Gold and silver prices steady in the euro weak in the dollar  

Gold TodayGold closed in New York at $1,346.10 on Tuesday after Monday’s close at $1,339.40.  London opened at $1,341.

    • The $: € was almost unchanged at $1.1262 from $1.1268.
    • The dollar index was almost unchanged at 94.96 from 94.94 Tuesday.
    • The Yen was slightly weaker at 100.76 from Tuesday’s 100.25 against the dollar.
    • The Yuan was weaker at 6.6330 from 6.6270 Tuesday.
  • The Pound Sterling was slightly stronger at $1.3014 up from Tuesday’s $1.2934.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  17

2016  08  16

SHAU

SHAU

287.60

287.48

287.39

288.47

Dollar equivalent @ $1: 6.6330

$1: 6.6270

$1,348.61

$1,349.27

$1,347.63

$1,353.92

Again Shanghai was higher than New York’s closing but London decided to walk its own road at the opening, opening lower at $1,341. The reason London pulled gold prices down before the opening in London was the continuing ‘strength of the euro/weakness of the dollar, as you can see in the euro gold prices below.

LBMA price setting:  $1,342.75 after Tuesday 16th August’s $1,349.10.

The gold price in the euro was set at €1,191.65 down €5.32 from Tuesday’s €1,196.97.

Ahead of the opening in New York the gold price stood at $1,343.75 and in the euro at €1,197.42.  

Silver Today –The silver price closed in New York at $19.80 on Tuesday down from $19.81 on Monday.  Ahead of New York’s opening the price was trading at $19.68.

Price Drivers

Yesterday saw more tonnage bought into the U.S. gold ETFs, but this had no effect on gold prices.  Gold had hit $1,354 during the day in both London and New York, but pulled back on little to no selling volume thereafter. It is reported that Stanley Drukenmiller has sold his holdings of SPDR gold ETF Call Options and this after his condemnation of the actions of central banks, justifying holding gold in May, not so long ago. We doubt he would have exited gold after that position statement.  More likely he would have found another way to hold gold. We would have expected him to change to allocated gold in physical form, if he was a serious long-term holder.

After all the SPDR gold ETF shareholders [which is what you buy when you buy into the ETFs] don’t own gold, the company owning SPDR does. And that rather defeats the purpose of owning such holdings. After all if central banks get into trouble one of the most likely sources of gold for them lies in SPDR gold holdings. So, it makes far more sense to own the gold directly out of reach of central banks in an allocated form [just holding it outside the country is insufficient to protect from confiscation] as no doubt Mr. Drukenmiller knows.

The market appears to be holding back ahead of the publication of the Minutes from the last Fed meeting for signs that a rate hike is in prospect. The markets have indicated that there is a 50% chance of a rate hike in December, not September, this year. But productivity in the U.S., a major factor in the decision remains at low levels and current data has been weak. As we said last yesterday, “On several fronts, developed world and emerging world bonds, equity markets and on the currency front, any lifting of U.S. interest rates would catapult these markets down, while the dollar would be catapulted higher. So the weight of responsibility on the U.S. Fed grows by the day. We at Gold Forecaster do not expect such a rise in rates for a long, long time because of this risk.”

Gold ETFs – In New York on Tuesday there were purchases of 1.781 tonnes into the SPDR gold ETF (GLD) and 0.96 of a tonne into the Gold Trust (IAU). This left their respective holdings at 962.228 tonnes and 223.85 tonnes.

Silver –Silver prices stumbled heavily pulling back from $20 to the mid-$19. Should gold rise through $1,360 you will see silver run ahead well over $20.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Digesting BoE inaction – Gold and silver marked down

Gold TodayGold closed in New York at $1,333.80 on Thursday after Wednesday’s close at $1,332.20.  In Asia the gold price held similar levels to New York.  

  • The $: € fell to $1.1135 down from $1.1096.
  • The dollar index fell to 96.07 from 96.32 Thursday.
  • The Yen was weaker at 106.00 from Thursday’s 105.44 against the dollar.
  • The Yuan was slightly weaker at 6.6825 from 6.6855 Thursday.
  • The Pound Sterling was stronger at $1.3352 down from Thursday’s $1.3225 reacting to the mistake in expecting more easing now.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  15

2016  07  14

SHAU

SHAU

285.95

288.94

286.62

287.60

Dollar equivalent @ $1: 6.6825

$1: 6.6855

$1,330.94

$1,344.26

$1,334.06

$1,338.02

The Chinese gold market followed New York yesterday as the Yuan picked up slightly over yesterday’s exchange rate. All global markets were surprised by the Bank of England’s inaction, despite the indication that if the U.K. economy slowed down between now and August, easing action would be taken. This left the markets in the same position as the Bank of England, waiting for post-Brexit data.

The attempt to break the gold price down further in New York, with yesterday’s over 2 tonnes sale of gold, continued, but with less enthusiasm. The Technical picture continues to point downwards but appears to lack conviction.

As we forecast yesterday, “It is clear that if the BoE does announce easing we may well see a very strong upward move in the gold price. If not we expect to see the gold price either move slightly higher or sideways, as this has been discounted in the gold price now.”

LBMA price setting:  $1,330.50 up from Thursday 14th July’s $1,325.70.

The gold price in the euro was set at €1,196.12 up €3.41 from Thursday’s €1,192.71.

Ahead of the opening in New York the gold price stood at $1,334.2 and in the euro at €1,199.33.  

Silver Today –The silver price closed in New York at $20.25 on Thursday down from $20.38 Wednesday.  Ahead of New York’s opening the price was trading at $20.26.

Price Drivers

Global financial markets were stunned by the lack of action by the Bank of England yesterday, despite an intention to add more easing should the U.K. turn down in the period until the next meeting.

With hindsight we can see why they did this. We don’t think it was because they had done enough to date, but we do see that like global markets, post Brexit data on the way forward and impact of Brexit needs to be assimilated, before decisions are made. Pre-Brexit information cannot point the way forward!

That throws us back to the ‘big’ picture, once again. There we see a stabilizing China with growth picking up to 6.7% indicating it is becoming less dependent on the developed world and now walking its own road. We do expect, long-term, that China’s economic activity will separate itself from that of the developed world, while continuing to draw wealth and power from it. The developed world continues to have a falling growth prospect and a rising debt burden threatening to hurt it badly. [It is different in China where economic growth enables loans to be repaid. This warrants higher debt levels]. The overall economic picture promises increasingly heavy exchange rate pressures that favor gold and silver.

Gold ETFs – In New York on Thursday there were sales of 2.376 tonnes of gold from the SPDR gold ETF but we did see purchases into the Gold Trust of 0.36 of a tonne, leaving their holdings at 962.845 tonnes and at 214.90 tonnes respectively.

Since January 4th this year, the holdings of these two gold ETFs have risen by 380.154 tonnes.

Silver –Silver prices are chomping at the bit towards the upside. The reins and the bit are being held back by the gold price only.

Julian D.W. Phillips

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

 

More huge gold purchases into US gold ETFs – almost 46 tonnes in 2 days

Gold TodayGold closed in New York at $1,207.50 down from $1,229.30 on Monday. In Asia, it rose back to $1,217 ahead of London’s opening. It fell back but then recovered in London and at the LBMA price setting it was set at $1,218.75 up from $1,203.65 yesterday. The dollar index is slightly weaker at 97.42 up from Monday’s 97.52.

The dollar is stronger against the euro at $1.1003 up from $1.1024 on Monday. The gold price in the euro was set at €1,106.97 up from €1,091.80.

Ahead of New York’s opening, the gold price was trading at $1,217.05 and in the euro at €1,106.16.  

Silver Today –The silver price closed in New York at $15.16 down 20 cents.  Ahead of New York’s opening the silver price stood at $15.22.

Price Drivers

Monday saw another purchase of 19.331 tonnes after Friday’s purchase of 19.332 tonnes into the SPDR gold ETF and a purchase of 3.00 tonnes after Friday’s 4.00 tonnes into the Gold Trust. The holdings of the SPDR gold ETF are now at 752.294 tonnes and at 187.50 tonnes in the Gold Trust.

In the SPDR [GLD] gold ETF we are clearly seeing a very large institution buying heavily on an ongoing basis. Again, we see in one day purchases of 22.331 tonnes of gold into the two main gold ETFs in the U.S. Yesterday saw purchases by U.S. investors of 23.332 tonnes of gold, into the funds.

We still don’t believe that the gold price is reflecting these purchases. If these had happened over a week we would have opined that they were extremely good weeks of gold purchases. So we ask, “Is this an institution like Paulson’s funds buying back holding sold in the last quarter or another aggressive U.S. fund. Or it could be a Chinese institution stocking up its holdings held outside China?”

These are very large amounts for the gold market, big enough to drive the gold price higher once market liquidity is squeezed. Nobody can say when this will happen but it must be close.

To give you perspective, the Chinese and Russian central banks each bought over 20 tonnes in a month. U.S. investors bought more than the total bought by these two in just two working days.

In the background we are seeing the gold market change structurally and in its direction. As we say above, it is a matter of liquidity in developed world markets. Something must give if this weight of buying continues!

Silver – Silver price volatility is being seen in line with the volatility in gold. This tells us that if gold does run higher, silver will follow it or run ahead of it.

 

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Huge US Gold ETF Purchases. Dual global gold market developing?

Is a dual global gold market developing?

Gold Today –Gold closed in New York at $1,229.30 on Friday down from $1,236.80 on Thursday. In Asia, quite unbelievably, it slipped back to $1,210 ahead of London’s opening. It kept falling in London and at the LBMA price setting it was set at $1,203.65 down from Friday’s $1,221.50. The dollar index is stronger at 97.52 up from Friday’s 96.88.

The dollar is stronger against the euro at $1.1024 up from $1.1102 on Friday. The gold price in the euro was set at €1,091.80 up from €1,100.25.

Ahead of New York’s opening, the gold price was trading at $1,210.35 and in the euro at €1,097.87.

Silver Today –The silver price closed in New York at $15.36 then in Asia it was pulled back to $15.02 down 34 cents.  Ahead of New York’s opening the silver price stood at $15.07.

Price Drivers

Friday saw purchases of 19.332 tonnes into the SPDR gold ETF and a purchase of 4.00 tonnes into the iShares Gold Trust. When we saw this number we thought we had made a mistake so we double checked. The numbers are correct. What is strange is that we can’t find anybody who noted this huge number. Physical gold purchases are rising in volume into these two, U.S.-based gold ETFs as gold continues to consolidate in a pattern promising a strong move shortly. The holdings of the SPDR gold ETF are now at 732.963 tonnes and at 184.50 tonnes in the Gold Trust.

We find it somewhat unbelievable that US. Investors should buy 23.332 tonnes of gold into their two main gold ETFs on Friday and then in Asia the price falls back $19.  The U.S. gold market is readying for a strong move shortly, still.

So we have to ask, “How can the prices in Asia fall so much, while New York and London are closed?” It is evident that there is little to no effective arbitrage capacity in the global gold market. China forbids the export of gold, so there is no chance that a smoothing of the gold price can come from Chinese sellers in New York or London. But liquidity levels in Shanghai are sufficient to see gold sales there with no price-chasing. Altogether Shanghai appears a more stable gold market now with less volatility.

With Chinese and Indian wholesalers buying as much gold as they can, confident that the retail and institutional buyers will be there soon thereafter, on an ongoing basis, supplies for the open market in the developed world are under strain. The volatility on the gold price in New York bears clear testament to this. As you can see even now prices fall in Asia and rise in New York substantially! If we are correct on this, then we have to expect continued and rising volatility in the weeks ahead, in daily prices.

So will there be two separate and very different gold prices across the world in the future?  We discussed, in our newsletters, the developments both in and outside China in terms of the structure of the global gold markets being undertaken by the Chinese institutions. We see these as developing effective arbitrage operations, under their control. That means that the absorption of London’s liquidity in the gold market will accelerate.

Asians do not chase prices, they always want to know it won’t go lower and then they buy. With the huge growth in Chinese Middle classes, ongoing demand for gold in China will grow too. So price dips will become increasingly rare and a steadier, less volatile market will evolve in Shanghai if this market evolution continues.

But until then, we will see daily prices between morning and evening, remaining volatile.

Silver – With the fall in the silver price in Asia being so heavy this morning, we expect to see a similar but upward volatility in New York.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance