French result hammers gold and silver

Gold Today –New York closed at $1,285.90 Friday after closing at $1,279.20 Thursday. London opened at $1,271.20 today. 

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

         The $: € was significantly weaker at $1.0843 after Friday’s $1.0695: €1.

         The Dollar index was weaker at 99.18 after Friday’s 99.94

         The Yen was weaker at 110.108 after Friday’s 109.18:$1. 

         The Yuan was barely changed at 6.8865 after Friday’s 6.8867: $1. 

         The Pound Sterling was weaker at $1.2787 after Friday’s $1.2833: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    4    24

     2017    4    21

     2017    4    20    

SHAU

SHAU

SHAU

/

285.10

285.30

/

285.11

285.23

$ equivalent 1oz @    $1: 6.8865

       $1: 6.8867

       $1: 6.8837

      

  /

$1,287.64

$1,289.11

/

$1,287.69

$1,288.79

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 285.00 towards the close today. This translates into $1,282.23. New York closed at a $3.67 premium to Shanghai’s Friday close. London opened at a discount of $11.03 after hearing the results of the French elections.

As you can see Shanghai has been remarkably stable over the last few days as the international scene has produced a lot of action. Over the weekend the Chinese government has pressured North Korea to abandon its nuclear programs. This removes the chance of a U.S. China confrontation and war. The consequences of a renewed North-South Korean war would need a major incident to trigger it. Will it happen?

Before London fell gold prices were marked down, not traded down by $13.00. We would expect these prices to recover when real dealing begins. But so far London has not led the way, Will New York?

LBMA price setting:  The LBMA gold price was set today at $1,271.80 from Friday’s $1,281.50.  

The gold price in the euro was set at €1,171.84 after Friday’s €1,198.00.

Ahead of the opening of New York the gold price was trading at $1,270.25 and in the euro at €1,171.10. At the same time, the silver price was trading at $17.80. 

Silver Today –Silver closed at $18.96 Friday after $18.01 at New York’s close Thursday, but dropped sharply on the French election result.

Price Drivers

The dollar index is weaker primarily against the euro, on the Macron victory in France.  Technically gold is sitting on support, while still consolidating.

Jack Mar on Artificial intelligence

Jack Mar of Alibaba, has been the first high profile person to state an obvious regarding artificial intelligence solutions and robotics impacting the workforce.  That has been going on for decades now and is capable of producing major social shocks in the future. We have reported that this could cost the world 50% of jobs. No nation will escape this trend. In history [France, Russia] the impoverishment of the people was responsible for revolutions. Certainly the world is unprepared for such events.  Gold will benefit from the coming disruptions.

Trump Tax reform

President Trump has announced that on Wednesday the principles of his Tax Reformation will be unveiled. This is needed to bolster his political momentum, which has faltered since his failure to repeal Obamacare. The reformation will only be implemented in a few months, though.

France

The Macron victory with Marine le Pen in the run-off in two weeks time is being read as Macron will be President. The parties that were defeated told their supporters to support Macron. This takes France leaving the Eurozone and the euro off the table. But amazingly Macron does not have a political party behind him. So his effectiveness is by no means certain.

Marine Le Pen is for leaving the E.U. and euro. If we are right and whether or not France might leave the E.U. is the fundamental issue, Macron will be President, which is why the euro is strong and a great deal of fear of the breakup of the E.U. is off the table. It does not make the E.U. strong, but it does keep the status quo. The E.U. continues to remain weak in its structure. Italy, for instance is more than capable of leaving the E.U. with its current problems.

Gold ETFs – Friday saw purchases of 4.44 tonnes into the SPDR gold ETF but no change in the Gold Trust. Their holdings are now at 858.69 tonnes and at 204.36 tonnes respectively.

Since January 4th 2016, 261.696 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 51.64 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips 

 GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

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Banks and Dealers positioned for higher Gold price. GLD continues to add gold

Gold Today –New York closed at $1,234.70 on the 6th February after closing at $1,219.00 on the 5th February. London opened at $1,230.00 today.

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

         The $: € was stronger at $1.0666: €1 from $1.0750: €1 on yesterday.

         The Dollar index was stronger at 100.62 from 99.96 on yesterday. 

         The Yen was stronger at 112.19:$1 from yesterday’s 112.62 against the dollar. 

         The Yuan was weaker at 6.8790: $1, from 6.8625: $1, yesterday. 

         The Pound Sterling was weaker at $1.2363: £1 from yesterday’s $1.2457: £1.

 Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    2    07

     2017    2    06

      2017    2    03

SHAU

SHAU

SHAU

/

272.00

269.93

/

271.92

269.52

$ equivalent 1oz @  $1: 6.8790

      $1: 6.8625

$1: 6.8632

  /

$1,232.81

$1,223.30

/

$1,232.45

$1,221.44

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 was trading in gold at 274.3 Yuan during today’s session before London opened. This equates to $1,240.25. Shanghai now has momentum and was trading just 55 cents above New York’s close.

LBMA price setting:  The LBMA gold price was set today at $1,231.00 up from yesterday’s $1,221.85.  

The gold price in the euro was set higher at €1,152.89 after yesterday’s €1,137.45.

Ahead of the opening of New York the gold price was trading at $1,230.75 and in the euro at €1,152.77.  At the same time, the silver price was trading at $17.64. 

Silver Today –Silver closed at $17.73 at New York’s close Friday against $17.46 on the 3rd February. 

Price Drivers

What is now very clear is that if Marine le Pen and her party are elected, France will likely leave the E.U. Yesterday saw a plan to leave the E.U. produced by her party. It could involve a dual currency. Some have said that a dual currency never works. On the contrary dual currencies have pulled several nations out of a hole, including the U.K. in the early seventies. One currency for commercial transactions and another for capital. The ‘Dollar Premium’ used by the U.K. was structured not only to prevent capital leaving but gave incentives to capital coming in. It worked so well that after the crisis then, there was a return to a single currency and no capital exited thereafter that could not be managed. At Gold Forecaster we wrote at length that this was an option for Greece years ago. Properly handled such dual currencies are ideal in the case of a nation like France that faces the risk of a capital exit and the return of the French Franc. It must be accompanied by Capital/Exchange Controls at the same time during the period of transition.

In response to the promise of a return to the French Franc Mario Draghi had a sense of humour failure and stated that the euro was irreversible.  So the issue of sovereignty both in the E.U. and in the member states is on the table! Even Britain may lose a member nation, Scotland.

Such an introspective national posturing is very good for gold as it highlights the weaknesses inherent in national currencies, producing falling confidence in them. Hence the need for a non-national asset that is acceptable internationally, even between enemies and those uncreditworthy nations. Gold has always filled that role, lasting throughout history. National currencies have not.

But as we said yesterday, “The moment such talk hits the airwaves, the moment we hear that will mean a collapsing euro. We cannot buy that at all”. The strong members remaining will re-group behind the euro.

Gold ETFs – Yesterday we saw 4.418 tonnes of gold bought into the SPDR gold ETF (GLD) but no change was seen in the holdings of the Gold Trust (IAU).  Their respective holdings are now at 818.653 tonnes and 199.91 tonnes. 

Yesterday’s large purchase of gold into the SPDR gold ETF added to the ongoing steady buying pattern that began last week.

As we said yesterday, “The buying is persistent enough for the bullion banks to keep their books ‘long’ of gold. The potential for any shortage of open market stocks is great now, as the mood towards gold goes positive. So dealers and banks have re-positioned themselves for higher prices.”

Since January 4th 2016, 217.953 tonnes of gold has been added to the SPDR gold ETF and to the Gold Trust. 
 Julian D.W. Phillips:  GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance