Gold clobbered by big ETF sales. Silver hit even harder

Gold Today –New York closed Friday at $1,212.40. London opened at $1,207 today. 

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

         The $: € was stronger at $1.1408 after Friday’s $1.1414: €1.

         The Dollar index was stronger at 96.15 after Friday’s 95.98

         The Yen was weaker at 114.21 after Friday’s 113.70:$1. 

         The Yuan was stronger at 6.8034 after Friday’s 6.7990: $1. 

         The Pound Sterling was weaker at $1.2873 after Friday’s $1.2897: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    7    10

     2017    7    7            

     2017    7    6

SHAU

SHAU

SHAU

/

269.34

270.06

Trading at 267.50

269.52

270.35

$ equivalent 1oz at 0.995 fineness

@    $1: 6.8034

       $1: 6.7990

       $1: 6.8037     

  /

$1,232.15

$1,229.59

Trading at $1,222.94

$1,232.98

$1,230.92

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.]

 As you can see Shanghai has not dropped as far as New York or London. The price differential is very wide now on today’s price of $15.94 between Shanghai and London. We have no doubt that today gold, from the SPDR [GLD} is flowing across to Shanghai via HSBC the Custodian of the gold ETF.

The big question is will Shanghai pull up London and New York prices or will Shanghai be pulled down to a much narrower differential? At the moment it is New York and London that are pulling prices down, but at the cost of gold flowing eastwards.

Silver Today –Silver closed at $15.56 Friday after $16.01 at New York’s close Thursday.

LBMA price setting:  The LBMA gold price was set today at $1,207.55 from Friday’s $1,220.40.  The gold price in the euro was set at €1,069.40 after Friday’s €1.075.13.

Ahead of the opening of New York the gold price was trading at $1,212.75 and in the euro at €1,065.03. At the same time, the silver price was trading at $15.40. 

Price Drivers

The gold price breakdown on the Technical front is now being seen in their prices. Today, the gold price is holding just above $1,200 and the silver price tumbled over $1.23 in the last three business days. Where to now? It has taken around 27 tonnes of sales from the SPDR gold ETF over the last two weeks, with virtually no purchases to cause the breakdown in the gold price.

The G-20 meeting on Friday was the most dramatic one we have seen for over a decade. Instead of coming out with the usual platitudes, this one came out with divisions between the U.S. and the other major blocs, China and the E.U. There is a clear distance building up between the E.U. and the U.S. So much so that the euro could rise to $1.20 by year’s end. The E.U. has solidified a Free Trade Agreement between each other. The G-20 agreed to fight Protectionism but the U.S. was not included in that agreement.

As we have pointed out exchange rates will be affected. We would go so far as to say that an E.U. – China trade agreement would be conducted either in Euros or Yuan or both. The increasing path to isolation that appears to be being followed now will impact the dollar and heavily. We see the result of the G-20 meeting as being the entrance to a full blown multi-currency system. This is extremely positive for gold at all levels.

Gold ETFs – Yesterday saw sales of 5.324 tonnes from the SPDR gold ETF (GLD) but no change in the Gold Trust (IAU) holdings. The SPDR gold ETF and Gold Trust holdings are at 835.345 tonnes and at 210.76 tonnes respectively.

This was a hefty sale and follows two earlier sales last week of a similar size. Combine these sales with the 12 tonne sale the week before and the physical downward pressure was too much to hold the gold price above the “Golden Cross”.

Since January 4th 2016, 196.206 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 33.691 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips 

 GoldForecaster.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 

Gold and silver rising?

Gold TodayNew York was closed on Monday but closed at $1,325.60 on Friday after Thursday’s close at $1,313.30.  London opened at $1,330.

    • The $: € was almost unchanged at $1.1167 down from $1.1165 yesterday.
    • The dollar index was slightly weaker at 95.59 from 95.65 yesterday.
    • The Yen was almost unchanged at 103.26 from yesterday’s 103.28 against the dollar.
    • The Yuan was slightly stronger at 6.6800 from 6.6770 yesterday.

 

  • The Pound Sterling was stronger at $1.3338 from yesterday’s $1.3328.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
     2016  09  6

2016  09 5

SHAU

SHAU

285.59

284.84

285.73

285.24

Dollar equivalent @ $1: 6.6800

$1: 6.6770

$1,329.77

$1,326.87

$1,330.42

$1,328.73

After a lackluster day in London, when the gold price sat around $1,326 all day, Shanghai took the gold price higher to $1,330 and London held it there at the open. Will New York follow suit?

The Yuan was slightly weaker against the dollar once more. The pound continued to strengthen as you can see.

LBMA price setting:  The LBMA gold price setting this morning was at $1,330.05. Yesterday it was at set at $1,328.30.

The gold price in the euro was set on Tuesday at €1,191.05 up strongly on yesterday’s 1,189.91.

Silver Today –The silver price held its level while New York was closed at $19.36, after $19.39 yesterday.  

Price Drivers

With New York closed we saw London do nothing and then follow Shanghai this morning. With London being the center of physical demand and supply one would have expected London to lead the way, but is followed both New York and Shanghai. But we do need to see strong moves to see clearly which market holds pricing power. At the moment it is New York and has been for a long time. Gold itself wanted to drift higher, which should set the tone for New York today.

Another underwhelming G-20 meeting was held in Shanghai where only the nicest things were said about China’s hosting the event and the inclusion of the Yuan in the currencies that make up the SDR of the IMF.  Essentially, it is recognition of the present and growing use of the Yuan in the world monetary system. Having set that milestone in place we expect to see a steady erosion of the use of the dollar in global trade at the expense of the dollar over time.

We see the role of gold growing in this structural change largely being used to ‘smooth out’ the transition’.

In our next issue of the Gold Forecaster we will discuss just what strategy will tremendously increase your returns in a time when gold prices are rising and just how to maximize returns, when it is not.

Over in China, we note there is a number that is not issued and could well have a big impact on the volumes imported into China. While Chinese officials point to the withdrawals from the Shanghai Gold Exchange as a measure of imports into China, the size of gold holdings in the SGE are not published. It is possible that these could be growing solidly, increasing the levels of imports. While the People’s Bank of China uses SAFE and others to hold gold for them before these are included in “Official reserves” we note that the PBoC controls the SGE and may well also hold gold through the SGE? Usually “Official Gold Reserves” are imported separately and not included in SGE numbers but there is no reason why they should not be, in reality, part of these.

Gold ETFs – As New York was closed yesterday there were no sales or purchases into or from the SPDR gold ETF or from or to the Gold Trust, leaving their respective holdings at 937.89 tonnes and 225.39 tonnes.

Silver – The silver price is keen to follow gold but needs to see action in New York after the holiday yesterday before we see any big moves.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Physical gold liquidity stretched.  Are central banks meeting the supply shortfall?

Gold TodayGold closed in New York at $1,367.20 on Friday after Thursday’s close at $1,359.10.  In Asia the gold price also fell slightly further as you can see below  

  • The $: € rose to $1.1048 down from $1.1075.
  • The dollar index was rose to 96.60 from 96.17 Friday.
  • The Yen was weaker at 102.48 from Friday’s 100.55 against the dollar.
  • The Yuan was slightly weaker at 6.6902 from 6.6830 Friday.
  • The Pound Sterling stayed almost the same at $1.2942 as Friday with more falls expected this week as the B. of E. adds further easing of interest rates! Or has this been discounted.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  11

2016  07  8

SHAU

SHAU

294.97

291.58

293.48

292.05

Dollar equivalent @ $1: 6.6902

$1: 6.6883

$1,371.35

$1,355.97

$1,364.32

$1,358.16

The fall in the Yuan continues. Other exchange rates are relatively stable, ignoring the U.S.  jobs report last Friday. The big event of the week is expected to come from the Bank of England on interest rates, later in the week.

LBMA price setting:  $1,358.25 up from Friday 8th July’s $1,356.10.

The gold price in the euro was set at €1,229.41 up €4.16 from Friday’s €1,225.25.

Ahead of the opening in New York the gold price stood at $1,355.75 and in the euro at €1,227.65.  London is trying to establish a pattern of lower prices ahead of New York when it feels physical buying may not appear in New York and in particular the gold ETFs. The moment physical interest is shown in the ETFs the gold price is lifted.

Silver Today –The silver price closed in New York at $20.19 on Friday up from $19.67 Thursday.  Ahead of New York’s opening the price was trading at $20.27.

Price Drivers

This week starts with a warning from China to the G20 calling for them to lead the global economy back to growth. But a look at the last 8 years of the G20’s failure to supply such leadership and the inactivity on that front and absence of any plans to promote such growth in the future makes such warnings rather pointless.

The Technical picture shows us that the latest period of consolidation appears to be ending ahead of the next strong move. With Friday seeing more physical gold being purchased after a sale, the time is right for another purchase. The question is, will it wait for the Bank of England’s announcement or hit the market on any ‘dip’ in prices before then?

The U.S. Jobs report on Friday was very good [but subject to re-adjustment in the days to come]. The effect on global markets was negligible and dissipated today. The feel of the market remains positive for gold and silver prices.

In India the monsoon is now 1% higher than the ‘normal’ level seen on average. If this continues demand for gold in India from the agricultural community will be as high as it has ever been.

As we said last week, the only restraint we see on the gold price is an Indian propensity to hold back when prices are rising strongly.

Gold ETFs – In New York, Friday, there was a purchase of 2.97 tonnes into the SPDR gold ETF (GLD) leaving its holdings at 981.256 tonnes. In the iShares Gold Trust (IAU) a purchase of 0.9 of a tonne was seen on Friday leaving its holdings at 214.09 tonnes. Perhaps it was the lower price that prompted the purchase? If so we are likely to see more buying this week.

It was reported to the SEC that older bars are now being put into the Custodian of the SPDR gold ETF. It may simply be a market coincidence, but older bars are usually synonymous with central bank holdings. Is it possible that London’s liquidity levels are dropping to the point where central banks are propping up its liquidity level?

We must point out that when the U.S. SPDR gold ETF and others together with the U.S. banks sold gold from 2012 peaks to the heavy falls in April 2013 the gold sold did not sit in the developed world’s gold markets but made its way primarily through Switzerland [where it was refined into metric sizes] to the Far East [China in the main].

This meant it was not going to come back when demand was resuscitated again. The tonnages of gold bought back into U.S. gold ETFs is over 500 tonnes, in total, so far this year. With most previously sold gold not available and the bulk of gold supplied into the market continuing to be absorbed by the Far East, the additional amounts needed for this new U.S. gold ETF demand has to come out of a new source.

We have watched liquidity levels of gold in the markets drying up, assisted no doubt by the Chinese Bank [ICBC-Standard] which has taken over from Barclays as a sub-Custodian for HSBC [Custodian of the SPDR gold ETF]. So where is this gold coming from? Older gold bars are likely to come from older stocks thus increasing the strain on London’s gold liquidity levels.

Since January 4th this year, the holdings of these two gold ETFs have risen by 397.75 tonnes.

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

Julian D.W. Phillips

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

Gold’s golden cross as negative interest rates help boost price

By Frank Holmes, CEO and Chief Investment Officer for US Global Investors

'Golden Cross' for Gold
click to enlarge

Last Friday, gold experienced a “golden cross,” a technical indicator that occurs when an asset’s 50-day moving average crosses above its 200-day moving average. It’s the first such movement in nearly two years and is a sign that gold might have further to climb.

But there’s more exciting news involving gold. On the same day that New Jersey Governor Chris Christie endorsed Donald Trump for president, the precious metal received its own high-profile endorsement. In a note to investors, Deutsche Bank said it’s time to buy gold, writing: “Buying some gold as ‘insurance’ is warranted.” The bank also stated its opinion that gold “deserves to be trading at elevated levels versus many other assets.”

The metal is already up 15 percent so far in 2016, its best start to the year in decades. But it started 2015 strong too, if you remember, before prices began to collapse in February.

Inflation consumes the return on your five-year Treasury bond.So what’s the difference between then and now?

Gold owes a lot of its success this year to negative real interest rates, something it didn’t have on its side in early 2015. As I’ve mentioned many times before, the metal has historically done well when real rates turned negative (because then you essentially end up paying the government to hold on to your money). To get the real rate, you subtract the consumer price index (CPI), or inflation, from the five-year Treasury yield. If it’s positive, investors will be more likely to put their money in Treasuries, and if it’s negative, they’ll seek out other stores of value—including gold.

In January 2015, the five-year Treasury yield averaged 1.37 percent, while inflation, less food and energy, posted a tepid 0.2 percent. This resulted in an overall real rate of 1.35 percent—a headwind for gold.

But here we are a year later, and real rates have gone subzero. With the five-year yield at 1.51 percent and inflation at a healthy 2.2 percent—its strongest reading since June 2012—real rates have dropped to negative 0.69 percent. This has helped make gold much more attractive to investors. For the month, as of February 24, the precious metal has risen nearly 10 percent.

How Real Interest Rates Drive Gold

There’s another way of looking at inflation, though—the ShadowStats Alternate Consumer Inflation index. For years, economist John Williams’ site ShadowStats.com has reported actual, or “real,” economic data that often tell a very different story from the official government numbers.

Williams argues that at one time, the official CPI was useful in determining changes in consumer prices year-to-year. But government officials continued to tinker with their methodologies, in effect “moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living.”

Below you can see the actual inflation rate, according to ShadowStats, based on 1980 methodologies. Whereas the official CPI is 2.2 percent, “real” inflation is running closer to 9 percent, adding to gold’s allure.

Official Inflation vs. ShadowStats Inflation
click to enlarge

Oil Rallies Following S&P 500’s Best Week of 2016

Following the S&P 500 Index’s best week of 2016, oil prices are strengthening on news that Russia and Saudi Arabia, the world’s two largest producers, are scheduled to meet next month to discuss possible production cuts. This, along with rising gasoline demand in the U.S., seasonality trends and supply disruptions in Iraq and Nigeria, has helped push both Brent and West Texas Intermediate crude comfortably above $30 per barrel. It was oil’s best week since August 2015.

The rally has given investors renewed confidence in domestic stocks after one of the largest equity selloffs earlier in the year. The correlation between crude and S&P 500 stocks is currently at levels not seen since 1990, according to the Wall Street Journal.

Brent Oil and Domestic Stocks Began to Decouple…But Have Been Trading Closely Together Year-to-Date
click to enlarge

Oil’s gain arrives at a time when President Obama announces plans to impose a $10.25 “fee” on every barrel of crude sold in the U.S. The details are fuzzy at this point, but the revenue would reportedly go toward clean energy initiatives such as electric cars, charging stations, public transit and high-speed rail.

These are all admirable goals, but charging oil companies what’s essentially a tax is the wrong way to go about it. The proposal has already been met with strong criticism from analysts and think tanks, who estimate that, if enacted, it would push up production costs, hurt employment and capital formation and lead to slower growth. The Congressional Research Service (CRS) concludes that oil and gas prices would rise, while the Tax Foundation writes:

[T]he annual level of GDP would be 0.3 percent less than otherwise (an annual loss of $48 billion in terms of the 2015 economy), private business capital stocks (e.g., equipment, structures) would be 0.6 percent lower, and 137,000 full-time jobs would be lost.

Again, affordable and reliable clean energy is a noble pursuit, but in the case of the $10.25 tax, the costs far outweigh the benefits. A much better and possibly more consequential strategy can be found in private sector efforts such as Bill Gates’ recently-founded Breakthrough Energy Coalition. Together with a couple dozen other billionaire businessmen and executives—including Richard Branson, George Soros, Mark Zuckerberg, Amazon CEO Jeff Bezos, Bridgewater Capital founder Ray Dalio and Alibaba CEO Jack Ma—Gates plans to invest billions into clean energy innovations over the next several years.

Cheniere Energy becomes the first-ever U.S. company to export liquified natural gas (LNG).

We’re encouraged by the fact that the U.S. just launched its first-ever shipment of liquefied natural gas (LNG) for export. The LNG, sold by Houston-based Cheniere Energy, left the Sabine Pass terminal in Louisiana last week and headed for market in Brazil.

This historic event confirms the U.S. as a major energy superpower, with the potential to be the world’s top supplier, and it should help support LNG demand around the world. The industry has a bright future.

Trans-Pacific Partnership the Cure for Sagging Global Trade

Here at U.S. Global Investors, we follow government policy closely because it’s a precursor to change. The political party matters little. It’s the policies that have the most significant ramifications, and both major American parties are capable of creating both good and truly awful policies.

Having said that, I might disapprove of Obama’s 10 percent oil tax, but I applaud him for continuing to put his weight behind the ratification of the Trans-Pacific Partnership (TPP). The TPP, as I’ve pointed out numerous times before, would help global trade by eliminating 18,000 tariffs among the 12 participating Pacific Rim countries. Last week the president said he planned to send the agreement to Congress for a vote sometime this year, and when that day comes, I urge our senators and representatives from both sides of the aisle to make the right choice.

Now more than ever, global trade needs a boost. According to the CPB Netherlands Bureau for Economic Policy Analysis, the value of goods traded across the globe, in dollar terms, fell a whopping 13.8 percent in 2015 after falling 2 percent the previous year.

Meanwhile, world trade volumes grew only 2 percent in 2015, the slowest year since the financial crisis, according to a recent report by the Organization for Economic Cooperation and Development (OECD).

Significant Slowdown in Global Trade Growth
click to enlarge

The OECD additionally trimmed its 2016 growth outlook to 3 percent, down 0.3 percentage points from its November projection.

Joining the OECD in downgrading growth projections is the International Monetary Fund (IMF), which lowered its forecast 0.2 percentage points to 3.4 percent. To strengthen growth, G20 countries should “reduce overreliance on monetary policy,” the IMF writes in a report ahead of the meeting among finance ministers and central bank governors in Shanghai past weekend. Further, “credible and well-designed structural reforms” are needed to “lift potential output” and provide some “coordinated demand support.”

I second the IMF’s calls for G20 nations to rebalance their monetary and fiscal policies and to reform rules and regulations that stand in the way of global trade. The TPP, which will involve countries that represent 40 percent of the world’s GDP, is a step in the right direction. But for synchronized growth to be achieved, more will need to be done.

Gold ETFs continue building; Silver decouples downwards

Gold TodayGold closed in New York at $1,222.80 down from $1,233.00. In Asia on Monday, it rose to $1,231.25 ahead of London’s opening. It then rose further to be set by the LBMA at $1,234.15 up from $1,231.00.  Since Friday’s setting, gold fell to $1,212 but not on physical selling. The dollar index is stronger at 98.25 up from 97.39 on Friday.

The dollar is up against the euro at $1.0895 up from $1.10248 on Friday. The gold price in the euro was set at €1,132.77 up from €1,116.65.

Ahead of New York’s opening, the gold price was trading at $1,232.00 and in the euro at €1,131.05.  

Silver Today –The silver price closed in New York at $14.65 down 48 cents.  Ahead of New York’s opening the silver price stood at $14.80.

Price Drivers

The result of the G-20 meetings, as usual, were disappointing. There was no real consensus on government support for solid growth and a warning was given by Mark Carney of the Bank of England that monetary policy was not sufficient to stimulate growth and that negative interest rates directly weaken exchange rates, eventually to no avail. The E.U. and Japan were the targets of this statement.

More importantly it is clear that if such policies were not halted it will be ‘every man for himself’ in a currency ‘war’! The euro went much weaker this morning as perhaps more negative interest rates were on the way. The Yen remains strong, still attracting capital.

Gold ETFs On Friday there were purchases of 2.82 tonnes into the SPDR gold ETF and purchases of 0.27 of a tonne into the Gold Trust. The holdings of the SPDR gold ETF are now at 762.405 tonnes and at 188.52 tonnes in the Gold Trust.   While Friday saw smaller but continuous purchases they were not heavy enough to have a forceful effect on the gold price. Please note that the price remains in the hands of U.S. investors.

Indian demand remains on the sidelines until the Indian budget details are out, today. Demand was held back hoping for a cut in duties in the last week. If duties are cut then the demand will jump as buyers see up to a 10% cheaper price there. That brings prices down from [see below] nearly Rs.85,000 an ounce to Rs.76,500. That will draw out new Indian demand. It will also make it much more attractive for Indian investors as the ‘spread’ on prices will narrow significantly, making both trading and investment more attractive.

It is feasible that the Indian government will drop duties, because the Trade Balance of Payments has improved significantly because of the plunge in oil prices, giving space for a popular decision such as the lowering of duties on gold.

Silver – For the first time in years the silver price broke away from the gold price and fell heavily. Yes, the gold price did fall and attempted to threaten the Technical picture for gold, but has started the week higher in a much better Technical picture. So we have to watch to see if silver will bounce back, like gold or has it really broken away. How it performs today will guide us on this. So today is a day for gamblers while professionals gauge the picture carefully.  

 

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Time to buy gold as OECD and IMF warn

Gold TodayGold closed in New York at $1,233.00 up from $1,229.20 on Thursday. In Asia, it rose to $1,237 ahead of London’s opening. It then pulled back during the morning to be set by the LBMA at $1,231 down from $1,235.40. The dollar index is slightly weaker at 97.39 up from 97.44 on Thursday.

The dollar is almost the same against the euro at $1.1024 up from $1.1028 on Thursday. The gold price in the euro was set at €1,116.65 up from €1,120.24.

Ahead of New York’s opening, the gold price was trading at $1,237.00 and in the euro at €1,121.79.  

Silver Today –The silver price closed in New York at $15.13 down 11 cents.  Ahead of New York’s opening the silver price stood at $15.13.

Price Drivers

There was no change in the SPDR gold ETF or the Gold Trust yesterday. The holdings of the SPDR gold ETF are now at 760.323 tonnes and at 188.25 tonnes in the Gold Trust.  Today in the U.S., is a frantic day, as Friday’s usually are, so be ready for action! The Technical picture remains positive.

This time COMEX did not drag prices down when there was no activity in the gold ETFs.

Indian demand has remained muted with discounts on the gold price. This is for two reasons, the first being that the recent price jumps were too big and too quick, so Indian buyers retreated to the sidelines.

More importantly and secondly, with the Indian budget coming up next week, the hope that government will lower the 10% of duties they imposed on gold imports will be lowered. This would reduce, if not eliminate, smuggling [possibly responsible for an extra 250+ tonnes extra of imported gold]. Then ‘official’ if not real, import figures would change. But right now we expect a shunt-effect as demand is held back to be released after the budget, whether or not duties are lowered.

We are informed that the expected Yuan Gold Fix on the Shanghai Gold Exchange will begin on the 19th April. At least 10 banks will be involved including some foreign banks. We expect the volumes traded of physical gold will be very large. This marks one of several structural changes in the global gold market which will change its shape and nature.

Meanwhile, across in the developed world, the G-20, usually a disappointing event, commences today. The OECD and IMF have issued strong warnings that debt is too high and unless governments step up to the plate to promote real growth [fiscal policies and infrastructural projects for a start] the downward trend in growth will continue. We can’t see governments doing this after 8 years so far, of failing to do this after the ‘Credit Crunch’. Warnings concerning a ‘currency war were also given by the Bank of England.

Citibank has come out and warned of a global recession coming. With the continuing shift of wealth and trading power continuing to eat away at the developed world, only vigorous action by governments can stop the rot. But when Germany opposes Fiscal stimulus ‘because debt levels are too high’, then we begin to lose hope!

Silver – The silver price is now holding back despite the continued positive picture for gold.

 

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance