 from yesterday’s $1,279.90.  

The gold price in the euro was set at €1,198.00 after yesterday’s €1,191.05.

Ahead of the opening of New York the gold price was trading at $1,284.15 and in the euro at €1,200.59. At the same time, the silver price was trading at $17.99. 

Silver Today –Silver closed at $18.01 yesterday after $18.14 at New York’s close Wednesday.

 Price Drivers

The dollar is recovering against other currencies today with gold rising in the dollar. Technically gold is sitting on support, while still consolidating.

France

With the French elections taking place this weekend, after another terror attack the mood in the world remains dark. The French polls are reminding us of the polls before the U.S. election, so we do not rate their abilities too highly. There is always a danger that we get so used to the dark side of the world that it becomes a ‘new normal’ but we do expect such attacks [in Paris today] to affect voters in France. Next week could see two euro-skeptics in the run-off for the Presidency.

Expectations too high

Currency markets are behaving in an unpredictable fashion at the moment as are markets.

Equity markets are too high and not for the right reasons as the U.S. recovery is still moderate and not such that gives rise to the current record highs we are seeing. Likewise in Europe with its tentative recovery. The IMF has increased its forecasts for the coming years. We would like to see more reasons and sustainability before endorsing such opinions. There are too many potential events that could disturb such a positive picture. What we do draw from the global scene is that the environment remains positive for gold.

China

When we see China reporting an increasingly robust economy we see a nation that is doing its best to be a separately, self-sustaining economy with supplies coming from countries not under U.S. influence. We do not see the U.S. and China working interdependently with each other in the future. China will walk its own road.

Russia

Russia continues to publicize the gold it buys, with last month’s purchases just below 25 tonnes. We do believe that China continues to build up its reserves in its institutions and through its agencies, but for whatever reason, has decided not to be open about this.

Gold ETFs

Yesterday saw sales of 6.513 tonnes from the SPDR gold ETF but no change in the Gold Trust. Their holdings are now at 854.25 tonnes and at 204.36 tonnes respectively.

Since January 6th 2017 47.20 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips 

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Huge gold purchase into GLD fails to boost price

 

 Gold Today –New York closed at $1,279.20 yesterday after closing at $1,290.10 Tuesday. London opened at $1,279.15 today. 

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

         The $: € was weaker at $1.0766 after yesterday’s $1.0724: €1.

         The Dollar index was weaker at 99.46 after yesterday’s 99.66

         The Yen was weaker at 109.03 after yesterday’s 108.99:$1. 

         The Yuan was slightly stronger at 6.8837 after yesterday’s 6.8854: $1. 

         The Pound Sterling was weaker at $1.2833 after yesterday’s $1.2857: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    4    20

     2017    4    19

     2017    4    18    

SHAU

SHAU

SHAU

/

286.11

286.04

/

285.75

286.03

$ equivalent 1oz @    $1: 6.8837

       $1: 6.8854

       $1: 6.8847

      

  /

$1,292.45

$1,292.26

/

$1,290.82

$1,292.22

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.]

 The Shanghai Gold Exchange was trading at 285.90 towards the close today. This translates into $1,286.82. While New York and London were pulled lower by Shanghai yesterday and today you will note that Shanghai has barely changed in the last two days.

New York closed $7.62 below Shanghai’s closing yesterday and today. London opened at a $7.67 discount to Shanghai in line with New York.

Shanghai continues to lead the way in the gold markets, barely changing its prices over the last two days, despite very heavy buying in New York into the U.S. based gold ETFs and the dollar weakening. We feel it is important to factor the current dominance of Shanghai’s pricing of gold over that of London and New York.  In line with this, we expect Shanghai to exert an upward pull on New York and London’s prices for the rest of this week.

This pull of Shanghai’s gold prices may grow in the coming months as the Chinese government has now committed itself to a stable Yuan [primarily against the U.S. Dollar.] It has separated broad Capital Controls from individual investment requests to invest overseas. Investments that directly benefit the Chinese economy will continue and remain unaffected by Controls, as permission for non-China benefitting investments which will continue to be refused. Already this is stabilizing the Yuan and will continue to do so as the Chinese economy is now growing on a stable footing, once more. Hence we expect the Yuan to remain at less than 7.00 to the U.S. dollar for the foreseeable future.

LBMA price setting:  The LBMA gold price was set today at $1,279.90 from yesterday’s $1,282.05.  

The gold price in the euro was set at €1,191.05 after yesterday’s €1,195.72.

Ahead of the opening of New York the gold price was trading at $1,278.60 and in the euro at €1,189.73. At the same time, the silver price was trading at $18.20. 

Silver Today –Silver closed at $18.14 yesterday after $18.32 at New York’s close Tuesday.

 Price Drivers

The dollar continues to weaken and U.S. buyers are now piling into the SPDR gold ETF and the Gold Trust and yet the gold price fell in New York. If Shanghai continues to exert pricing power over the gold price as we see now, U.S. physical buying and selling will have a decreasing effect on the gold price. We expect less volatility in gold prices if this comes to be. This is a significant change in the structure of the gold price. We are watching to see if this change becomes permanent or is simply a short term factor.

If we are right, then we expect the gold price to recover in New York and London soon, as the factors that have caused gold prices to rise in the past [a weak dollar and U.S. physical demand] are in place right now.

With the French elections coming up this weekend some believe that the euro is soon to fall. If Marine le Pen is elected to the Presidency in the second round of the elections, the future of the Eurozone will be in doubt. With the Polls indicating that Macron is more likely to pick up the votes of the other two defeated candidates, the prospects of a Le Pen Presidency looks unlikely.

Gold ETFs – Yesterday saw purchases of a huge 11.842 tonnes into the SPDR gold ETF (GLD) and a purchase of 0.9 of a tonne into the Gold Trust (IAU). Their holdings are now at 860.763 tonnes and at 204.36 tonnes respectively.

Since January 6th 2017 53.713 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance