Global gold and silver prices rebounding

Gold Today –New York closed yesterday at $1,220.30. London opened at $1,222.15 today. 

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

         The $: € was stronger at $1.1402 after yesterday’s $1.1448: €1.

         The Dollar index was almost unchanged at 95.75 after yesterday’s 95.76

         The Yen was stronger at 113.03 after yesterday’s 113.36:$1. 

         The Yuan was stronger at 6.7821 after yesterday’s 6.7881: $1. 

         The Pound Sterling was stronger at $1.2927 after yesterday’s $1.2855: £1.

Yuan Gold Fix
Trade Date     Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    7    13

     2017    7    12            

     2017    7    11

SHAU

SHAU

SHAU

/

268.39

267.30

Trading at 269.60

268.58

267.30

$ equivalent 1oz at 0.995 fineness

@    $1: 6.7821

       $1: 6.7995

       $1: 6.8034     

  /

$1,222.72

$1,217.03

Trading at $1,231.42

$1,223.59

$1,217.03

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.]

 New York followed Shanghai higher yesterday leaving a $2.40 differential. Today, London turned higher, also following Shanghai but raising the differential to $9.27 from yesterday’s $7.

All global gold markets are seeing a rebound from the breakdown of the Technical picture from $1,250.  

Silver Today –Silver closed at $15.92 yesterday after $15.84 at New York’s close Monday.

LBMA price setting:  The LBMA gold price was set today at $1,221.40 from yesterday’s $1,219.40.  The gold price in the euro was set at €1,071.03 after yesterday’s €1.064.23.

Ahead of the opening of New York the gold price was trading at $1,220.80 and in the euro at €1,071.35. At the same time, the silver price was trading at $15.90. 

Price Drivers

The gold price is rebounding and not simply because it is a natural market move to do so. Janet Yellen’s comments yesterday in front of the Senate are playing a part. We expect more of the same from her today.

The Fed

Janet Yellen’s comments yesterday made it clear that the Fed wants a ‘neutral’ interest rate, neither higher than inflation nor lower. At the moment it is lower, but with inflation falling in the U.S. the Fed may well delay another rate hike beyond year’s end because they may  see ‘neutral’ rates without raising rates again this year. This has softened the dollar, which at one point nearly touched the point at which the dollar falls into a ‘bear’ market. We see that as coming very soon. It will benefit the dollar gold price.

The Gold Price

We do note that with demand and supply nearly in balance in London before the breakdown the sales over two weeks of 27 tonnes of physical gold into the London Market tipped that balance and the price fell.

What is important to understand about the gold price is that it does not reflect total demand and supply. For instance, in June, some reports suggest 220 tonnes of gold were sold into India (Although others suggest a much smaller 75 tonnes – Editor). This did not impact the gold price, because it did not go through the market. It was contracted and a price between the contractors was set against the afternoon price setting in London. It did not travel through the market. But sales from the SPDR cause the Custodian to unload that gold into the London market, which does affect the price. Essentially, the gold price is determined by  what is called the ‘marginal’ supply and demand, that is the unforeseen amount that are needed or got rid of in the market. Of course, this does not reflect total demand and supply and allows speculators considerably more pricing power than would be the case if all gold sales and purchases do go through the market.

In China there is an interbank market in gold, which operates off market, but the bulk of the physical gold bought and sold does go through the Shanghai  Exchange . With both an institutional and now a retail physical arbitrage market between London and Shanghai in operation Chinese and other international investors can affect price by dealing between the markets.

We believe that where gold is contracted between two parties they may  well find that the Shanghai Benchmark prices are more reflective of a truer gold price than the LBMA gold price settings and adjust the price they use to Shanghai’s in the future, as some exchanges are already doing.

Gold ETFs

Yesterday saw no sales or purchases from or into the SPDR gold ETF or the Gold Trust. The SPDR gold ETF and Gold Trust holdings are at 832.391 tonnes and at 211.41 tonnes respectively.

Julian D.W. Phillips 

GoldForecaster.com | StockBridge Management Alliance 

Shanghai leading gold higher?

 Gold Today –New York closed at $1,224.10 yesterday after closing at $1,219.30 yesterday. London opened at $1,228.55 today. 

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

         The $: € was slightly stronger at $1.0864 after yesterday’s $1.0870: €1.

         The Dollar index was slightly weaker at 99.64 after yesterday’s 99.65

         The Yen was stronger at 113.75 after yesterday’s 114.19:$1. 

         The Yuan was slightly stronger at 6.9047 after yesterday’s 6.9056: $1. 

         The Pound Sterling was weaker at $1.2875 after yesterday’s $1.2941: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    5    12

     2017    5    11

     2017    5    10

SHAU

SHAU

SHAU

/

273.62

273.79

/

274.02

273.91

$ equivalent 1oz @    $1: 6.9047

       $1: 6.9040

       $1: 6.9064     

  /

$1,232.70

$1,233.03

/

$1,234.50

$1,233.57

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 275.60 towards the close today. This translates into $1,236.49. New York closed at a $17.39 discount to Shanghai’s close yesterday. London opened at a discount of $7.94 to Shanghai’s close today.

While New York rose slightly yesterday, Shanghai rose strongly and is leading the way for London.

On today’s moves, we would say Shanghai is dominating pricing power. As we said yesterday, Shanghai needed to stop falling before prices turn around. It has turned higher now.

LBMA price setting:  The LBMA gold price was set today at $1,227.90 from yesterday’s $1,221.00.  

The gold price in the euro was set at €1,129.21 after yesterday’s €1,123.48.

Ahead of the opening of New York the gold price was trading at $1,231.30 and in the euro at €1,128.60. At the same time, the silver price was trading at $16.45. 

Silver Today –Silver closed at $16.32 yesterday after $16.22 at New York’s close yesterday.

Price Drivers

Technically, it is time for gold to rise up into the pattern that it is forming. Its failure to breakdown further and the performance of the three gold markets across the world point higher today.

The latest figures on inflation in the U.S. has been hoped for and expected and is positive for the gold price. With negative interest rates here to stay for some time to come, the influence on gold is positive.

India

Demand for gold at the Akshaya Tritiya festival at the end of April was stronger than has been seen in the past confirming the problems with shortages of cash have dissipated. It is clear that Indian demand for gold is, once again, robust. Estimates for this year’s demand [because of positive forecasts for the monsoon as well] have gone as high as 1,000 tonnes. That’s official demand, excluding smuggled gold. In the past WGC estimates from years ago guesstimated smuggled gold was around 250 tonnes. It has certainly grown since then and will grow much more if the 5% GST tax is imposed on gold sales.

If one accepts this, China and India account for just over 80% of total supply [including scrap] of gold annually. This leaves very little for the rest of the world’s demand. If the rest of the world’s demand jumps, it will have a disproportionate impact on the gold price until that demand is pulled back by higher prices precipitating sales.

Gold ETFs – Yesterday once again saw no change in the SPDR gold ETF or the Gold Trust. Their holdings are now at 851.891 tonnes and at 201.69 tonnes respectively.

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Indian gold demand rebuilding; gold price consolidating

Gold Today –New York closed at $1,195.40 on the 12th January after closing at $1,190.90 on the 11th January. London opened at $1,195.45 today.

 Overall the dollar is slightly weaker against global currencies today. Before London’s opening:

         The $: € was slightly weaker at $1.0633: €1 from $1.0631: €1 yesterday.

         The Dollar index was slightly stronger at 101.33 from 101.25 yesterday. 

         The Yen was slightly weaker at 114.70: $1 from yesterday’s 114.52 against the dollar. 

         The Yuan was stronger at 6.8873: $1, from 6.9115: $1, yesterday. 

         The Pound Sterling was weaker at $1.2168: £1 from yesterday’s $1.2249: £1.

 Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    1    13

     2016    1    12

      2016  12    11

SHAU

SHAU

SHAU

/

269.17

268.72

/

269.25

269.00

$ equivalent 1oz @  $1: 6.8873

      $1: 6.9225

$1: 6.9244

  /

$1,215.59

$1,209.31

/

$1,215.95

$1,210.57

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle Eat 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 gold prices corrected this morning. While we cannot get access to today’s Shanghai’s Fixings, gold was trading down, between $1,191 and $1,196 or back to 263.73 Yuan and 264.83 Yuan. After the gold price rises in Shanghai during this week, a correction was needed to make the market healthy.

With this correction London and New York are now higher than Shanghai [see note below table].

LBMA price setting:  The LBMA gold price setting was at $1,196.35 this morning against yesterday’s $1,206.65. 

The gold price in the euro was set higher at €1,123.54 after yesterday’s €1,133.96 as the dollar weakened.

Ahead of the opening of New York the gold price was trading at $1,198.00 and in the euro at €1,125.15.  At the same time, the silver price was trading at $16.80. 

Silver Today –Silver closed at $16.78 at New York’s close yesterday from $16.73 on the 11th January. 

 Price Drivers

With no sales or purchases into or out of the U.S. based gold ETFs yesterday we expect week’s end in both London and New York to be neutral with a likelihood of a correcting price. The psychological $1,200 will cause the gold price to pause as it is doing now. But we feel $1,200 will not be a significant barrier.

The dollar is stabilizing today but for how long? The exuberant expectations, discounted in markets, of what a President Trump will bring are dissipating and the dollar is losing momentum. If it falls back to below 100 on the index then we expect it to weaken further, benefitting gold.

India

It is clear that Modi’s attack on “Black Money” has failed, as 97% of the Rs.500 and Rs.1,000 notes have been collected by the banks. We had expected that not just because of the ingenuity of the Indians but because overall government and its bureaucrats are inherently corrupt, despite Modi’s noble efforts. Indians will remain a cash society against government efforts to see into their businesses because of cash being so difficult to monitor.

We expect gold to be bought with the new notes and hidden away, as before. No statistics issued by the government on gold imports of late, will be accurate now as the buying undoubtedly went through smugglers.

With Indian seasonal demand set to continue until May, we do expect to see ‘legal’ demand figures to be on the rise from now on. Overall gold demand in India is resuscitating now.

Gold ETFs – Yesterday, in New York, there were no sales or purchases from the SPDR gold ETF or any from or into the Gold Trust, leaving their respective holdings at 804.996 tonnes and 198.30 tonnes. 

As we said in an earlier report, “Substantial sales of gold on a daily basis are needed for New York to control the gold price”.

Since January 4th 2016, 202.416 tonnes of gold has been added to the SPDR gold ETF and to the Gold Trust.  We remain at almost at half the total level accumulated in 2016.

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

Improving Asian demand sees gold price trending higher

Gold TodayNew York closed at $1,273.60 yesterday after the previous close of $1,264.30 London opened at $1,275.55.

    • The $: € was weaker at $1.0911: €1 from $1.0877: €1 yesterday.
    • The Dollar index was weaker at 98.59 from 98.75 yesterday.
    • The Yen was stronger at 104.13: $1 from yesterday’s 104.42 against the dollar.
    • The Yuan was stronger at 6.7720: $1 from 6.7792: $1 yesterday.

 

  • The Pound Sterling was weaker at $1.2187: £1 from yesterday’s $1.2226 £1.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
     2016  10  26

     2016  10  25

SHAU

SHAU

278.76

276.39

278.55

276.93

Dollar equivalent

1 oz @ $1: 6.7720

$1: 6.7792

$1,280.33

$1,268.10

$1,279.37

$1,270.58

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle Eat 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.]

Allowing for the difference in quality of gold priced, gold prices in Shanghai and London are in line. New York closed strongly higher with Shanghai lifting it slightly higher still. While there was good buying into the SPDR gold ETF, Asian demand together with that buying, is lifting the gold price higher in all currencies except the euro and Yuan.

LBMA price setting:  The LBMA gold price setting was at $1,273.90 against yesterday’s $1,269.30. The gold price in the euro was set lower at €1,166.25 against yesterday’s €1,166.85.

Ahead of the opening of New York the gold price was trading at $1,271.55 and in the euro at €1,164.26.  At the same time, the silver price was trading at $17.70.

Silver Today –The silver price rose to $17.75 at New York’s close yesterday from $17.59, the day before yesterday.  

Price Drivers

Asian demand remains buoyant. In India gold prics remain well below previous peaks, almost Rs. 10,000 below them so have considerable attraction to Indian investors still as Diwali arrives on Sunday. Thereafter the massive marriage season is underway.

In the developed world the festivities are at the year end, so manufacturers are busy making jewelry for that time. We, in the west, favor, not gold per se, but jewelry made up, in part, by 9 or 18 carat gold and precious or semi precious stones, whereas Asian demand favors pure 24-carat gold.

In the west such jewelry is not primarily held as an investment whereas jewelry in Asia is held for investment purposes, hence its purity. This makes it difficult to separate investment from jewelry.

In India, gold, once bought tends to stay in the family and passed from generation to generation.

In India, families are not deterred by government requirements or taxes on gold because if the government demands accountability investors buy smuggled gold with cash and refuse to comply with what they see as a corrupt government.

In China, memories of hyper-inflation and the revolution are present, alongside recent memories of poverty. The stock exchange is more like a casino in their eyes and property has become too speculative and overpriced, so gold remains the safe investment, more so as the Yuan declines.

With U.S. elections two weeks away there is a build-up of worry as to what lies ahead for the U.S. and the rest of the global economy. While both candidates are positive for gold prices, much more than that is worrying financial markets, as we look ahead to more uncertainty, greater financial risks and turbulence in 2017.

The environment is positive for gold, so these prices rises we are seeing now are looking solid. Gold ETFs – There were purchases of 3.262 tonnes of gold into the SPDR gold ETF but no change in the Gold Trust yesterday, leaving their respective holdings at 956.826 tonnes and 228.16 tonnes.  

Since January 4th this year, the holdings of these two gold ETFs have risen by 384.007 tonnes.

Silver – Longer term, silver prices should continue rising but at a slower pace than gold, for now.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Strong Indian Monsoon to Boost Gold purchases

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

Since before recorded human history, the people of India have had an insatiable appetite for gold, treasuring it not only for its flawless natural beauty and religious significance but also as a superb store of value. This tradition carries on today, with India’s demand for gold jewelry in 2015 reaching more than 668 tonnes, nearly a third of total global demand and second in size only to China.

India and China Dominate Global Gold Jewelry Market
click to enlarge

I’ve pointed out many times before that the price of gold is largely driven by the Love Trade in India. Demand fluctuates year-to-year depending on several factors, the two most significant being the number of Indian weddings held in the fourth quarter and the amount of crop revenue that’s generated as a result of the summer monsoon season.

The wedding season is still three months away, but the June to September monsoon season is currently in full swing. It’s impossible to overstate just how crucial this period is to India’s important agriculture sector. During an average monsoon season, the Indian subcontinent can receive close to 80 percent of its total annual precipitation.

Most reports so far this year indicate surplus rainfall, with 12 inches being dumped nationwide last month alone, the fifth best month since the 1990s. This should come as welcome relief to Indian farmers, whose incomes have been squeezed by two long years of drought.

It’s also good news for gold consumption.

Converting Crops into Gold

Because of the above-average monsoon, gold spending in India is expected to increase 11 percent in 2016/2017 over the previous September to August crop season, according to Thomson Reuters. This would help reverse weak second-quarter jewelry demand in India due to a gold jewelers’ strike that closed the market for six weeks early in the quarter, a new 1 percent excise duty on jewelry and rising prices.

Gold has Rallied 26% Year-to-Date
click to enlarge

About a third of Indian gold demand comes from rural farmers, who have traditionally converted a percentage of all crop revenue into the precious metal to be held as insurance and sold in times of dire need. A GFMS/Thomson Reuters study conducted last year found that, between 1985 and 2014, there was a strong positive correlation between Indian crop revenue and spending on gold.

Following the crop season, we have Diwali and the Indian wedding season to look forward to.

Diwali, also known as the Festival of Lights, is arguably the most sacred holiday in Hinduism, celebrated by millions of people all over the globe. Much like Christmas, it serves as a major shopping season. Families splurge on expensive items such as cars, appliances, clothes—and gold jewelry. You can see how, in past years, the price of gold has ramped up in August and September as Indian merchants and jewelers restock inventories in preparation for the fall festival.

Gold has Rallied 26% Year-to-Date
click to enlarge

150 Million Indian Weddings Between Now and 2021?

The largest owners of gold in Indian are women, as it is auspicious to give them gifts of gold jewelry before their weddings. Because India lacks a formal social security system, it’s vital for women in particular to have some form of wealth preservation in the event of divorce or widowhood. This is what’s known as stridhan—a portion of a married couple’s wealth that is controlled exclusively by the wife and to which she is entitled, even after separation from her husband.

As World Gold Council CEO Aram Shishmanian put it during our joint webcast in June: “In India, a marriage is not a marriage without gold.”

Indian Weddings and Gold Infographic

So how many weddings are we talking about, and how much gold? Let’s look at the numbers. According to the Indian government, there are 300 million Indians between the ages of 25 and 29 from now until 2021. During this period, a projected 150 million weddings will take place. And for each wedding, roughly 35 percent to 40 percent of total expenses will be devoted to gold in the form of bullion, coins and jewelry.

Put another way, it’s estimated that the amount of gold purchased for a typical Indian wedding ranges between 20 and 2,000 grams—equivalent to a little over 70.5 ounces, or $95,457 at today’s prices. The wealthier the family, of course, the more gold they can afford to buy.

But gold is just as popular and valued—if not more so—among lower income families, many of whom depend on monsoon rains to nourish their crops. Here’s to a bountiful yield!

Gold Reacts to Jobs Report – What’s Next? – The Holmes SWOT

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

Strengths

  • The best performing precious metal for the week was platinum, which recorded a slight loss of 0.24 percent after falling on Friday in sympathy with the pullback in precious metal prices.
  • The Austrian Mint had its third best year on record in 2015, according to its annual gold sales report, showing 756,200 troy ounces of Vienna Philharmonic gold coins sold. Although the bulk of sales are to Austrians, the report is used as a barometer for overall European and global physical gold demand. Sales of silver coins have also seen positive market reaction, with sales of the Perth Mint’s 2016 Australian Kangaroo coins surging to 10 million coins, when expectations were just 5 million for the year, reports GoldCore. According to Bloomberg, investors also amassed the most silver on record in exchange traded funds in July.
  • The Bank of England cut key rates this week for the first time in seven years, sending gold higher on the news. The yellow metal also moved in reaction to details of a stimulus package in Japan, reaching a three-week high before the release of the U.S. jobs report on Friday. BullionVault reported that its Gold Investor Index (which measures a balance of client buyers to sellers) rebounded from an eight-month low this week, rising to 53.4 versus 51.4.

Weaknesses

  • The worst performing precious metal for the week was silver with a loss of 3.10 percent. Relative to the 1.14 percent pullback in gold, the move was about as expected.
  • Gold declined from its highest level in more than two weeks as the U.S. jobs report came out much better than expected on Friday. According to Deutsche Bank’s GDP growth model, the bank’s economists were expecting a much slower pace of job additions, around 150,000 in July, when in reality the U.S. created 255,000 jobs last month. Most economists are modeling the expected jobs number off relative GDP levels and they have come in below expectations for the second quarter, thus they were expecting the jobs number to fall too.
  • Indian gold demand continues to slow, according to analysts at Desjardins. Gold imports fell for a sixth consecutive month, with purchases slumping 77 percent to 22 tonnes in July from this time last year. One explanation could be the surge in gold price by 29 percent so far in 2016. “Customers are staying away, as they feel these prices are too high and they are waiting for a correction,” said Bachhraj Bamalwa, a director at the All India Gems & Jewelry Trade Federation.

Opportunities

  • HSBC has a positive outlook for silver in 2017, according to its latest Global Commodities report. In regards to supply and demand of the metal, the group notes that one side of the equation is anticipated to remain consistent while the other is expected to rise, reports ValueWalk. Francisco Blanch of Bank of America Merrill Lynch says that investing in gold right now makes sense for two important reasons. Not only does gold make an attractive investment when one-quarter of global bonds are offering negative yields, he told Bloomberg News, but gold’s carry costs are even lower compared to some currencies. “The negative carry on gold is actually smaller than the negative carry on, say, the euro or some other currencies,” Blanch explains.
  • Barclays points out that inflows into precious metals in 2016 have topped previous records for the amount of money flowing into exchange-traded products featuring precious metals. Just in the last two months, nearly $8 billion has poured into these products, bringing the tally for the first seven months of the year to $50.8 billion. As the chart below illustrates, gold’s returns have dominated other asset classes and done so with less volatility than Treasury bills and just slightly more volatility than the S&P 500 Index. Note that volatility is graphically represented by the size of the circles.

swotaug8

  • Dovish central bank policies by the Federal Reserve, the Bank of Japan and the Bank of England are lending support to gold, says UBS. The group says that, overall, the regime has not changed, and as such, the macro story for gold remains intact, noting that bouts of weakness are potential buying opportunities. The report reads: “Weaker growth outlook and lower real yields—especially with potential tolerance for inflation to overshoot—in a sense reinforce the themes that have driven investors towards gold this year.”

Threats

  • “We take the seemingly unpopular view, and contend that gold has already seen its 2016 peak,” said Christopher Louney, commodity strategist for RBC Capital Markets. In a report released by RBC last week, Louney notes that investors should be cognizant of just how much/little runway remains for gold appetite, reports Bloomberg, especially since its rally has stemmed almost entirely by investor demand. He does not see the metal moving significantly higher, at least not absent another significant risk-off event.
  • Japan’s Government Pension Investment Fund, the world’s largest retirement savings pool, lost $50 billion last year, reports ValueWalk. A root of the issue stems from Prime Minister Abe’s redirection of the country’s financial assets from Japanese bonds to equities, searching for higher returns. The markets that Abe said would go up declined instead, and now the fund’s plans include buying junk bonds and emerging market debt. The bottom line is, the fund now pays out to retirees more than it takes in, the article continues.
  • Alan Greenspan says we’re seeing the early stages of inflation, Bloomberg reports, noting things like slow productivity around the world, a pickup in wages and a pickup in money supply. Greenspan said the U.S. won’t be able to pay for entitlements, pushing the idea that the economy won’t be able to recover until politicians deal with the issue. He added that it’s crowding out and scaring off investment.

Holiday over: U.S. will drive gold and silver prices, but in which direction?

Gold TodayGold closed in London at $1,344.90 on Monday after Friday’s New York close at $1,343.70.  In Asia the gold price stayed in line with London’s gold price, also adjusting for a weaker Yuan.  

  • The $: € slipped to $1.1156 down from $1.1124.
  • The dollar index moved lower to 95.54 from 95.73 yesterday.
  • The Yen was stronger again at 101.70.
  • The Yuan was almost unchanged at 6.6661 from 6.6663 on Monday.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  5

2016  07  4

SHAU

SHAU

288.21

290.07

288.48

290.01

Dollar equivalent @ $1: 6.6673

$1: 6.6600

$1,344.52

$1,354.68

$1,345.78

$1,354.40

Shanghai pulled the gold price back ahead of New York’s re-entry after Independence Day to a level not far from the close of last Thursday.

We do expect a ‘shunt’ effect in New York as the three global gold markets return to a common view on the gold price. We expect the view that caused New York to take gold and silver prices higher on Friday, ahead of the long weekend; will return to move prices up today.

The Yuan continues to weaken, as the Yen strengthens.  

Japan would be in deep trouble if it were not for the fact that its creditors are mainly its own citizens. Japan is in deflation’s vice like grip even after massive Q.E.

Once again, against all expectations, the dollar is holding close to the same levels as it has done for the last week.  In view of the warnings on Brexit it is remarkably steady.

LBMA price setting:  $1,344.75 up from Monday 4th July’s $1,348.75.

The gold price in the euro was set at €1,206.49 down €5.11 from Monday’s €1,211.60.

With New York returning for business today, the gold price ahead of its opening stood at $1,347.65 and in the euro at €1,209.14.  

Silver Today –The silver price closed in London on Monday at $19.85.  With New York returning today they will find the silver price hardly changed at $19.79.

Price Drivers

New York returns to see silver higher so expect a ‘shunt’ effect from the market. We usually see U.S. investors buy on the rise. With the return and seeing silver prices higher, we expect them to join the fray.

Gold may well pause and consolidate for a short time, before a strong move higher, as investors contemplate the Technical picture [which is looking good!

India

When the ‘gold Season’ starts again in India in September, we now expect strong demand from the sub continent because the monsoon is now covering almost all of India, a prerequisite for high Indian gold demand.

Gold ETFs – With the U.S. closed yesterday the holdings of the SPDR gold ETF were unchanged with its holdings at 953.914 tonnes and the holdings of the Gold Trust at 208.17 tonnes. We don’t expect these to rise again today as the gold price has corrected a little and points higher.

Since January 4th this year, the holdings of these two gold ETFs have risen 365.298 tonnes. Until the ‘gold season’ starts in September, ETF demand is the main driver of the gold price.

Silver –Silver prices may well run ahead of gold as U.S. investors, who closed positions last Friday, re-open them on the long side. With the U.S. the prime driver of the silver price we expect them to jump in on the upward train.

We bear in mind that silver is a much smaller market, with a tonne of silver costing $643,000 against a tonne of gold at $43.404 million. Consequently, it is much more volatile.

Julian D.W. Phillips

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

Sales from GLD for first time in weeks rocks prices

Gold TodayGold closed in New York at $1,228.00 on Tuesday, down from Monday’s $1,249.60, a fall of $21.60. On Wednesday morning in Asia it fell to $1,224 while the U.S. dollar was stronger against the euro.

LBMA price setting:  $1,220.75 down from Monday’s $1,242.65.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  05  25

2016  05  24

SHAU

SHAU

259.64

263.32

258.68

262.98

Dollar equivalent @ $1: 6.5640

+$1: 6.5600

$1,230.30

$1,248.50

$1,225.75

$1,246.89

The movements in the gold price were a reflection of the stronger dollar against the euro, but against other currencies the dollar was weakening.  While we may well see more falls in the gold price we are getting very close to support.

We are seeing a strong sterling at $1.47 and yet a weak euro at $1.1143 and a steady Dollar Index at 95.55 slightly up from yesterday’s 95.47. With the failure of the G-7’s intention to not use exchange rates for international trade for competitive reasons, it seems that we are moving towards all nations looking out for their own interests, exclusively on the currency front.

The signal that this was on the cards really came when the U.S. dollar index hit 100 at its peak and then failed to get there again. As we have said many times, neither the Fed nor the U.S. Treasury wants a strong dollar and are taking action to ensure it does not happen.

At the same time, due to the gold market’s propensity to move gold the opposite way to the dollar, we saw a floor put under the gold price. Since then the number of U.S. institutional investors in gold and silver has jumped dramatically. The volume of their gold purchases through the shares of gold ETFs has soared, but their recent impact on the gold price has been close to zero.

When gold prices, and by extension, silver prices fail to respond to such high demand it allows buying to stay at massive levels, which in turn will, in time, lead to a shortage of supply, which cannot be sustained at low prices. Prices have to react eventually.

The gold price in the euro was set at €1,096.12 down from Tuesday’s €1,112.39.

Ahead of New York’s opening, the gold price was trading at $1,223.65 and in the euro at €1,098.13.  

Silver Today –The silver price closed in New York on Tuesday at $16.23, lower than Monday’s $16.40 a fall of eleven cents. Nevertheless it remains well over $15.00 and looks as though it will hold there, while waiting for gold to turn, before it sprints again.

Ahead of New York’s opening the silver price stood at $16.29.

Price Drivers

Yesterday saw the gold price knocked down once again, but this time from gold ETF selling, as well as exchange rate movements.  There is no doubt that the gold price bears little relation to demand and supply factors.

The seasonal factors in the gold market are in play, for sure. In India we have moved out of the ‘marriage season’ into the period where the main gold buyers turn to farming ahead of the Monsoon. This will last until the crops are sold and the festive season begins in September. This seasonal influence has been tempered by urbanization in India, which continues at a fast pace.

We are moving towards the European holiday season too. August is the big holiday period where businesses in the gold industry are at their low point ahead of the end of the holiday season in September.

This period in the year is called the “Doldrums” in the gold world.

The June to September period is the time when the main influences on the gold price are macro-economic and currency factors. Don’t necessarily think that this means that gold prices will go lower. The point at which gold hit its peak, in this decade, was during this time of the year.

What is also for sure is that currency factors are disturbing, in terms of the structure of the global currency market. This implies a large potential for gold price volatility. We suggest that gold market followers look at gold only in their own currencies and that investors take positions in weakening currencies alongside their gold positions.

Gold ETFs – Tuesday, for the first time in weeks, saw selling from the SPDR gold ETF (GLD). We saw sales of 3.592 tonnes from the SPDR gold ETF but nothing into the Gold Trust (IAU). This leaves their holdings at 868.662 and 199.43 tonnes in the SPDR & Gold Trust, respectively.

While, large volumes of buying are having no impact, yesterday saw selling having an impact on gold prices, which, while they were also moving against exchange rates, did fall on this selling.

Silver –The silver price may try to go lower still but has a resilience to it that makes downward falls difficult to hold at lower levels.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Huge YTD 2015 Chinese SGE gold demand will pass full year record in 2 weeks

Full month figures for October aren’t yet available, but announced gold withdrawals out of the Shanghai Gold Exchange (SGE) up to October 23rd have already exceeded last year’s full year total – and last year was the second highest full year ever for SGE gold deliveries.  The record year of 2013 is now in the sights and will almost certainly be surpassed within the next two weeks.  As I have predicted before a full year total of around an absolutely massive 2,600 tonnes of gold  – over 400 tonnes higher than the previous annual record figure (and amounting to some 80% of total global new mined gold output) will pass through the SGE this year.  And this is all physical gold – not paper!

SGE GOLD WITHDRAWALS – YTD AND PREVIOUS 5 FULL YEAR TOTALS

Year

SGE gold withdrawals (tonnes)

2015 (to Oct 23rd)

2,119

2014

2,102

2013

2,181

2012

1,134

2011

1,043

2010

814

Source: Shanghai Gold Exchange, Sharelynx.com

We have already concluded from published export statistics from countries supplying gold to the Chinese mainland that Chinese gold imports this year are almost certainly heading for perhaps 1300 tonnes plus – a very similar figure to that suggested by China gold specialist Koos Jansen writing on www.bullionstar.com – and domestic production will probably be in the order of 480 tonnes for the full year.  Yet the principal mainstream analysts still see China’s consumption as perhaps only around 1,000 tonnes – and latest GFMS figures for Q2 even put China behind India as the world’s biggest gold consumer – although admittedly not by much.

However, the analysts seem to treat India and China totally differently in their assessments.  Indian gold consumption as they see it pretty much equates to the country’s gold import levels (perhaps they include domestic supply too but as this is only 1-2 tonnes a year this is just about irrelevant).  But Chinese consumption is put far behind its new gold supply, which we calculate as imports plus domestic gold production, equating to some 1700-1800 tonnes.  Add recycled gold into the mix and we are probably talking 2,000 tonnes or more – still well short of SGE deliveries…..

To read full article on Sharpspixley.com, click on this link

Ramifications for gold and silver enormous

New York closed with the gold price at $$1,187.90 up from $1,168.10 yesterday. In Asia this morning gold pulled back to $1,184 ahead of London’s opening. London held it around that level before the LBMA price setting fixed it at $1,183.35. The dollar Index was weaker at 94.04 from 94.65 and the dollar was trading against the euro at $1.1441 down from $1.1390. In the euro the fixing was €1,034.31 up from €1,029.11.  Ahead of New York’s opening gold was trading at $1,184.70 and in the euro at €1,035.31.  

The silver price closed at $16.16 up 26 cents over Tuesday’s close. Ahead of New York’s opening, silver was trading at $16.12.

Price Drivers

The Technical position now looks good. What is positive for gold are the reasons why gold looks strong. We see them as extremely important structurally. We cannot cover these reasons in this daily report as there is not enough space [see newsletters]. What we can say is that a structural change has taken place in the dollar and its relationship to other currencies that will affect the global monetary system for many years to come. It has not been heralded by the media but it doesn’t need to be. The ramifications for gold and silver are enormous.  

On the U.S. physical side, we saw large purchases into the SPDR gold ETF of 7.743 tonnes but only a small amount of o.4 of a tonne into the Gold Trust. It seems U.S. investors, watching the Technical position are now moving into physical gold as well as continuing to cut short positions while increasing long positions. The holdings of the SPDR gold ETF are at 694.939 tonnes and 161.75 tonnes in the Gold Trust.

Bear in mind that the ongoing demand for physical gold from the Far East continues. We hear reports of lower demand for gold in India, but find this difficult to accept as smuggled gold comes in unseen and immeasurable at a 10% discount to ‘official’ gold as they are ex-duties. Indians are unfazed by buying such gold, so it is logical that ‘official’ imports of gold should suffer. Nevertheless projections of 900 to 1,000 tonnes will be imported into India through ‘official’ channels this year.

In China the continuing rise in Chinese middle classes continues unabated at a projected 10% growth per annum. The People’s Bank of China continues to add to its reserves at levels it deems worthy of publication, although most believe agencies for the central bank are continuously buying gold for China. It is worthy of note that PBoC purchases do not have to be reported via the Shanghai Gold Exchange. So, total imports to China remain opaque, probably higher than reported.

Silver will rise with gold but at a faster pace.

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

India’s gold demand could have reached 1,200 tonnes with smuggled metal

Julian Phillips’ latest update on the gold and silver markets and their key geopolitical drivers.

Gold closed at $1,178.60 down $6.10 on Friday in NY. Asia lifted it to $1182 over the weekend before the LBMA Gold price was set at $1,182.75 down $9.60 today. The euro equivalent stood at €1,091.62 down €8.25 while the dollar was virtually unchanged. Ahead of New York’s opening, gold was trading higher in London at $1,185.60 and in the euro at €1,094.48.
The silver price closed at $15.72 down 17 cents on Friday. Ahead of New York’s opening it was trading at $15.85.
Even now there is no clarity on the direction of gold and silver on the charts. However, in New York on Friday speculators pushed it lower but not enough to bring in the triggering of stop losses en masse. We feel they might try again today as equity markets defy gravity and reach new records.
The dollar index fell to 97.06 on Friday against today’s 97.20l with a slipping dollar leaving the euro at $1.0832. It seems the line in the sand is 100 on the dollar index at which point it is pushed back. It is clear that U.S. exports are being hurt even at these levels. With an index over 100 the damage would be widespread.
There were no purchases or sales of gold into the SPDR gold E.T.F. or the Gold Trust on Friday. The holdings of the SPDR gold ETF are at 742.347 tonnes and at 165.58 tonnes in the Gold Trust.
The Greek tragedy worsened on Friday with the meetings ending with acrimony. The German Finance Minister is at the forefront of this and said on Saturday that Germany is preparing for a Greek default. The question we all have to ask, particularly in the gold and silver world is, “Is this what both sides want?” We suspect it is. But the negotiations are now confrontational despite them being close now. But still we have to wait and see if this is now political pantomime or horse trading at its meanest. As we said last week, “The exchange rate of the S: € will not be affected by Greece until a conclusion is reached one way or the other.”
In India demand is tapering off after the second biggest festival in their calendar. Traditionally the farmers turn their attention to the planting season, but we suspect the India’s seasonality is reducing as the economy grows alongside urbanization and modern IT capabilities. During this quiet time we strongly suspect that many investors will buy forward if they see the gold price hold at bargain basement levels. We note too that last year if we include a guesstimate of smuggled gold that Indian demand was above record levels seen when duties were low. 1200 tonnes of demand would not be an outrageous level we believe. Add to this ongoing Chinese demand and there is little stock available for western investors. Once they are seen in the market place again we expect them to pay up for the gold they want. Hence the strange consolidation pattern, at present.
Julian D.W. Phillips for the Gold & Silver Forecasters – http://www.goldforecaster.com and http://www.silverforecaster.com

Indian gold demand to ‘gently accelerate’

Julian Phillips’ latest commentary on gold and silver prices and data from the SPDR gold ETF.

As we said yesterday, “We expect gold price support to be really tested for the next week.” We would emphasize that while this period may see a low point in the gold price this does not reflect a dwindling demand for gold. It only reflects the temporary closure of the Chinese gold market and the holding back of demand in India until the budget is announced there on the 28th February.

At that time we will see if a lowering of Indian gold import duties from 10% to 2% will take place. Expectations are very high that this will happen as the current account of the Balance of Payments is reducing heavily because of the oil price falls.  We believe that Indian imports of gold and wholesale stocks within the country are being allowed to run down in anticipation of potentially better margins for the industry and greater demand from the retail sector.

On top of that, though longer term, India’s growth rate is expected to accelerate in the months and years to come. This will increase the wealth of the gold buying Indian middle classes. We therefore expect gold demand to gently accelerate over time from there.

In our opinion, the Technical picture for gold remains to the upside despite the recent heavy falls. Support showed itself in the last day after the Fed minutes indicated that rate rises may well be delayed as international factors alongside a stronger dollar gives cause for a delay. A strong dollar in itself is a tightening factor giving rise to the reverse of the J-curve, which is detrimental to the U.S. trade deficit.

The silver price showed itself keen to rise as an acceleration of purchases was seen as gold started to rise yesterday. Should gold show strength at these levels we expect the silver price to sprint ahead of gold in percentage terms.

Markets and SPDR gold ETF

New York closed yesterday at $1,211.20 up $2.70. In Asia the gold price was lifted to $1,215.60. London Fixed the gold price at $1,217.75 up $11.25 and in the euro, at €1,068.295 up €8.939, while the euro was almost unchanged at $1.1399. Ahead of New York’s opening gold was trading in London at $1,217.4 and in the euro at €1,068.18.

The silver price closed at $16.45 down 6 cents. Ahead of New York’s opening it was trading at $16.65.

There were sales yesterday of 0.299 tonnes of gold from the SPDR gold ETF but none from the Gold Trust on Wednesday as gold prices started to bounce despite the closure of the Shanghai Gold Exchange until 25th February [Thursday next week]. The holdings of the SPDR gold ETF are at 768.263 tonnes and at 167.03 tonnes in the Gold Trust.

 

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