Gold and silver recovering above $1,320

Gold TodayGold closed in New York at $1,325.60 on Friday after Thursday’s close at $1,313.30.  London opened at $1,327.

    • The $: € was weaker at $1.1165 down from $1.1182 Friday.
    • The dollar index was weaker at 95.65 from 95.79 Friday.
    • The Yen was slightly stronger at 103.28 from Friday’s 103.57 against the dollar.
    • The Yuan was slightly stronger at 6.6770 from 6.6823 Friday.

 

  • The Pound Sterling was stronger at $1.3328 from Friday’s $1.3267.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
     2016  09  5

2016  09 2

SHAU

SHAU

284.84

282.69

285.24

282.50

Dollar equivalent @ $1: 6.6770

$1: 6.6823

$1,326.87

$1,315.81

$1,328.73

$1,314.93

Shanghai took the gold price higher by a small amount and London held it there at the open.

The Yuan was slightly stronger against the dollar which weakened slightly across the board. The pound continued to strengthen as you can see.

LBMA price setting:  The LBMA gold price setting on Monday was at $1,328.30. On Friday it was at set at $1,311.50.

The gold price in the euro was set on Monday at €1,189.91 up strongly on Friday’s 1,172.34.

New York is closed today but at the time New York usually opened, the gold price was trading at $1,327.10 and in the euro at €1,188.84.  At the same time, the silver price was trading at $19.48.

Silver Today –The silver price closed in New York at $19.39 up 52 cents, on Friday after $18.87 Thursday.  

Price Drivers

We wish those of our readers who are in the U.S. enjoy their holiday today, ready for a stronger gold market on their return. 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.

While New York is on holiday the jump in gold prices seen last Friday persists. The disappointing jobs report shook markets on Friday seemingly postponing a rate increase until the end of the year. Meanwhile the dollar continues to weaken against the major currencies, with the exception of the Japanese Yen.

There were no significant moves in the U.S. physical market showing that it is exchange rate moves which continue to affect gold and silver prices.

Meanwhile demand in India is on the rise as the gold and festival seasons begin. We keep seeing statistics for Indian demand related mainly to ‘official’ imports. We find these almost impossible to accept, because the Indian gold market is no longer dominated by ‘official’ imports.

Smuggling, three years ago, was thought to be at around 250 tonnes per annum on top of ‘official’ imports. Since then professional smugglers have improved efficiencies and market penetration. In addition the government has increased their profit margins by 1% by imposing a further Tax of that amount. During the gold manufacturer’s strikes, their front doors were closed and their back doors were open and manufacturing continued no doubt with the assistance of smuggled gold imports.

So when we see ‘official figures marked down and reports of dropping demand coming through we take these with a pinch of salt.

After a very good Monsoon, gold buyers are putting profits back into their pockets. With no tax payable on agricultural profits, much of those find their way into property and into gold as an ‘alternative’ financial system. It’s the Indian way of life resulting from many, many years of political corruption and bureaucratic abuse on the gold trade there.

So we would suggest that you add a minimum of 250 tonnes to the ‘official gold figures annually to see what the real annual Indian demand really is.

Gold ETFs – In New York Friday there were no sales from of purchases into the SPDR gold ETF but a small sale from the Gold Trust of 0.05 of a tonne leaving their respective holdings at 937.89 tonnes and 225.39 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen by 364.165 tonnes.

Silver – The silver price jumped on the relatively small move in the gold price on Friday and this has carried through to London on Monday. A jump, of just under 3% in silver prices was seen while gold rose 1% on Friday.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

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Gold and silver see strong support above $1,300

Gold TodayGold closed in New York at $1,323.20 on Monday after Friday’s close at $1,321.10.  London opened at $1,321.

    • The $: € was at $1.1172 from $1.1187 Monday.
    • The dollar index was at 95.76 from 95.60 Monday.
    • The Yen was at 102.37 from Monday’s 102.14 against the dollar.
    • The Yuan was the same at 6.680 from 6.680 Monday.

 

  • The Pound Sterling was weaker at $1.3072 from Monday’s $1.3107.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  30

2016  08  29

SHAU

SHAU

284.81

283.32

284.56

283.68

Dollar equivalent @ $1: 6.680

$1: 6.680

$1,326.13

$1,319.20

$1,324.97

$1,320.87

As you can see Shanghai followed New York  but London reopened at Friday’s levels ignoring both New York and Shanghai. The dollar remains stronger.  

LBMA price setting:  There was no gold price setting on Monday as London was closed. On Tuesday the setting was at $1,318.85.

The gold price in the euro was set on Tuesday at €1,180.71 up on Friday’s 1,173.20.

Ahead of the opening in New York the gold price was reported as trading at $1,319.00 and in the euro at €1,182.22.  The silver price is trading at $18.77 ahead of New York’s opening.

Silver Today –The silver price closed in New York at $18.84 Monday up from $18.64 Friday.  

Price Drivers

What gold investors should not take their eyes off is the price of gold in other currencies as these are important to the real value of gold.

  • For instance the Chinese Yuan continues to sink against the U.S. dollar, so we are now seeing Yuan gold prices rise.
  • The Pound Sterling continues to fall against the dollar, so U.K. gold prices are rising.
  • In the U.S. Dollar the gold prices are sitting at their lower levels after the surge in the dollar exchange rate against all other currencies.
  • In Australia the falling Aussie dollar has made their gold mines profitable.
  • In South Africa the gold miners’ incomes suffered when ‘yield tourists’ turned to the Rand with its high interest rates. But as is South Africa’s unique political myopia, the resurgence of the South African police’s attack on the Minister of Finance is sending the Rand down from R13.3 to R14.4 against the U.S. dollar improving profitability to that extent.

Likewise gold owners are using gold to hedge against their own currencies within their countries. So gold is functioning well in measuring the value of currencies.

Please note that the moves in the last few days in the gold price have seen barely any physical action, so prices were simply adjustments to changes in exchange rates. In this way, gold is acting as a measure of value inside countries and not simply in comparison to its price in other currencies. It is a real defense against your own currency.

With the palpable negative view of a stronger U.S. dollar by the Fed and Treasury in the U.S. where will gold go now?

It is then that physical demand [a measure of confidence in currencies overall] adjusts the value of gold in all currencies.

Gold ETFs – In New York yesterday there was no change in the SPDR gold ETF but a purchase of 0.54 of a tonne into the Gold Trust. This left their respective holdings at 956.588 tonnes and 225.44 tonnes.

Silver – The silver price is moving higher at $18.7 at London’s opening and is doing so while gold’s moves looked like they may continue to go down. Once again we are seeing greater vigor in the silver price on the upside just as it demonstrated vigor when falling down from over $20. The fundamentals of gold are weighed in favor of an upside move back to that level, so now we wait to see what New York will do with the silver price.      

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold and silver blasted down by HFT

Gold TodayGold closed in New York at $1,321.10 on Friday after Thursday’s close at $1,322.50.  London is closed today.

    • The $: € was at $1.1187 from $1.1293 Friday.
    • The dollar index was at 95.60 from 94.63 Friday.
    • The Yen was at 102.14 from Friday’s 100.45 against the dollar.
    • The Yuan was weaker at 6.6687 from 6.6560 Friday.

 

  • The Pound Sterling was at $1.3107 from Friday’s $1.3200.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  29

2016  08  26

SHAU

SHAU

283.32

284.19

283.68

284.44

Dollar equivalent @ $1: 6.680

$1: 6.6687

$1,319.20

$1,325.49

$1,320.87

$1,326.66

As you can see Shanghai followed New York with lower prices and the lowest Yuan we have ever seen.

LBMA price setting:  There was no gold price setting today as London was closed. On Friday the setting was at $1,324.90.

The gold price in the euro was set on Friday at €1,173.20.

Ahead of the opening in New York the gold price was reported as trading outside the markets at $1,320.00 and in the euro at €1,182.37 up from €1,175.48.  

Silver Today –The silver price closed in New York at $18.64 Friday UP from $18.56 Thursday.  

Price Drivers

All currencies are weaker today than the dollar which jumped strongly after Janet Yellen’s comments indicating that a rate hike case is now stronger. Of course, the media tries to put us back on tenterhooks for a September rate hike and will continue to do so until it is seen and then do the same before the next rate hike or the next meeting of the FOMC. It is understandable as it is the main global financial story and, as we now see, in the stronger dollar. Will the dollar rise through 100 on the Index? We think not, simply because neither the Fed nor the Treasury wants this.

But, once again, there was no physical content to the fall in the gold price. No sales took place from either the SPDR gold ETF or from the Gold Trust. This makes the fall in the gold and silver price vulnerable. On Friday the gold price did begin to recover fast and hit $1,336 after hitting a low of $1,322. But then it was slammed down again quickly in a short time back to $1,322 where it closed. All of this fall was due to High Frequency Trading. But no buyers came in to take it back higher after the expiry on the months Options and Futures. The best way to summarize the action is that dollar strength hit all currencies and gold, but not silver!

Ahead of New York’s opening while London was closed prices were marked down by the off-market traders who decided not to have a holiday. They took it to $1,316, but it rose again to $1,320 before New York opened.

This engineered fall has taken the gold price down a relatively long way, leaving it in a position where we expect some strong volatility and wide price moves this week.

We must remember that we are moving into the busiest quarter of the year for gold. This is certainly not the time to drive gold prices down unless you believe that the physical gold market is completely disjointed from the ‘paper’ gold market of COMEX.

Gold ETFs – In New York yesterday there were sales of 1.781 tonnes  from the SPDR gold ETF but a purchase of 0.30 of a tonne into the Gold Trust. This left their respective holdings at 956.588 tonnes and 224.90 tonnes.

Silver –Silver prices rose 9 cents on Friday confirming that silver prices were not affected by the ‘paper bear raid’. On Monday ahead of New York’s close the silver price held at $18.61.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Fundamental change in gold price structure under way

Gold TodayGold closed in New York at $1,352.70 on Thursday after Wednesday’s close at $1,346.50.  London opened at $1,341 but immediately recovered to $1,346 before rising further.

    • The $: € was correcting at $1.1307 from $1.1329.
    • The dollar index was correcting at 94.52 from 94.35 Thursday.
    • The Yen was correcting slightly at 100.20 from Thursday’s 100.08 against the dollar.
    • The Yuan was weaker at 6.6517 from 6.6324 Thursday.

 

  • The Pound Sterling was slightly weaker at $1.3122 down from Thursday’s $1.3144.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  19

2016  08  18

SHAU

SHAU

288.02

288.80

288.68

288.84

Dollar equivalent @ $1: 6.6517

$1: 6.6324

$1,346.79

$1,354.36

$1,349.87

$1,354.55

New York closed higher than Shanghai’s whole day as Shanghai gold prices remain steady in Yuan!

It was a rapidly weakening Yuan exchange rate against the dollar that was responsible for dollar gold prices to fall. The combination of the Yuan price of gold and the move in the Yuan exchange rate affecting dollar gold prices this way, is just what the Shanghai Gold Exchange wanted. When they established the Fix an accompanying statement made it clear that it was not just to give SGE gold prices but to promote the use of the Yuan in such dealings. Here it is!

The Yuan throughout the week has being doing just that as it gyrated up and down.  The dollar, at the same time, while showing a weakening trend, has been comparatively steady.

We will watch this feature going forward as it indicates where pricing power lies.

LBMA price setting:  $1,346.85 after Thursday 18th August’s $1,347.10.

The gold price in the euro was set at €1,189.80 up €1.20 from Thursday’s €1,188.60.

Ahead of the opening in New York the gold price stood at $1,345.20 and in the euro at €1,187.55.  

Silver Today –The silver price closed in New York at $19.75 on Thursday down from $19.66 on Wednesday.  Ahead of New York’s opening the price was trading at $19.45.

Price Drivers

Long time readers of this daily report will know that we believe a fundamental change in the structure of the gold price is underway with pricing power slowly but surely headed eastwards to Shanghai.

With COMEX, a ‘paper gold’ market with the exception of between 1 & 5% physical dealings, yet controlling the dollar gold price and London, a secondary influence, despite it having a considerably larger measure of physical dealing in its midst, the fundamentals of gold demand and supply have become secondary to the influences of economic events on the gold price.

With China the largest physical gold market in the world and dealings based on physical content it overshadows the rest of the world’s gold markets already and yet this is not apparent. We know it will happen, so we follow the Shanghai Gold Fixings carefully to see the change in influence over the gold price come through and show itself in the price. What we have seen this week, in Shanghai and the Yuan gold price, is a shift away from the dollar in establishing the gold price. If the Chinese get what they want the main gold price will be a Yuan price and not a dollar price!

Gold ETFs – In New York on Tuesday there were sales of 1.781 tonnes from the SPDR gold ETF but no change in the holdings of the Gold Trust. This left their respective holdings at 955.994 tonnes and 223.85 tonnes.

Silver –Silver prices are dropping as they exaggerate gold’s small slippage, but, as always, will turn if gold breaks through resistance. If gold does not, we expect to see silver hold around these levels as they have already discounted a fall in the gold price.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Shanghai beginning to call the gold price tune?

Gold TodayGold closed in New York at $1,346.50 on Wednesday after Tuesday’s close at $1,346.10.  London opened at $1,352.

    • The $: € was very weak at $1.1329 from $1.1262.
    • The dollar index was weak at 94.35 from 94.96 Wednesday.
    • The Yen was stronger at 100.08 from Wednesday’s 100.76 against the dollar.
    • The Yuan was slightly stronger at 6.6324 from 6.6330 Wednesday.

 

  • The Pound Sterling was slightly stronger at $1.3144 up from Wednesday’s $1.3014.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  18

2016  08  17

SHAU

SHAU

288.80

287.60

288.84

287.39

Dollar equivalent @ $1: 6.6324

$1: 6.6330

$1,354.36

$1,348.61

$1,354.55

$1,347.63

In almost a repeat of yesterday Shanghai was much higher than New York’s closing but London decided to walk its own road opening lower at $1,352. Dollar weakness continues heavily, as seen in the dollar index as well as against the euro. We are in a time when a large number of experts are calling the dollar higher, but it consistently does the reverse.

With emerging and higher risk nations offering higher yields, their currencies are strengthening and will continue to do so until we do actually see a rate hike [which we don’t expect until next year].

LBMA price setting:  $1,347.10 after Wednesday 17th August’s $1,342.75.

The gold price in the euro was set at €1,188.60 down €3.05 from Wednesday’s €1,191.65.

Ahead of the opening in New York the gold price stood at $1,350.15 and in the euro at €1,191.3.  

Silver Today –The silver price closed in New York at $19.66 on Wednesday down from $19.80 on Tuesday.  Ahead of New York’s opening the price was trading at $19.75.

Price Drivers

Yesterday saw heavy sales from the U.S. gold ETFs and this pulled New York prices down a little. Overnight saw prices rise in Shanghai which is leading the way lately, in setting gold prices.

Is it right to describe higher prices in Shanghai as a premium over New York/London’s prices or should we say that New York is trading at a discount to Shanghai?

The physical statistics says the second, but COMEX, until recently, led the way on gold prices. We are watching carefully to see if the pattern persists and if global markets take the lead in gold prices from Shanghai. This would mean that pricing power is moving to Shanghai. This is significant in that it alters the factors influencing the gold price, making them more globally oriented, as opposed to U.S. oriented. It would then make for a more believable gold price, both in monetary terms and physical terms.

The Fed Minutes described a split in the FOMC, but where the ‘hawks’ sat was on the non-voting side and the ‘doves’, led by Janet Yellen, sat on the voting side. The factors affecting the ‘doves’ were global influences as well as productivity, alongside wages. We can see that while the U.S. economy appears solid, the growth is low and not accompanied by a ‘healthy’ level of inflation. Hence the market views a rate hike in September with only a 21% likelihood and a hike early next year at a 50% likelihood. This prospect heightens the impact a rate hike will have on all global financial markets.

Gold ETFs – In New York on Tuesday there were sales of 4.453 tonnes from the SPDR gold ETF (GLD) but no change in the holdings of the Gold Trust (IAU). This left their respective holdings at 957.775 tonnes and 223.85 tonnes.

Silver –Silver prices should continue around current levels until there is a breakout in the gold price, one way or the other.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

 

Gold firms after fall to support again

Gold TodayGold closed in New York at $1,335.30 on Monday after Friday’s close at $1,336.40.  London opened at $1,333.

    • The $: € was up at $1.1092 from $1.1096.
    • The dollar index rose to 96.35 from 95.30 Monday.
    • The Yen was slightly stronger at 102.32 from Monday’s 102.41 against the dollar.
    • The Yuan was weaker at 6.6614 from 6.6616 Monday.

 

  • The Pound Sterling was weaker at $1.2990 down from Monday’s $1.3042.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  9

2016  08  8

SHAU

SHAU

286.29

286.78

285.87

286.54

Dollar equivalent @ $1: 6.6615

$1: 6.6614

$1,336.73

$1,339.00

$1,334.77

$1,337.88

With the exception of the pound sterling, which continues to weaken substantially, all other currencies were stable in the day.

We note that the thinking in the Chinese media is that the Yuan will continue to drop. Official policy likes to be broadcast in the media, so we expect the falls to continue towards 7.00 to the U.S. dollar.

It is important to note that Chinese demand for gold is down when one looks at the withdrawals from the Shanghai Gold Exchange.

But we note two factors; first this is not due to a fall-off in the growth of the Chinese middle classes, which continue to burgeon, as is evidenced by auto demand in the country and secondly that Shanghai gold prices are not driving global gold prices at the moment.  Likewise Indian demand!

We cannot see this happening until gold availability in London falls to the point that liquidity drops to almost critical levels. Certainly London’s liquidity levels have reduced substantially over the last two years. If U.S. demand combines with Asian demand we will see a change in pricing power.

LBMA price setting:  $1,332.90 after Monday 9th August’s $1,330.00.

The gold price in the euro was set at €1,202.11 up €2.07 from Monday’s €1,200.04.

Ahead of the opening in New York the gold price stood at $1,333.55 and in the euro at €1,203.08.   Post opening gold and silver both gained in strength with gold moving above $1,340.

Silver Today –The silver price closed in New York at $19.73 on Monday up from $19.70 on Friday.  Ahead of New York’s opening the price was trading at $19.63.

Price Drivers

Gold and silver held remarkably steady yesterday in the face of a large sale of gold from the SPDR gold ETF. The gold price continues to rest on support and with the gold season nearly on us the physical market, at least will see demand grow significantly. In the U.S. fears of a global slowdown [and low productivity] affecting the U.S. economy and the large number of potential banking and debt crises that are more than likely, the atmosphere for gold continues to be positive.

A President Trump has announced he will institute a cutback in Corporate Tax to 15% that should be sufficient to encourage many non-manufacturing companies to return to the U.S. Why not manufacturing? Because the wage differentials between U.S. wages and developing countries wages, remains substantial!  But Trump certainly knows how to press the buttons of the electorate. We can only reflect that the ridicule heaped on him as a Republican Presidential Candidate did not stop him, so the ridicule we now see for him may follow the same road.

Gold ETFs – In New York on Monday there were sales of 6.531 tonnes sold from the SPDR gold ETF but nothing from or to the Gold Trust. This left their respective holdings at 973.805 tonnes and 220.40 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen by 396.59 tonnes.

Silver –Silver prices have been more stable than gold in the last day, but this is simply marking time before gold moves again.

Julian D.W. Phillips

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

 

Gold and silver prices in positive run

Gold TodayGold closed in New York at $1,353.30 on Monday after Friday’s close at $1,353.30.  

    • The $: € was down at $1.1197 from $1.1175.
    • The dollar index fell to 95.42 from 95.64 Monday.
    • The Yen was stronger at 101.69 from Monday’s 102.20 against the dollar.
    • The Yuan was stronger at 6.6358 from 6.6415 Monday.

 

  • The Pound Sterling was stronger at $1.3231 up from Monday’s $1.3179.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  2

2016  08  1

SHAU

SHAU

288.69

288.65

289.32

287.95

Dollar equivalent @ $1: 6.6358

$1: 6.6415

$1,353.15

$1,351.84

$1,356.11

$1,348.53

Shanghai prices took New York’s close higher still and London even higher.

We are seeing the Yuan strengthen against the U.S. dollar but staying in line with other currencies. The People’s Bank of China is not focused on the dollar but on the broad basket of currencies of its trading partners. The PBoC wants a stable to weakening Yuan and that despite what level the dollar will reach at some point this year.

We previously mentioned that the Yuan would weaken against the dollar to bring it into line with other global currencies against which the dollar had risen. But now that the dollar itself is weakening we are lowering our sights on where the Yuan will be by year’s end. We see it stronger than 7.00 to the dollar [weaker means more Yuan to the dollar] by year’s end.

LBMA price setting:  $1,358.15 after Monday 1st August’s $1,348.85.

The gold price in the euro was set at €1,212.63 up €4.42 from Monday’s €1,208.21.

Ahead of the opening in New York the gold price stood at $1,357.50 and in the euro at €1,212.81.  

Silver Today –The silver price closed in New York at $20.43 on Monday up from $20.34 on Friday.  Ahead of New York’s opening the price was trading at $20.68.

Price Drivers

Ahead of Thursday’s expected rate cut in the U.K. [and likely more QE] we have the announcement from the Japanese government we expected to come and mentioned yesterday. $273 Billion worth of stimuli! The details will follow. And yet we are seeing the Yen continuing to strengthen towards 100 and possibly lower in the days ahead.

It is clear that the Bank of Japan has come to the end of its road and that the government must step up to the plate now. Its demographics are against it as is the age of its population. Disinclined to spend and focussed on less spending, not more, as it ages, the population will not run out to support growth. The Abe government seems to be facing an intractable situation, worse than, but similar to, many other countries in the developed world.

After years of efforts to combat deflation, many now believe that the current round of stimuli will not change the picture of the deflating Japanese economy.

Gold ETFs – In New York on Monday there were purchases of 5.937 tonnes bought into the SPDR gold ETF (GLD) and a purchase of 0.51 of a tonne into the Gold Trust (IAU) leaving their holdings at 964.032 tonnes and 219.70 tonnes, respectively.

The U.S. buying of physical gold via the U.S. based gold ETFs has begun again in earnest. If it continues at this rate gold and silver prices will move through overhead resistance!

Since January 4th this year, the holdings of these two gold ETFs have risen by 386.117 tonnes.

Silver –Silver prices are consolidating alongside gold and at the same pace today. Tomorrow may see it resume its characteristic vigor. The market has a positive tone.

Julian D.W. Phillips

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

Another significant sale from GLD – but gold price little moved.

Gold TodayGold closed in New York at $1,319.80 on Tuesday after Monday’s close at $1,314.10.  

    • The $: € was down at $1.0991 up from $1.007.
    • The dollar index rose to 97.29 from 97.03 Tuesday.
    • The Yen was weaker at 105.64 from Tuesday’s 104.13 against the dollar.
    • The Yuan was stronger at 6.6709 from 6.6754 Tuesday.

 

  • The Pound Sterling was weaker at $1.3120 down from Tuesday’s $1.3081.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  27

2016  07  26

SHAU

SHAU

283.34

283.84

283.17

283.71

Dollar equivalent @ $1: 6.6709

$1: 6.6786

$1,321.09

$1,322.53

$1,320.30

$1,321.92

Shanghai prices were in line with New York’s close and London held it at the same level adjusting for a slight exchange rate change.

With China the world’s largest gold producer [450 tonnes] and the Shanghai Gold Exchange the largest global gold market, we expect to see its influence over the gold price rise substantially, unless it is in the interests of the P.B. of C. to hold prices around the levels seen in London and New York. The P.B. of C. as the main counterparty is able to do that.

On the supply side we must factor into the long term picture the fall off in exploration and development in the gold mining industry.  This will impact production over the long term. If the gold price goes higher, gold miners increase their reserves as the break-even point falls. This usually leads to a fall-off in production as lower grade ore moves through the mills.

LBMA price setting:  $1,320.80 after Tuesday 26th July’s $1,321.25.

The gold price in the euro was set at €1,201.60 up €0.46 from Monday’s €1,201.14.

Ahead of the opening in New York the gold price stood at $1,319.80 and in the euro at €1,200.80.  

Silver Today –The silver price closed in New York at $19.64 on Tuesday up from $19.51 on Friday.  Ahead of New York’s opening the price was trading at $19.60.

Price Drivers

Not only is the FOMC meeting under way but the markets are expecting an announcement from the Bank of Japan shortly, telling us that they will add more stimuli to their economy. We have no doubt that the BoJ is hoping this will weaken the Yen as well as make another attempt to contain structural deflation in the country. We expect both central banks announcements to be good for gold and silver.

However, we may have to wait until the Fed announcement before we see them react.

Gold ETFs – In New York on Wednesday there were sales of 4.453 tonnes of gold from the SPDR gold ETF (GLD), but no purchases or sales into or from the Gold Trust(IAU), leaving their holdings at 954.235 tonnes and 217.99 tonnes, respectively.

This sale, the second in two days at a similar level should have been enough to hurt the gold price as the first one did, but it didn’t. This is a positive sign, particularly because it is the SPDR gold ETF which is the main driver of the gold price at the moment.

Clearly, as we enter August the proximity of the ‘gold season’, the rising demand potential from India and the ongoing macro-economic problems, worldwide are causing the gold price to hold above $1,300. Add this week’s central bank statements and we expect more potential for a gold price rise than a fall. Once a rise begins, we expect gold ETF demand to resume.

Since January 4th this year, the holdings of these two gold ETFs have risen by 374.61 tonnes.

Silver –Silver prices could have a quiet time today, until gold leads the way again.

Julian D.W. Phillips

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

Gold falls despite big continuing physical buying in the U.S.

Gold Today Gold closed in New York at $1,232.70 down from $1,234.00. In Asia on Wednesday, it fell to $1,224 ahead of London’s opening. It then rose further to be set by the LBMA at $1,229.35 down from $1,240.00. The dollar index is slightly higher at 98.45.

The dollar is up against the euro at $1.0853 up from $1.0857 on Wednesday. The gold price in the euro was set at €1,132.78 down from €1,140.44.

Ahead of New York’s opening, the gold price was trading at $1,231.00 and in the euro at €1,134.25.  

Silver Today –The silver price closed in New York at $14.84 up 4 cents.  Ahead of New York’s opening the silver price stood at $14.85.

Price Drivers

Equity markets have been rallying this week and may well continue to do so today. Dealers continue to pull gold and silver prices back in expectation of price falls while these equity rallies continue across the world. But this is not warranted in terms of the demand and supply of gold.

Dealers do not respond to physical buying as we explain below [ETFs], the Technical picture continues to describe a tightening of the trading range. We were premature in calling for a big price move either way coming, but the Technical picture continues to support our view that we are getting closer to that move.

Gold ETFs In yet another amazing week for gold demand in the U.S. and after Monday’s huge purchase of gold into the SPDR gold ETF of 14.869 tonnes we see another 8.921 tonnes bought yesterday and a purchase of 0.450 of a tonne into the Gold Trust. The holdings of the SPDR gold ETF are now at 786.195 tonnes and at 189.87 tonnes in the Gold Trust.   And yet because of better data out of the States and an equity market rally, gold fell.

Readers may feel that when there are such purchases the U.S. price of gold should rise automatically. But that’s not the way it works. HSBC is the Custodian of SPDR gold, so when the SPDR asks it to acquire gold for the company, HSBC must go into the physical market to buy it. It goes primarily into the physical market, most likely in London [if not from its own sources] to get it – not into the U.S. to get it. As a result, such demand does not impact the U.S. price of gold, initially. Now you have a situation where the supply and demand picture in gold is not reflected in the U.S. gold price, despite the fact that it is U.S. buyers of physical gold that are buying so much. Yes, it is inevitable that at some point their buying will reflect in the gold price.

This makes the establishment of the Yuan gold price “Fixing” in Shanghai after April 19th so important to the future gold price.

Silver – While the silver price has re-affirmed its relationship with the gold price, it remains more volatile than gold both ways. Clearly, for short term trading silver can be more rewarding or damaging, than gold, but we bear in mind that long-term it continues to be treated as a monetary metal.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance