U.S. Gold ETFs put on another 4.75 tonnes

Gold TodayGold closed in New York at $1,279.00 on Tuesday up from Monday’s $1,274.40. On Wednesday morning in Asia it held at $1,272.75, as most exchange rates were close to yesterday’s levels, except the euro.

LBMA price setting:  $1,270.90 barely up from Monday’s $1,270.10.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  05  18

2016  04  17

SHAU

SHAU

268.71

268.64

268.15

267.85

Dollar equivalent @ $1: 6.5540

+$1: 6.5475

$1,275.22

$1,276.16

$1,272.57

$1,272.40

No dominant influences can be read into these gold prices as they are trading in such a tight trading range. What is happening of note is that the dollar is stronger today and the Yuan weaker, while the gold price is acting as an effective measure of all currency values against itself.

The trading pattern of gold is eerily tight and has been this week to date. To us, the longer it moves sideways, the greater the subsequent move, either way.

The dollar index is almost unchanged at 94.83, up from yesterday’s 94.54. The dollar is also slightly stronger against the euro at $1.1275, stronger than Tuesday’s $1.1323.

The gold price in the euro was set at €1,126.47 up from Monday’s €1,121.70.

Ahead of New York’s opening, the gold price was trading at $1,274.15 and in the euro at €1,129.67.  

Silver Today –The silver price closed in New York on Tuesday at $17.23 higher than Monday’s $17.14. Ahead of New York’s opening the silver price stood at $17.07.

Price Drivers

Today saw a very heavy imposition of duties on steel imports to the U.S.A. It’s a game changer!

Take a look at the ‘currency wars’ that have taken place over the last couple of years. Now we see the dollar bull market has ended, to stem the loss of competitive advantage the dollar has. The background psyche is that nations don’t have friends they have interests. Globalization favors the cheap exports which undermine local industry. There is no tactic in exchange rates that can combat that. The only way to stop it is to impose duties of sufficient levels to remove the advantage to importers of cheap products. It is called ‘protectionism’. The steel import duties are a major step down this road. Expect protectionism to grow, globally.

Why is this important to gold and silver? Because it directly affects currencies and their exchangeability! Protectionism is divisive. Such division favors gold and silver.  In turn, this eventually, will affect global currency liquidity. This brings back the importance of gold as a global trade facilitator.

Gold ETFs – Tuesday saw purchases of 4.754 tonnes of gold bought into the SPDR gold ETF or the Gold Trust. This leaves their holdings at 855.886 and 198.38 tonnes in the SPDR & Gold Trust, respectively.  

Once again this is a large amount in a day, but once again COMEX and foreign exchange rates rule the day.

Silver –The Silver price continues to hold around $17.00 waiting for gold to move. Gold:silver ratio has risen to nearly 75 again

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

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Will Fed Statement Boost Gold & Silver prices?

Gold TodayGold closed in New York at $1,244.80 up from $1,239.40 on Tuesday. On Wednesday morning in Asia it rose to $1,246, before the LBMA price setting.

LBMA price setting:  $1,244.75 up from Tuesday’s $1,234.5.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  04  27

2016  04  26

SHAU

SHAU

260.06

259.23

259.90

258.53

Dollar equivalent @ $1: 6.5060

$1: 6.4945

$1,243.28

$1,237.63

$1,242.59

$1,239.44

At the start of the week the Shanghai Gold Fixings were higher than those in London, but today we see them very much in line with New York, transitioning into London’s opening. So we can say that at the start of the process it appears that there is indeed a ’24-hour market’ for gold.  Time will tell if this continues and how the pricing power changes.

The dollar index is lower today, at 94.39 down from Tuesday’s 94.80. The dollar is weaker against the euro at $1.1314 from Tuesday’s $1.1283.

The gold price in the euro was set at €1,100.19 down from Monday’s €1,094.12.

Ahead of New York’s opening, the gold price was trading at $1,245.60 and in the euro at €1,100.94.  

Silver Today –The silver price closed in New York higher at S17.21 on Tuesday up from Monday’s $17.053. Ahead of New York’s opening the silver price stood at $17.32.

Price Drivers

Today, we will hear the statement from the Fed, but no press conference. In view of the less vigorous data since the last meeting, we expect the Fed to remain dovish and to, again, mention the dangers to the U.S. economy from outside of the country. The dollar may well be mentioned, as it remains below its peak, but has barely dropped since the last meeting. We believe the Fed wants it lower!

While markets are myopic, if we stand back and look at the long term, the dollar’s use in the global economy is waning and is set to drop considerably more. This implies a structural change in the gold and, eventually, silver markets, within the monetary system, that cannot be ignored the same way it is being ignored now.

Needless to say, this is all positive for gold and silver prices.

Gold ETFs – Yesterday saw no sales or purchases of gold to or from the SPDR gold ETF and the Gold Trust. This leaves their holdings at 802.654 and 187.56 tonnes in the SPDR & Gold Trust respectively.  

Silver – The silver price is showing robust behavior but following gold directionally. It promises to outperform gold in the future.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Chinese bank ICBC becomes a ‘Market Maker’ in London!

Gold Today Gold closed in New York at $1,230.20 up from $1,214.90 on Tuesday. On Wednesday morning in Asia, it fell to $1,226. London pulled it back slightly to see the LBMA price setting at $1,225.75 down from $1,231.50 on Tuesday.

The dollar index is slightly higher at 94.93 up from 94.72 yesterday. The dollar is stronger against the euro at $1.1345 up from $1.1370 on Tuesday.

The gold price in the euro was set at €1,080.43 down from €1,083.11 on Tuesday.

Ahead of New York’s opening, the gold price was trading at $1,220.85 and in the euro at €1,076.11.  

Silver Today –The silver price closed in New York at $15.13 down from $14.92 up 21 cents on yesterday. Ahead of New York’s opening the silver price stood at $15.02.

Price Drivers

As you can see in the ETF section below the gold and silver markets are becoming relatively quiet on the pricing front. Likewise the trading pattern of both gold and silver are tightening, particularly in gold. This points to a strong move, in the near future.

ICBC is made a ‘Market Maker’ in London

ICBC Standard Bank has been reclassified as a spot Market Making Member of the London Bullion Market Association with effect from yesterday. In order to qualify as a LBMA Market Maker, a company must offer two-way quotations in both gold and silver to the other Market Makers throughout the London business day. In deciding on the issue of reclassification, the Committee takes account of the views of the other Market Makers on the performance of the candidate company during an approximately three month probationary period.

Why is this of particular note? There are many reasons which we examine in our newsletters, but one is that the ICBC cannot export gold from China to sell in London, so where will it get gold from to sell?

Gold ETFs – We saw sales of 0.28 tonnes of gold sold from the SPDR gold ETF on Tuesday. There were also sales of 0.28 of a tonne of gold from the Gold Trust yesterday. This leaves their holdings at 815.435 715 and 186.96 tonnes in the SPDR & Gold Trust respectively.  

Silver – The silver price continues to consolidate around $15 ahead of a strong move either way.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

 

Gold and silver on pause – waiting for physical buying!

Gold TodayGold closed in New York at $1,199.60 but stood, in Asia, at over $1,212 this morning but then slipped back to $1,204 before London opened. Then the LBMA set it at $1,202 down from $1,212.00 down $10.00, with the dollar index stronger at 96.85 up from Monday’s 96.54.

The dollar is slightly stronger against the euro at $1.1144 up from $1.1171 on Tuesday. The gold price in the euro was set at €1,078.51 down from €1,084.95.

Ahead of New York’s opening, the gold price was trading at $1,207.40 and in the euro at €1,084.34.  

Silver Today –The silver price stood in Asia at $15.22.  Ahead of New York’s opening the silver price stood at $15.30.

Price Drivers

Tuesday saw no purchases or sales from or to the SPDR gold ETF or the Gold Trust, clearly waiting for gold to hit support. Their intention appears to be to buy at the best prices they can and not chase any price. The holdings of the SPDR gold ETF are now at 710.954 tonnes and at 179.19 tonnes in the Gold Trust. We don’t believe that after such strong buying investors have moved out of the market. We believe that they are readying to start buying the shares of the SPDR gold ETF soon.

China too appears to be waiting for the gold price to settle down, although while they could during the Lunar New Year holiday they piled into the shops to buy gold. Chinese demand remains robust. We also expect the post holiday fall-off in demand to be slight with lower prices and ongoing enrichment of the middle classes.

But yesterday saw the gold price hold lower levels because of the absence of gold ETF buyers in the U.S. Now that the gold price is bouncing off support at $1,200 we expect physical demand to come in again.

The media appears obsessed by growth in China and the Yuan exchange rate as though they are the factors hurting the developed world. We believe nothing could be further from the truth. China will internalize its debt problems and growth problems as they continue to change direction towards consumption and the development of the middle classes. It is a process the developed world has not seen since the Second World War. Such a process limits imports from the west.

Bear in mind the Chinese government rules the entire financial system there with an iron hand, unlike in the west. A 1% or 2% move, both ways this week, of the Yuan, are of no consequence!

The basic problem the developed world is facing is that global cash flow to itself is dropping over time from the 80% it enjoyed in 2000 to the eventual 35% in 2020. As of now its global cash flow is between 40% and 45% going to Asia and 55% to 60% to the developed world. The road forward is to see China and Asia producing all products that the west does, as well and cheaper.

China wants to become the No. 1 economy as independent of the Developed world as possible, to remove its vulnerability to it. This will divide the world and bring intense pressure on the developed world, long term. It is inevitable that this will bring additional financial and currency pressures to the globe.

With this in mind China is, through its citizens and institutions, buying as much gold as it can, as it foresees the day when gold will reinforce a failing global monetary system.  But even there, the government can, at the drop of a hat, confiscate the bulk of their gold. The Chinese are so obedient or fearful of government that they will hand in their gold if told to do so by government. Bear in mind too that Hong Kong is part of China.

Silver – The silver price is holding strongly above $15.00 and we expect will do so while gold is in this Technical pattern.

 

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

 

Volatility, bigger market moves and structural changes ahead for gold

Thursday saw sales from the SPDR gold ETF of 1. 19 tonnes and sales of 0.60 of a tonne from the Gold Trust. The holdings of the SPDR gold ETF are now at 644.749 tonnes and at 153.72 tonnes in the Gold Trust. With sales of this size we are inclined to attribute them to retail sales of speculative positions ahead of the holidays.

We do expect there to be dealer adjustments to prices as gold will follow the strengthening euro. But at this time of the year market activity will be thin. It is a good opportunity for larger speculators to jump the market to push it one way or the other as their impact will be proportionately bigger in thin trade.

But the market mood has changed from the slow downward path to a sideways movement as we see a more positive Technical shape. This shape could go either way still, but a glance across at the strengthening euro indicates direction for gold and silver. Until the market is out of holiday mode we doubt whether too much should be read into price movements.

The feeling that we are about to ride into a New Year is heavy in the air. Extrapolating what is happening at the end of 2015, what is becoming palpable is that the ‘lackluster’ 2015 will change to a 2016 with far more hormones [both ways?] bringing volatility, bigger market moves and structural changes. We note that the persistent media optimism about developed world economic prospects has more of a tone of hope than reality. In 2016 we expect events to break through this optimism as structural changes create divisions in the monetary world in 2016. This will apply to gold and silver worlds as they continue to act as monetary metals, ignoring their fundamentals.  Just how long the market participants accept prices that ignore fundamentals remains to be seen, but we expect the earlier part of 2016 to see major changes on this front. We do see structural changes in gold markets and in the monetary world which will directly affect gold and silver prices.

Julian D.W. Phillips for the Gold & Silver Forecasters –www.goldforecaster.com and www.silverforecaster.com

Greek deal will keep Euro weak vs dollar

Julian Phillips’ latest Market Morning

New York closed yesterday at $1,149.30 down $5.90 with Asia and London taking it $2 lower. The dollar was stronger at $1.0934 down from $1.1011 against the euro with the dollar Index at 97.27 up from 96.66 before London opened.  The LBMA gold price was set this morning at $1,145.10 down $9.65 in reaction to the rising dollar. The euro equivalent was €1,051.08 up €3.55. Ahead of New York’s opening, gold was trading in London at $1,145.20 and in the euro at €1,051.32.

The silver price fell to $15.11 down 27 cents in New York. Ahead of New York’s opening it was trading at $15.00.

The gold market continues to see thin trade with few buyers or sellers, allowing the gold price to be nudged around by currency moves. Short positions are at extremely high levels on COMEX as Janet Yellen made it clear the Fed wants to begin a very slow and small lifting of interest rates, so as not to damage the recovery that is still vulnerable. More importantly she wants to cause as little disruption to bond and equity markets as they transition out of no rates rises, with rates at record lows, to a market where the trend change for rates will be to the upside. We see the beginning of such rises occurring as 2015 ends, not before then, as the recent economic data from the U.S. is proving disappointing. We point out that rate rises have already been discounted in the gold price as they have been hyped for years now.

Nevertheless the gold price is being nudged down as the dollar moves stronger. There were no gold ETF sales or purchases yesterday with the holdings of the SPDR gold ETF still at 709.65 tonnes and at 167.40 tonnes in the Gold Trust.

Looking back at Greece, now that it will not impact the euro exchange rate, we stand back to see the ‘big’ picture. From there we see the objective of the E.U. as it has always been was to retain the weak member links to ensure a weak euro. Without a weak euro there would have been little point in including such members, as no global trade advantage would be gained and no drawing off of E.U. trade without a ‘fixed’ exchange rate via a common currency. With Greece accepting vast loans that both lenders and borrowers know cannot and will not ever be repaid, the weakest link Greece is now locked into the E.U. and the euro structured to remain weak. The competitiveness of German and other strong E.U. member exports, is now consolidated and it gains additional competitiveness that outnumbers any loan losses to Greece by considerably more than tenfold. This will directly impact U.S. export potential in the years to come [as is being seen on aircraft already].

Silver will likely fall faster than gold, just as it will rise faster. It will not move independently of gold.     Julian D.W. Phillips for the Gold & Silver Forecasters – www.goldforecaster.com and www.silverforecaster.com