Gold up, Silver up, GLD returns to taking in gold

Gold TodayGold closed in New York at $1,351.30 on Friday after Thursday’s close at $1,337.00.  

  • The $: € was down at $1.1175 from $1.1086.
  • The dollar index fell to 95.64 from 96.37 Friday.
  • The Yen was stronger at 102.20 from Friday’s 103.38 against the dollar.
  • The Yuan was stronger at 6.6415 from 6.6525 Friday.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  1

2016  07  29

SHAU

SHAU

288.65

286.98

287.95

286.01

Dollar equivalent @ $1: 6.6415

$1: 6.6525

$1,351.84

$1,341.76

$1,348.53

$1,337.23

Shanghai prices were slightly lower but London stayed in line with Shanghai’s close. Shanghai continues to remain in synch with both New York and London despite the fact it is a far, far bigger physical gold market than the two put together. The Chinese appear to be quite happy to let the two smaller markets make the gold and silver price. But for how long?

LBMA price setting:  $1,348.85 after Friday 29th July’s $1,332.50.

The gold price in the euro was set at €1,208.21 down €8.89 from Friday’s €1,199.32.

Ahead of the opening in New York the gold price stood at $1,348.05 and in the euro at €1,207.39.  

Silver Today –The silver price closed in New York at $20.34 on Friday up from $20.22 on Thursday.  Ahead of New York’s opening the price was trading at $20.50.

Price Drivers

This week at noon [U.K. time] on Thursday, the Bank of England reveals its stimulus package on the U.K. having garnered the first impact of Brexit on the U.K. economy. The data suggests a near-term stagnation with a high risk of recession. An interest rate cut of 25 basis points and an expansion of the Q.E. program is on the cards. This event is likely to hang over the market until it happens.

With the Pound already down over 10% since Brexit, we expect more falls to come, with a positive reaction in the gold price not only in sterling but in the dollar as well.

Some months ago now we called the end of the dollar bull market and have proved correct since then. Today, we see the dollar moving back towards its lows since we made that call, but only now are we hearing others beginning to join us, including a major U.S. bank. We see this as happening because of the impact the global economy will have on the U.S. and a treasury preference towards a weaker dollar.

Once again we are hearing talk in Japan of more stimulus, this time from the government. But despite all these efforts the Yen is strengthening. But this is not strength for positive reasons. We are not seeing Japan grow and we are not seeing deflation defeated despite all the government’s three arrow efforts.

Global growth is still shrinking, as well described by U.S. growth, last week. Gold is being recommended by more and more institutions now.

Gold ETFs – In New York on Friday there were purchases of 3.86 tonnes bought into the SPDR gold ETF (GLD)  and a purchase of another 0.6 of a tonne into the Gold Trust (IAU) leaving their holdings at 958.095 tonnes and 219.19 tonnes, respectively.

Since January 4th this year, the holdings of these two gold ETFs have risen by 379.67 tonnes.

Silver –Silver prices showed a different volatility today, jumping up to the mid-$20 area as gold prices recovered nearly $20, on Friday. Repeat – We expect this volatility to continue in the days to come.

Julian D.W. Phillips

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

Gold and silver react to US Fed & BoJ

Gold TodayGold closed in New York at $1,341.40 on Wednesday after Tuesday’s close at $1,319.80.  

    • The $: € was down at $1.1084 from $1.0991.
    • The dollar index fell to 96.54 from 97.29 Wednesday.
    • The Yen was stronger at 104.68 from Wednesday’s 105.64 against the dollar.
    • The Yuan was stronger at 6.6610 from 6.6709 Wednesday.

 

  • The Pound Sterling was stronger at $1.3178 up from Wednesday’s $1.3120.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  28

2016  07  27

SHAU

SHAU

286.93

283.34

287.55

283.17

Dollar equivalent @ $1: 6.6610

$1: 6.6709

$1,339.82

$1,321.09

$1,342.71

$1,320.30

Shanghai prices were on the same momentum track as New York, rising after the Fed statement. We expect the Bank of Japan to issue a statement ahead of New York’s Friday opening which could well have the same impact as the Fed’s statement on gold & silver prices.

We have watched and listened to the media’s fascination with Fed statements over the last few years and seen how the markets have been led by it. But with hindsight it is clear that the reality is that the Fed is following, not leading the data. When we look at that data there is little to inspire economic optimism and belief that rates are going to rise soon. The future, on the contrary, points to around a decade of very low interest rates as the global economy struggles with structural changes and a solid wave of deflation.

The desperate battle of exchange rates is dominating total returns and while emerging currencies yield good returns at the moment their exchange rates can become mercurial in a heartbeat, ensuring risk levels in the medium to long term remain heightened. We expect another episode in this story to unfold in the days not far ahead.

LBMA price setting:  $1,341.30 after Wednesday 27th July’s $1,321.25.

The gold price in the euro was set at €1,218.15 up €16.55 from Wednesday’s €1,201.60.

Ahead of the opening in New York the gold price stood at $1,342.35 and in the euro at €1,210.74.  

Silver Today –The silver price closed in New York at $20.38 on Wednesday up from $19.64 on Friday.  Ahead of New York’s opening the price was trading at $20.37.

Price Drivers

The report from the Fed was positive on the U.S. economy but not so positive as to indicate September could see a rate hike. Why not? Most U.S. observers are riveted on the U.S. economy in isolation from the rest of the world. But that is myopic. The Fed has made it clear that the global economy does affect the U.S. economy.  The dollar exchange rate does affect the U.S. economy and cannot be ignored or removed from the formula that defines when a rate hike will occur.

The monetary system is under stress reflecting deep ailments [Japan, Italy, Brexit, low growth, burgeoning debt] and the Fed is quite right to bring these into their formulae for rate hike decisions. Gold and silver prices barely reflect these ailments. Should these weaknesses burst upon the global economy [and we cannot see reasons why they shouldn’t] , we will not only see very different global financial markets but a structurally different approach to precious metals.

The Fed’s announcement produced the reaction we expected and tomorrow’s Bank of Japan will likely extend this reaction.

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

We are starting to hear well-respected investment advisors recommending increasing the percentage of gold held in portfolios from 10% to 25%. To us this signifies recognition of the depth of global financial market changes that lie ahead of the world.

Silver –Silver prices showed the potential for running ahead of gold as they jumped 4% yesterday against gold’s 1.5%. But all silver price movements rely on gold leading the way, both up and down. Such price movements do not reflect the fundamentals of the silver market, only the relationship to gold prices.

Julian D.W. Phillips

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

 

Gold sitting on support – so far.

A shortened, updated and edited version of Julian Phillips’ commentary for Tuesday which was delayed from reaching us for technical reasons.

Shanghai prices have been higher than in New York, after gold was sold from the SPDR gold ETF [see below], and London followed Shanghai’s prices, so at this stage we conclude that New York prices were considered to have been marked down too far.

A weakening dollar is at the heart of any strength there is in gold and silver prices. Once again, in the face of analyst’s opinions, we see the dollar weakening across the board, this time alongside the FOMC meeting.

While the risk to the euro is to fall to $1.07 against the dollar, the U.S. does not want to see the dollar any stronger than at present despite the state of the E.U. We reiterate that we believe the dollar’s ‘bull’ run is over.

Russia and China are now continuing to buy gold for their reserves. China, Kazakhstan and Russia simply issue local currency to their miner’s and take some or all the local gold production into their reserves. It does not leave their countries and does not pass through any international gold market.  The total amount involved could be around 25% of total global gold production.

Price Drivers

The FOMC meeting is scheduled to begin today with a statement issued on Thursday. There are few who expect a rate hike. We expect more reasons to be given as to why no rate hike is on the cards. The concept put forward by the Fed Chair Mrs. Yellen that we could see a rate hike in the ‘summer months’ is now off the table after Britain voted to leave the E.U., probably precipitating a recession in the U.K. and more than likely one in several member states of the E.U. if not the E.U. itself.

Physical demand in the U.S. remains the principal driver of the gold price, a fact that was aptly demonstrated Monday when over 4 tonnes of gold was sold from the SPDR gold ETF. This pulled the gold price to $1,314, but Shanghai took it back up with London agreeing China’s price. This is the first recent, noticeable, difference in the three global markets prices.

Gold ETFs – As noted, in New York on Monday there were sales of 4.466 tonnes of gold from the SPDR gold ETF (GLD), but purchases of 0.45 of a tonne into the Gold Trust (IAU), leaving their holdings at 958.688 tonnes and 217.99 tonnes, respectively.

Since January 4th this year, the holdings of these two gold ETFs have risen by 379.063 tonnes.

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

Julian D.W. Phillips

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

A Trump Presidency would be positive for gold and silver

Gold TodayGold closed in New York at $1,333.10 on Thursday after Wednesday’s close at $1,319.30.  

    • The $: € was barely changed at $1.1028 down from $1.1029.
    • The dollar index fell to 97.01 from 97.00 Thursday.
    • The Yen was slightly stronger at 106.21 from Wednesday’s 107.02 against the dollar.
    • The Yuan was stronger at 6.6722 from 6.6742 Thursday.

 

  • The Pound Sterling was weaker at $1.3184 down from Wednesday’s $1.3254.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  22

2016  07  21

SHAU

SHAU

285.37

282.87

284.88

282.96

Dollar equivalent @ $1: 6.6722

$1: 6.6742

$1,330.30

$1,318.25

$1,328.01

$1,318.67

Shanghai prices were slightly less than at New York’s close, while London tried to pull prices lower at the opening.

The main bullion banks can arbitrage positions using the funds they have in all centers. Likewise the ICBC, the main Chinese bullion bank in China and a gold market maker in London can do the same, buying and selling gold without moving it across borders. This is acceptable to the Chinese monetary authorities as it involves a large use of Renminbi [Yuan] internationally.

Consequently, we are seeing the gold price smoothed out across the world. So a conclusion that can be drawn is that gold prices are in sync globally.

Nevertheless, this does not mean that there is a globally liquid gold market reflecting gold’s demand and supply. Traders and speculators continue to dominate prices, while physical gold continues to express a very different market sentiment as it moves into U.S. gold ETFs and across to Asia.  At some point in the future the two different markets will come together in a most dramatic way.

LBMA price setting:  $1,322.00 the same as Thursday 21st July’s $1,322.00.

The gold price in the euro was set at €1,198.98 down €1.10 from Thursday’s €1,200.08.

Ahead of the opening in New York the gold price stood at $1,325.05 and in the euro at €1,202.84.  

Silver Today –The silver price closed in New York at $19.85 on Thursday up from $19.61 on Wednesday.  Ahead of New York’s opening the price was trading at $19.68.

Price Drivers

Last night’s acceptance speech from Donald Trump was of significance to gold and silver prices should he become President.

Many believe he stands little chance of becoming President, just as the vast majority of Americans did not think he had a chance of becoming the Republican Presidential nominee when the selection process began. So the chances of him becoming President are more than a possibility. His message is pertinent.

He intends following a policy of what is clearly protectionism and a move away from globalization. This will not only be negative for growth, but disruptive and divisive for the global economy.

As it is, the global monetary system is marching determinedly to a multi-currency system. A President Trump will rapidly accelerate this process. The need for gold in ‘Official’ hands will grow in such an environment to smooth out the ruptures in cash flows between nations across the world.

Silver is likely to rapidly increase its pace towards a recognized monetary metal in that environment too.

A President Trump would be gold & silver price positive!

Gold ETFs – In New York on Thursday there were sales of 2.079 tonnes of gold from the SPDR gold ETF, leaving their holdings at 963.142 tonnes and purchases of 0.6 of a tonne into the Gold Trust, leaving their holdings at 217.54 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen by 383.091 tonnes.

Silver –Silver prices continue to fall, relative to gold.

Julian D.W. Phillips

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

 

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]

 

BoE disappoints. Gold and silver fall back. Pound rises.

Gold TodayGold closed in New York at $1,332.20 on Wednesday after Tuesday’s close at $1,332.20.  In Asia the gold price tried to rally as you can see below  

  • The $: € fell to $1.1096 up from $1.1151.
  • The dollar index fell to 96.32 from 96.53 Wednesday.
  • The Yen was weaker at 105.44 from Wednesday’s 104.32 against the dollar.
  • The Yuan was slightly weaker at 6.6855 from 6.6845 Wednesday.
  • The Pound Sterling was initially weaker at $1.3225 down from Wednesday’s $1.3271 waiting for Governor Carney’s expected easing of the B. of E. interest rates.  A hope that was dashed with a no change decision leading to a pick up to the $1.3400 level before easing back again.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  14

2016  07  13

SHAU

SHAU

288.94

286.90

287.60

288.16

Dollar equivalent @ $1: 6.6855

$1: 6.6845

$1,344.26

$1,334.97

$1,338.02

$1,340.83

The Chinese gold market was not convinced by the fall in New York and lifted the gold price, reflecting internal Chinese demand. After the close and ahead of London’s opening the gold price was ‘marked down’ pretty heavily and after the LBMA price setting was trading at $1,326.65. No doubt, if Shanghai prices remain higher, its banks in London will move physical gold from their London bases to Shanghai to arbitrage prices and shift more bullion into China.

The attempt to break the gold price down further in New York with no physical sales is a risky mark down of prices as the Technical picture degenerated and pointed down. The bears who have engineered this break down of the Technical position are relying on no further stimuli and hope that physical demand will stay on the sidelines. Get ready for a dramatic day in New York!

LBMA price setting:  $1,325.70 down from Wednesday 14th July’s $1,340.25.

The gold price in the euro was set at €1,192.71 down €17.56 from Wednesday’s €1,210.27.

Ahead of the opening in New York the gold price stood at $1,328.05 and in the euro at €1,195.20.  

Silver Today –The silver price closed in New York at $20.38 on Wednesday up from $20.09 Tuesday.  Ahead of New York’s opening the price was trading at $20.15.

Price Drivers

The extraordinary features of the gold market are that they do not reflect the balance of demand and supply, either totally or even the marginal amounts outside those amounts ‘subject to contracts’. So called ‘efficient markets’ are supposed to reflect these fundamentals and changes in physical demand and supply.

Shanghai is trying to do that, but is hesitant to impose their fundamentals on the global gold price, even though they should be entitled to do so in view of the fact that they have the largest, most active physical market in the gold world.

No, the biggest influence on the gold price is the ‘paper’ gold market on COMEX where 5% or less of the transactions require a physical settlement. However, we are seeing U.S. demand for physical gold for the gold ETFs based in the U.S. have a decidedly strong impact on prices, despite such gold being bought and sold in London.

This makes the global gold market far from an ‘efficient’ market and one likely to remain so until Shanghai exerts it potential influence on gold prices. What’s holding them back? We believe it is their desire to acquire as much gold as possible for the retail, institutional and retail Chinese gold markets, as all such sources are considered ‘China’s gold” [easily available for confiscation should the authorities decide to do that].

But the gold price is far from just a ‘commodity’ price. It is a monetary metal.  As we said yesterday, “The prime drivers of the gold price remain macro-economic and monetary factors which will not change overnight.”

The degradation of the value of currencies give a facet to the gold price which ‘reverses’ the gold price, making gold a pricer of currencies, not currencies pricing gold [which is how the majority of investors view the gold price]

Gold ETFs – In New York on Tuesday there were no sales or purchases into either the SPDR gold ETF or the Gold Trust, leaving their holdings at 965.221 tonnes and at 214.54 tonnes respectively.

We expect activity in this market to pick up later today in New York.

Since January 4th this year, the holdings of these two gold ETFs have risen by 382.17 tonnes.

Silver –Silver prices could be extremely volatile and have slipped along with gold after the BoE decided not to raise rates.

Julian D.W. Phillips

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

Gold and silver prices marked down – waiting for the BoE

The dollar is slightly stronger today against the Yen and weaker against a recovering pound. But the moves are not significant, nor are expected to be so, as the world waits for Mark Carney of the Bank of England tomorrow. Some believe he will do nothing so as to encourage the pound to recover, feeling his focus will be on the internal situation in Britain and delay any further easing until August.

But with a recession on the cards for the U.K., and his failure to try to protect the pound’s exchange rate since Brexit, so far, we feel that it is unlikely that he will do nothing. He has before him a real chance of lowering the pound’s exchange rate even further, which in itself will act as an economic stimulus to the U.K. economy.  Hence, we see a further easing now.

As to the news on China’s claim to sovereignty over the Spratly Islands chain, we see this, for now, as gold and silver neutral.  Likewise, the new British Prime Minister’s appointment, it will speed up negotiations on Brexit, but again this is gold and silver neutral.

The prime drivers of the gold price remain macro-economic and monetary factors which will not change overnight. Daily news factors are unlikely to change the upward trend in the gold price.

Gold ETFs – In New York on Monday there were huge sales of 16.035 tonnes of gold from the SPDR gold ETF but purchases of 0.45 of a tonne into the Gold Trust. Their holdings remain at 965.221 tonnes and at 214.54 tonnes in the SPDR gold ETF and Gold Trust respectively.

The sale of 16.035 tonnes was a massive number and precipitated the fall in the New York COMEX gold market. The timing and size of the sale is an extraordinary statement that was more than just a future view of the gold market on Friday, after the BoE actions. It appears to us to be an attempt to force the gold market lower at a time when gold dealing was sparse in New York.  Instead of shoving the market lower, Shanghai turned the price around and took it higher.

There may be another attempt to push prices down today in New York, but we expect London and Shanghai to take the same neutral stance in the gold market.

Since January 4th this year, the holdings of these two gold ETFs have risen by 382.17 tonnes.

Silver –Silver prices are keen to go higher but remain slightly restrained by lower gold prices. If gold does move higher we expect silver prices to spring higher.

Gold TodayGold closed in New York at $1,332.20 on Tuesday after Monday’s close at $1,354.60.  In Asia the gold price also fell further as you can see below  

  • The $: € fell to $1.1051 up from $1.1100.
  • The dollar index rose to 96.53 from 96.12 Tuesday.
  • The Yen was weaker at 104.32 from Tuesday’s 103.44 against the dollar.
  • The Yuan was slightly weaker at 6.6859 from 6.6859 Tuesday.
  • The Pound Sterling was stronger at $1.3271 up from Tuesday’s $1.3158 but waiting for Governor Carney tomorrow when we expect the BoE to add further easing of interest rates!

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  13

2016  07  12

SHAU

SHAU

286.90

292.05

288.16

291.86

Dollar equivalent @ $1: 6.6845

$1: 6.6859

$1,334.97

$1,358.65

$1,340.83

$1,357.76

The Chinese gold market followed New York down, but then turned it up at China’s morning Fix taking it higher during their day to set the pace for London’s morning.

The attempt to break the gold price down in New York with the very large physical gold sale worked to some extent, but Shanghai then ignored the sale as demand came in at the lower prices. Certainly, Shanghai took the reins in the last day against the will of New York. We will watch today to see who exerts dominant pricing power?

LBMA am price setting:  $1,340.25 down from Tuesday 13th July’s $1,352.85.

The gold price in the euro was set at €1,210.27 down €8.51 from Tuesday’s €1,218.78. The afternoon price was set at $1,342.75 and in the euro at €1,211.03.

Silver Today –The silver price closed in New York at $20.09 on Tuesday down from $20.29 Monday.  Ahead of New York’s opening the price was trading at $20.40 but has slipped a little to $20.20.

Julian D.W. Phillips

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

Worth Taking Some Profits In Silver Stocks?

Those invested in silver stocks and/or derivatives may like to take a look at my latest article on seekingalpha – Worth Taking Some Profits In Silver Stocks?

There has been an enormous rise in the silver price year to date – as noted in Frank Holmes’ summary of the performance across all commodities in H1 2016, which puts silver at no. 1 – See: Silver Takes the Gold: Commodities Halftime Report 2016.

The rise, in particular in silver equities has been enormous with most doubling or tripling in value over the half year.  Thus it may make sense to take some profits – not necessarily all – in case the precious metals upward price path sees consolidation and/or a setback, although overall we continue to like the sector long term.

Silver through resistance and gold preparing to run higher

Gold TodayGold closed in New York at $1,343.70 on Friday after Thursday’s $1,323.70.  In Asia the gold price again jumped higher and London was trying to pull the gold price lower just after its opening.  

  • The $: € slipped to $1.1124 up from $1.1152.
  • The dollar index moved lower to 95.73 from 95.89 Friday
  • The Yen was unchanged at 102.65.
  • The Yuan was weakening to 6.6663 from 6.6572 on Friday.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  4

2016  07  1

SHAU

SHAU

290.07

284.54

290.01

285.50

Dollar equivalent @ $1: 6.660

$1: 6.6572

$1,354.68

$1,329.42

$1,354.40

$1,333.90

Shanghai took the lead again ahead of London’s opening, as the perspective on the global economy continued to point to more deflation and national monetary policies targeted more easing.

The Yuan continues to weaken, as you can see above, against the U.S. dollar. The dollar itself continues to weaken against the euro as a result of behind the scenes activity. We see this as more than just protecting the U.S. economy, but a stabilizer in the foreign exchange world itself. The Pound appears to be stabilizing now too.

LBMA price setting:  $1,348.75 up from Friday 1st July’s $1,331.75.

The gold price in the euro was set at €1,211.60 up €12.40 from Friday’s €1,199.20.

With New York closed for Independence Day, the gold price in London’s afternoon was trading at $1,350.70 and in the euro at €1,212.80.  

Silver Today –The silver price closed in New York on Friday at $19.70 almost a dollar higher than Thursday’s $18.26. In London’s afternoon the silver price stood at $20.18.

Price Drivers

With New York closed today, our audience is either those whose interests/positions demand they keep in touch or in countries where business is as usual. All of us are slightly open mouthed at the strong rises in both gold and in particular silver, of late. It is a good opportunity to reflect on the global ‘big’ picture. In summary this points to a solid, rising second half of the year for both gold and silver prices.

The prime reasons for the rises are that both their Technical pictures have moved out of the consolidation area into ‘new territory’. Silver’s breakout is clearer than gold’s at this moment.

Over the coming weeks and months the ramifications of ‘Brexit’ on the global economy will give us a measure of just how much of a tectonic shift in the world economy it was. The most visible impact has been a lowering of the expectations for interest rates and the heightened economic risks to the world.  The risk factor pulls markets down and the low interest rates should push both bond and equity markets up. That mix is expressing itself in market levels now. But equity market rises are not for the right reasons. The future is not improving economically, quite the reverse, so markets are rising [where they are doing so in the world] because of better yield offerings. Most agree that the future of the global economy is extremely worrying, which is why gold and silver are gaining more and more momentum. This is a trend change from the last three years in precious metals and will not reverse until we see some of the last eight year’s hopes become realities. This is unlikely!

A growing fear is now becoming that deflation’s grip will grow in a world where the capacity and competence of the governments and central banks is insufficient to combat the downturn in the developed world. The current efforts are focused on undermining currencies, which is showing itself in currencies weakening against gold.

Gold ETFs – On Friday the holdings of the SPDR gold ETF jumped another 3.86 tonnes leaving their holdings at 953.914 tonnes and the holdings of the Gold Trust remained the same as the day before, leaving its holdings at 208.17 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen 365.298 tonnes. According to Bloomberg, the total increase in ETF gold holdings is over 500 tonnes. This far exceeds expectations of central bank’s purchases for the entire 2016.

Silver –Silver prices have burst through overhead resistance and sees little if any resistance to rises for some way.

Julian D.W. Phillips

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

Gold rising; silver too even more so but may see a temporary pause

Silver bounding higher, gold still rising as structural damage begins to be realized!

Gold TodayGold closed in New York at $1,323.70 after yesterday’s $1,317.60.  In Asia the gold price jumped higher and London was trying to take the gold price higher just after its opening.  

  • The $: € slipped to $1.1152 down from $1.1067.
  • The dollar index moved higher to 95.89 from 95.51 yesterday.
  • The Yen strengthened slightly [102.65 down from 102.88].
  • The Yuan was strengthening up to 6.6572 from 6.6441 yesterday.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  07  1

2016  06  30

SHAU

SHAU

284.54

281.54

285.50

281.78

Dollar equivalent @ $1: 6.6572

$1: 6.6441

$1,329.42

$1,317.99

$1,333.90

$1,319.12

Once again Shanghai took the lead in taking gold prices higher in their today, as the perspective on the global economy continued to point to more deflation and national monetary policies targeted more easing. The Bank of England of the United Kingdom [How long will it be called that if Scotland has a referendum to remain in the E.U. – will we have Border Controls in Berwick?] indicated lower interest rates, likely in August. The pound continues to slip.

LBMA price setting:  $1,331.75 up from Thursday 30th June’s $1,317.00.

The gold price in the euro was set at €1,199.02 up €18.07 from Thursday’s €1,180.95.

Ahead of New York’s opening, the gold price was trading at $1,334.30 and in the euro at €1,199.42.  

Silver Today –The silver price closed in New York on Thursday at $18.78 up from Wednesday’s $18.26 a rise of 52 cents. Ahead of New York’s opening the silver price stood at $19.20. We expect it to continue to outpace gold, particularly when gold rises itself.

Price Drivers

The preoccupation in the U.S. with when the next rate hike will be, is giving way to the possibility of rates easing. Perhaps additional Q.E. will come onto market screens as global deflation continues its firm grip on the developed world economies.  We do not believe the U.S. dollar can carry the burden of a strong Dollar.

Japan has announced a further fall in prices, which to us is confirmation that the Bank of Japan’s stimuli is failing badly.

In the United Kingdom we are likely to see a recession. The Governor of the Bank of England, Mark Carney, stated today, “It now seems plausible that uncertainty could remain elevated for some time. The economic outlook has deteriorated and some monetary policy easing will likely be needed over the summer.”

Any loosening by the BoE would be its first since 2012, when it last expanded its asset purchase program. Its key interest rate has been at a record-low 0.5% since March 2009. The BOE has signaled it can go closer to zero. Sterling has fallen about 11% since the EU vote.

Asked about the initial drop after the referendum result, Carney said big moves were to be expected and there had been a need for the pound to “find a new level.” It is doing so and will likely fall further.

Gold is moving higher and will likely continue to do so in the face of monetary easing engulfing the global economy at the same time as deflation grows.

Gold ETFs – On Wednesday the holdings of the SPDR gold ETF remained the same leaving their holdings at 950.054 tonnes and the holdings of the Gold Trust rose a relatively massive 4.46 tonnes to take the holdings to 208.17 tonnes.   Since January 4th this year, the holdings of these two gold ETFs have risen 361.438 tonnes.

Silver –Silver prices need to pause before tackling overhead resistance.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Asia Pushing Gold Higher and Silver’s on a Roll

Trading overnight on the Shanghai Gold Exchange (SGE) served to give the gold price a boost overnight last night.  The SGE’s am benchmark fix came in at the equivalent of US$1329.05 an ounce, around $10 higher than it had been trading on Western markets the previous day, and the pm SGE benchmark price came in higher at $1.335.27 on http://www.kitco.com’s calculations – the site has a nice interactive tabulation of the SGE benchmark prices in various combinations of yuan, U.S. dollars, ounces and grams.

Whether the SGE uptick will start to show up in terms of a pick-up in Asian demand – notably in China where it appears to have been lacklustre so far this year – remains to be seen. But this could already be happening given net imports of gold into mainland China from Hong Kong (which currently accounts for around 40-50% of such imports), rose sharply in May to the highest level in five months at 115 tonnes.  If Asian demand does pick up – we will be watching mainland China gold import levels with perhaps added interest in the months ahead to see if there is a continuing improvement – and if gold ETF inflows continue at recent levels, there could well be even more of a squeeze in physical gold availability given inventories of available. non-attributable, metal in London and New York appear to be getting particularly tight.

The real precious metals beneficiary of yesterday’s gold move – indeed of gold’s overall performance over the past few weeks – has been silver, which for the first time since September 2014 has breached the $19 an ounce level.  Indeed its rise of around 6% over the past 10 days has been pretty spectacular.  This is also showing up strongly in the Gold:Silver Ratio (GSR) – effectively calculating the amount of silver it would take to ‘buy a similar weight in gold – which has come down to below 70 from a high of over 83 only around three short months ago.  silver had seemed to be relatively slow to move, but now it appears to have some momentum behind it.

As a result of silver’s increase, silver stocks – even before the latest big surge in price – had been probably the best performing stock market subsector year to date – See: Silver Stocks Best Investment YTD. Can They Continue to perform?.  But since I wrote that article only a few days ago they have, not surprisingly, continued to move sharply upwards alongside the boost in the silver price.  From the UK investor’s point of view, most of these major silver stocks are quoted in Toronto (TSX) and the USA (NYSE or NASDAQ) – the only major primary silver producers with UK quotes are Fresnillo (FRES) and Hochschild (HOC).  FRES is up 142% year to date and HOC 178%.  Another more diversified approach would be the Way Charteris Gold and Precious Metals Fund where silver stocks comprise a large part of its major investments.  After a pretty torrid performance over the past few years, this year to date it is up around 154% from the beginning of January.  These are impressive performances, but as usual with silver, while the upside potential is really positive, the downside risks are similarly large.  Silver tends to outperform gold when the latter is rising, but can substantially underperform on the downside.

Silver too, as a very small market sector in monetary investment terms, is also seen as being particularly prone to potential manipulation on the futures markets by a number of silver analysts and by virtually the whole community of out and out silver bulls.  They will point to a number of occasions, and particularly April 2011, when silver was on a roll and reached just short of $50 an ounce, where huge seemingly anomalous sales on the futures markets saw it crash – even when gold at the time was  to continue on an upwards path for another 4 months.

Both silver and gold have benefited quite strongly from the shock UK Brexit referendum outcome which has had some strange effects on markets in general.  Gold, and silver, have benefited, while the pound sterling has plunged, but the UK’s well-followed FTSE 100 Index, after a  stutter, recovered all its lost ground, and more.  It is currently up 5% on the past month at a new high for the year to date.  Few would have predicted that kind of outcome from a vote for the UK to leave the safety net of the EU.

But as cautioned, silver is a volatile metal to trade, and silver stocks perhaps even more so.  If gold continues to show some strength, there’s a good chance silver’s momentum could carry it yet higher still with the GSR continuing to come down.  If gold were to reach $1,400 or higher by the year end – as many analysts are now suggesting – silver and silver stocks could well be somewhere to put perhaps a limited section of your investment portfolio, but only a true gambler would risk all!

 

Gold ETFs still increasing holdings. Greenspan, Faber tell investors go for gold.

Markets calmer, but more money printing across the world lies ahead, cheapening currencies against gold and silver!   

Gold TodayGold closed in New York at $1,317.60 after yesterday’s $1,312.40 down from $1,326.50 on Tuesday.  In Asia and London the gold price held at the same levels.  

  • The $: € slipped to $1.1152 down from $1.1067.
  • The dollar index moved higher to 95.51 from 96.01.
  • The Yen weakened slightly [102.88 down from 102.50].
  • The Yuan was strengthening up to 6.6441 from 6.6482 yesterday.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  06  30

2016  06  29

SHAU

SHAU

281.54

282.68

281.78

282.87

Dollar equivalent @ $1: 6.6441

$1: 6.6482

$1,317.99

$1,322.51

$1,319.12

$1,323.75

Shanghai, New York and London were in sync in the last day with gold pausing at lower levels. The day before, Shanghai led the way, taking the gold price up to $1,323.4 at the afternoon ‘Fix’ there.  There were a few days when Shanghai was playing ‘catch-up’ with London and New York. We see this as reflecting a broader global view on the reactions to Brexit.

The Yuan was relatively stable today after depreciating steadily in the last few days. We do expect an ongoing gentle decline of the Yuan over the weeks ahead as most ‘hard’ currencies join in the ‘currency war’.

While Brexit has caused the U.K. to join the ‘currency war’, with more monetary easing, we do expect to see the U.S. react strongly to a stronger dollar if we see it on the index. The prospect of a Fed interest rate hike was being pushed out to 2018 by the markets today. But more will be needed to make the dollar fall with other ‘hard’ currencies. We would not be surprised to see Q.E. return in the U.S. or other similar moves, in time.

The conclusion of the ‘currency war’ has to be protectionism expressed through tariff or various forms of Capital Controls.

LBMA price setting:  $1,317.00 down from Wednesday 29th June’s $1,321.50.

The gold price in the euro was set at €1,180.95 down €13.14 from Tuesday’s €1,194.09.

Ahead of New York’s opening, the gold price was trading at $1,317.40 and in the euro at €1,181.84.  

Silver Today –The silver price closed in New York on Wednesday at $18.26 up from Tuesday’s $17.78 a rise of 38 cents. Ahead of New York’s opening the silver price stood at $18.40. We expect it to continue to outpace gold, particularly when gold rises itself.

Price Drivers

The amazement that Britain voted for the exit from the E.U. continues with anger showing itself in Europe. It is clear that a recession is looming in the U.K. and may well do so in the E.U., while low growth in the U.S. may start to weaken further. All were so convinced that Britain would vote to remain in the E.U. that it seems no plans were made for the exit. Politicians now realize they completely misread the voters [who like politicians, were voting for their own interests – halting immigration seems to have been the main concern]. Much as politicians want to turn back, that’s not on the agenda.  

The scene of the world is changing and becoming more violent, poorer [at consumer level] while globally diasporas are growing and increasing in intensity. Politicians from the U.S. to the U.K. and Europe don’t seem to have understood the implications, so creating uncertainty. This leaves the establishment trying to protect their economies at the expense of their currencies. It is this that will continue to their losing value against gold and silver.

In such times gold and silver represent stores of value. Not only is Alan Greenspan expressing himself as a ‘gold bug’ but Marc Faber is telling investors to go for gold.

While this is right, it does not describe government’s changing views on gold and the future actions they are likely to take to shore up confidence in their currencies with gold.

Gold ETFs – On Wednesday the holdings of the SPDR & gold Trust rose 2.673 tonnes with their holding growing to 950.054 tonnes and the holdings of the Gold Trust rose 0.3 of a tonne to take the holdings to 203.71 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen 356.978 tonnes.

Silver –Silver prices are now going full pelt higher!

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Damage done – gold and silver pause but poised

The Tsunamis haven’t struck, but are on the way. The damage has been done! Gold and silver pause ahead of strong moves!   

Gold TodayGold closed in New York at $1,326.50 up from $1,318.90 on Monday a rise of $7.60.  In Asia the gold price began to pull back and continued in London, dropping to $1,308 before reversing higher.  

  • The $: € recovered to $1.1092 from $1.1004 before starting to weaken again before New York opened.
  • The dollar index moved lower to 95.97 from 96.37.
  • The Yen recovered slightly [102.31 down from 101.70].
  • The Yuan was stabilizing to 6.645 from 6.65 yesterday.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  06  28

2016  06  27

SHAU

SHAU

282.65

283.36

282.15

283.43

Dollar equivalent @ $1: 6.6446

$1: 6.6412

$1,323.11

$1,325.41

$1,320.75

$1,327.42

The Yuan ‘fixing’ continues to lower the Yuan against all currencies, as you can see above. The Yuan is headed lower and will continue to do so, retreating from levels it was taken to by a rising dollar. After the current pause as the full weight of the ‘Brexit” earthquake is fully assessed by global markets we expect aftershocks to strike in the financial world.

It is important for gold investors to realize that gold is simply reflecting the real weakness of all currencies, from now on. As a result of the tectonic shifts in the monetary world that have been triggered by the U.K. leaving the E.U., we have seen the first change, of many to come, in the global economy.

LBMA price setting:  $1,312.00 down from Monday 27th June’s $1,324.60.

The gold price in the euro was set at €1,200.92 down €0.040 from Monday’s €1,200.96.

Ahead of New York’s opening, the gold price was trading at $1,310.70 and in the euro at €1,183.05.  

Silver Today –The silver price closed in New York on Monday at $17.75 up from Friday’s $17.72 a rise of 3 cents. Ahead of New York’s opening the silver price stood at $17.63.   

Price Drivers

We live in a time of consequences that will bring gold into an active role in the global monetary system!

  • The economic growth in China has been at the expense of the developed world. In 2000 80% of global cash flow went to the developed world. By 2020 only 34 % will go to the emerging world. At the moment the developed world gets around 55% of the global cash flow. This is the foundation of the economic decay of the developed world.
  • The credit crisis in 2008 was a separate event of euphoric attitudes towards credit. Whether in auto finance or at government level the same view of credit persists and encouraged.
  • The developed world is experiencing severe deflationary pressures, which are ameliorated to the point where they are barely visible due to various forms of quantitative easing. The result appears to be nearly zero inflation.  We are waiting to see inflation burst upon us.  There is a point where deflation and inflation stop compensating each other and combine to trigger rocketing inflation. The classic case of this was in Germany in 1923 in the Weimar Republic. The root cause first showed itself in 2008 from which the world has not yet emerged.
  • Political institutions have either been emasculated due to ‘hung’ governments or lack of will to really promote growth. Crises initiate the process of loss of control by governments triggering further socio/political crises. Brexit appears to be a start in a long series of events which will breed further crises. [More in our newsletters – subscribe below]

We look to Europe for the next crisis. It is likely to spawn protectionism and potential capital controls as the world moves into reverse gear in the process of globalization.

Gold ETFs – On Monday the holdings of the SPDR gold ETF (GLD) again jumped 13.068 tonnes to a holding of 947.381 tonnes and the holdings of the Gold Trust (IAU) rose 0.45 of a tonne to take the holdings to 202.36 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen 352.955 tonnes.

Silver –Silver prices are still ready to go full pelt, after this short-term consolidation.

Julian D.W. Phillips

Gold and silver to hold their prices, and currencies fall against them.

Gold TodayGold closed in New York at $1,318.90 up from $1,257.50 on Friday a rise of $51.40.  Before the opening in London the gold price rose further to over $1,332, before pulling back to $1,325 after the market opened.

  • The $: € plunged lower on Monday morning to $1.1004 from [pre-Brexit] Thursday’s $1.1336.
  • The dollar index moved higher to 96.37 up from the pre-Brexit, 93.48.
  • The Yen continues to strengthen [101.70] after central bank indicated it may well intervene to weaken the Yen.
  • The Yuan continues to weaken to 6.65 respectively. The Yuan fix showed the Chinese authorities are taking pulling the Yuan down more in line with the euro than the dollar.
  • The dollar is strong on the Index so we do expect action to weaken the dollar even if it is just through swaps. The Fed expressed their worries at their last statement, so we doubt they will tolerate such strength.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  06  27

2016  06  24

SHAU

SHAU

283.36

270.42

283.43

278.92

Dollar equivalent @ $1: 6.6412

$1: 6.6236

$1,325.41

$1,269.85

$1,327.42

$1,309.77

With the Yuan now being pulled down by the authorities in China,  we expect the Yuan price of gold to rise faster, as the Yuan falls.

Gold is rising against all currencies describing the real weakness of all currencies, even though the dollar is the least weak of them.

The positive Technical picture continues to promise higher prices.  

LBMA price setting:  $1,324.60 up from Friday 24th June’s $1,313.85.

The gold price in the euro was set at €1,200.96 up €14.00 from Friday’s €1,186.96.

Ahead of New York’s opening, the gold price was trading at $1,329.75 and in the euro at €1,208.53.  

Silver Today –The silver price closed in New York on Friday at $17.72 up from Thursday’s $17.33 a rise of 39 cents. Ahead of New York’s opening the silver price stood at $17.76.

Price Drivers

We are informed by the Chancellor of the Exchequer in Britain that he communicated with the G-7 leaders over the weekend and that their objective is to ‘calm’ markets and we have not seen any “gapping” [brutal sudden drops in values] yet.

His efforts will be focused on slowing down the process of divorce from the E.U.  in an attempt to minimize disruptions. All nations want calm, but all nations care for their own interests before those of others, so their efforts will not detract from their interests, leaving the fundamental problems of major structural proportions [much bigger than 2008] ahead of them. Let’s put it this way:

The huge earthquake has happened and tsunamis are on their way! Governments [who, to date, have not shown either the will or competence to resolve the problems that arose in 2008] are now building walls to minimize the impact of these.  They are on the defensive, without direction. Gold and silver will hold their prices, and currencies will fall against them.

Governments are braced for major banking crises with vast sums of newly printed money, which again will devalue those currencies against gold and silver!

The B.I.S. continues to warn of crises, this time pointing at the unsatisfactory way Sovereign debt is treated on balance sheets. In short, while the banks are well shored up with new capital and central banks are prepared to put new money into the monetary tide walls, the massive debt burden may well add to the tsunamis approaching. If governments are so concerned, so should we be!

Please note that all data that we receive from the global economy is pre-Brexit, so will not be indicative of the future state of global economies. Uncertainty rules the day!

Gold ETFs – On Thursday the holdings of the SPDR & gold Trust jumped 18.415 to a holding of 934.313 tonnes and the holdings of the Gold Trust remained the same at 201.91 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen 339.437 tonnes.

Silver –Silver prices are ready to go full pelt, even against gold prices!

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Brexit fallout: Gold, Silver Soar, Pound and Euro Plunge, Yen soars   

Gold TodayGold closed in New York at $1,257.50 down $8.70 on Thursday ahead of the start of voting in Britain.  This morning Asia took it up to $1,310 as they were the first market to ‘see’ the Brexit. At the opening on London the gold price the gold price pulled back to $1,319.

The $: € plunged lower to $1.1069 from Thursday’s $1.1336. The dollar index moved higher to 95.77 up from 93.48. It is a day when the dollar is stronger overall but weaker in the Yen. The Euro and Yuan were much weaker, alongside sterling.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  06  24

2016  06  23

SHAU

SHAU

270.42

267.96

278.92

268.66

Dollar equivalent @ $1: 6.6236

$1: 6.5797

$1,269.85

$1,266.70

$1,309.77

$1,270.01

With the Yuan tumbling against the dollar, the gold price in Shanghai was much stronger and led the way for London’s pricing.

While investors can’t export physical gold, they can take a position in Shanghai ahead of London, take their profits and export those. In this way they can ‘arbitrage’, matching their ‘long’ positions in London at higher prices, should they wish.  Above shows that they could have taken a position in Shanghai, well ahead of London’s opening in physical then match the position in London selling out the Shanghai position in Shanghai afterward, before the close. Then it would have shifted the funds to London and not the gold. This makes the International side of the Shanghai Stock Exchange an integral part of the global gold market.

The positive Technical picture promises higher prices.  

LBMA price setting:  $1,313.85 up from Thursday 23rd June’s $1,265.75.

The gold price in the euro was set at €1,186.96 up €76.75 from Thursday’s €1,110.21.

Ahead of New York’s opening, the gold price was trading at $1,323.35 and in the euro at €1,195.92.  

Silver Today –The silver price closed in New York on Thursday at $17.33 up from Wednesday’s $17.27 a rise of 6 cents. Ahead of New York’s opening the silver price stood at $17.93.

Price Drivers

The unexpected happened ! The paw paw hit the fan! The drama erupted at 7.00 a.m. London time and began to be discounted in Shanghai before London opened.

We have just witnessed an earthquake of over 8 on the global, monetary Richter scale.

Will we see a Frexit [Marie le Pen has just called for a French referendum and Spain may follow as could the Netherland…….], a Spexit, a Nexit……? This could prove a mortal blow to the E.U. and eventually leave just the strong members remaining, implying, very long term, a much stronger euro.

The biggest hit was taken by the banking sector as shares in leading banks dropped 20 to 30% at the opening. We are reassured that the banking sector can survive these crises, by Mark Carney, Governor of the Bank of England who pointed out that the banks in the U.K. have raised over 100 billion pounds in capital, while the Bank of England stands ready to provide additional liquidity of another 250 billion pounds in support.

We wondered why they did not resort to the imposition of the dollar premium, as they did in a similar crisis in 1971. Then we realized that the provision of so much more liquidity did more.

  • It permitted a tumbling of sterling [improving the U.K.’s international competitiveness [while joining the currency war].
  • It set the U.K. on a Quantitative Easing path of major proportions.
  • It abandons concern for the exchange rate and stability of Sterling’s value in currency markets facilitating a weaker exchange rate. This suggests a steadily falling pound sterling in the weeks/months ahead.

We recognize that this is why the Fed waited before considering a rate hike. We don’t expect one until the end of 2016 at the earliest, if then. More to the point, we are aware that the Fed/Treasury will not be happy with a strengthening dollar and may well act to counter it, just as we expect the Bank of Japan to intervene in the foreign exchange markets to lower the exchange rate of the Yen.

Please note that gold has only, so far recovered to where it was a month ago at its recent peak. The changes wrought by Brexit promises to take gold higher long term.

Gold ETFs – On Thursday the holdings of the SPDR & gold Trust remained the same as did those of the Gold Trust at 915.898 tonnes and at 201.91 tonnes respectively. We expect that to change today!  

Since January 4th this year, the holdings of these two gold ETFs have risen 321.022 tonnes.

Silver –Silver prices are going to sprint ahead of gold prices now that the way forward higher is now clear.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

 

Brexit vote Day – All quiet on the ‘Western Front’ for now

Gold TodayGold closed in New York at $1,266.20 up $0.30 on Wednesday ahead of the start of voting in Britain.  Asia took it up to $1,270 and London let it slip a dollar and a half, despite strong demand for physical gold in the U.S.

The $: € moved lower to $1.1336 from Wednesday’s $1.1271. The dollar index moved to 93.48 down from 93.89. It is a day when the dollar is weaker in the world’s main currencies, but the Yuan was weaker too.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  06  23

2016  06  22

SHAU

SHAU

267.96

269.81

268.66

268.00

Dollar equivalent @ $1: 6.5797

$1: 6.5886

$1,266.70

$1,273.72

$1,270.01

$1,265.17

While the Yuan weakened against the dollar, the gold price in Shanghai was slightly stronger than New York, which led the way for London to follow. This showed clearly the small change in direction was due to the influence of Shanghai showing a measure of pricing power.

Gold prices worldwide are ‘on hold’ pending tomorrow’s result in Britain, after which we will see strong movements.

We believe that a ‘stay in’ vote has been discounted in global financial markets, to some extent.

At the moment, the positive Technical picture remains unchanged. We don’t expect any change, subject to tomorrow’s vote.

LBMA price setting:  $1,265.75 up from Wednesday 22nd June’s $1,265.00.

The gold price in the euro was set at €1,110.21 down from Wednesday’s €1,119.96.

Ahead of New York’s opening, the gold price was trading at $1,261.25 and in the euro at €1,110.60.  

Silver Today –The silver price closed in New York on Wednesday at $17.27 from Tuesday’s $17.23 a rise of 4 cents. Ahead of New York’s opening the silver price stood at $17.31.

Price Drivers

We have to be careful to not see the referendum in the U.K. as the ‘be all and end all’ in the global economy today. There are many other issues going on in other parts of the world.

The dollar is a weaker today, a factor totally unrelated to the British referendum. The news out of the E.U. from France is that manufacturing continues to fall into a contractionary state.

Repeat: The Pound Sterling continues at very strong levels! If the vote is to leave, expect a heavily plunging pound!

Currencies and precious metals are in gambler’s territory as the polls look pretty even!

Gold ETFs – The holdings of the SPDR Gold ETF (GLD) rose another 3.564 tonnes as the physical buying continued at a fast pace, leaving its holdings at 915.898 tonnes. The Gold Trust (IAU) saw no action yesterday and its holdings remain at 201.91 tonnes.  

Since January 4th this year, the holdings of these two gold ETFs alone have risen 321.022 tonnes. Silver –Silver prices are stronger over yesterday’s price at $17.41 but remain and now wait for the vote to be announced tomorrow morning.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance