Gold soars to 2-year high: The Holmes Gold SWOT

By Frank Holmes, CEO & Chief Investment Officer, U.S. Global Investors

Strengths
  • The best performing precious metal for the week was palladium, rising 2.24 percent. Palladium surged early in the week, doing just the opposite of gold, when polls indicated British voters were more likely to vote “remain” in the Brexit referendum, thus economic uncertainty would be maintained.
  • However, the palladium price dropped on Friday as gold soared to a two-year high following the U.K.’s vote to exit the European Union, boosting haven demand. According to Bloomberg, U.K. voters backed leaving the EU by 52 percent to 48 percent, causing turmoil across markets and prompting Prime Minister David Cameron to resign.
  • Gold dealers in London say they have never seen anything like it, describing the rush from consumers to sell gold, and many more to buy the precious metal following the U.K.’s vote to exit the EU. “We’re doing 10 times the business we normally do,” said Michael Cooper, commercial director of ATS Bullion Ltd. BullionVault saw its busiest day ever on Friday, reports Bloomberg.
 Weaknesses
  • Despite the surge in gold prices on Friday following the U.K. vote, it was the worst performing precious metal for the week, although still up 1.43 percent. Gold backed ETFs have seen a surge in assets this year as investors have started to discount that political leaders at the central banks around the world have lost their mojo, as you can see in the chart below.

HGS276

  • Gold experienced weakness most of the week, falling for the first four days of the week as polls on the Brexit referendum showed uneven results. Gold tumbled by the most in almost a month as other polls on Monday showed voters tilting toward remaining in the EU.
  • Kinross Gold Corp. temporarily halted mining at its Tasiast mine in Mauritania, reports Bloomberg, after the Ministry of Labor banned some of its expatriate workers from the site due to invalid work permits. The stoppage comes a week after a three-week strike by unionized workers ended at the mine, one Seeking Alpha article points out.
Opportunities
  • According to the median of 12 forecasts in a Bloomberg survey of analysts and traders from New York to Canada, gold prices could reach as high as $1,424 an ounce by year end, reports Bloomberg. “The Brexit referendum lowered the probability for an interest rate hike,” said commodity analyst Thorsten Proettel. Low rates are a boon to gold because it increases the metal’s appeal as a store of value, the article continues..
  • Capital spending by gold producers has been decimated, writes Sean Gilmartin at Bloomberg, which will lead to a long-term decline in the mine supply of the metal. According to UBS, high quality gold equities still offer attractive leverage to gold price upside, and will outperform physical gold in a rising price environment. Other opportunities for the metal come in the mergers and acquisitions space, reports the Financial Review, particularly in the West African-focused gold space driven by strong acquirers out of North America. In an all-share deal, Teranga Gold made an offer to buy Gryphon Minerals, boosting its share price by 22 percent on the news.
  • Hartley’s reports on Burey Gold Limited this week, noting the company’s release of significant drilling results from its maiden RC drilling program in the northern zone of its Giro project. Highlights include 2 meters at 196 grams per ton from 12 meters, and 15 meters at 255.6 grams per ton from 15 meters. Additional results include 33 meters at 6.1 grams per ton from surface and 12 meters at 21.2 grams per ton from 3 meters. Hartley’s writes “These results confirm our opinion that the Giro project has potential to define a company-making asset particularly given these significant high grade results.”
Threats
  • Physical demand for gold out of both India and China was tepid during the first half of the year, reports Bloomberg. Demand was historically weak in India, with the discount averaging $25 an ounce in 1H versus $8 a year ago. Also contributing to the overall weakness was a poor farming year in India, continues the article, yielding less disposable income for Indians to buy gold.
  • Although a vote for Brexit will benefit gold, reports SocGen, other commodities such as copper and oil could suffer. Mark Keenan, SocGen Asia head of commodities, points out that a rising U.S. dollar will depress metals such as copper, and risk aversion may hurt oil.
  • In a note from Sovereign Man this week, the author reflects on how much has changed since the publication started seven years ago. He points out that U.S. government debt soared 70 percent, that the Federal Reserve’s balance sheet more than doubled, and that the U.S. government has been caught red-handed spying on everyone – all in seven years’ time. “We’ve seen an appalling rise in police violence and Civil Asset Forfeiture to the point that the U.S. government now steals more than every thief in America combined,” he continues. Perhaps Donald Trump is right in that Mexico will pay to build a wall on its northern border, which is to keep Americans from crossing illegally into Mexico.

 

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Big gold SPDR ETF sale has no impact on price confirming underlying strength

Julian Phillips’ take on the current gold and silver markets and geopolitical effects impacting on them

There was a large sale of gold from the SPDR gold ETF on Friday of 5.373 tonnes but there were no sales or purchases of gold into or from the Gold Trust on Friday. The holdings of the SPDR gold ETF are at 744.401 tonnes and at 164.71 tonnes in the Gold Trust.  This size sale would ordinarily have hurt the gold price in New York, but it didn’t, as you can see. This confirms underlying strength. The dollar weakened with the dollar index falling to 98.22 after its high of over 100. The euro recovered to $1.08 in Asia, slipped back to $1.0772 ahead of London’s opening then rose to $1.0887.

New York closed Friday at $1,183.20 up $12.90. Asia held it a dollar below that level before London opened. So far the new way of Fixing does not appear to have produced any dramas and the ‘runs’ have gone well. Of course true transparency would mean the participants disclosing details of their in-house deals which were ‘netted’ out before the participants did an overall ‘netting out’. This morning the “LBMA gold price” was set at $1,181.40 up $9.65 with the euro price down nearly €10.   Ahead of New York’s opening, gold was trading in London at $1,181.60 and in the euro at €1,085.73.

The silver price closed at $16.73 up 60 cents. Ahead of New York’s opening it was trading at $16.70 .The silver price showed how quick it can turn up as support held firm.

The widening of support for the AIIB [the Asian equivalent of the I.M.F./World Bank] was not the only piece of Asian news last week. Something considerably more dramatic took place, something we at Gold Forecaster and Silver Forecaster have been pointing to for several years now as a structural change in the world monetary order. So far it has not been reported in the media or gold world. Once it happens, gold and silver prices will see a major change in their fundamentals. We will expound on this once we have first informed subscribers.

As to Greece, another stressful week for the country takes place. The country will run out of money by the end of April. This news alone should empty the banks of deposits. By blocking the exit of capital now, they may be able to salvage a viable banking sector, but will they? While the credit position of Greece may be a great emotional issue, we would have expected the Greek government to have accepted the reality of their situation and the fact that their debt is un-repayable and already exited the E.U. Clearly political face saving is going on as the government did commit to staying in the E.U. An exit must have the element of surprise to stop capital leaving, so could happen any time now.

Gold speculators given a fright

Julian Phillips’ latest take on what’s driving the precious metals markets.  Sees Fed waiting longer to implement a rate rise.

There were purchases of 1.791 tonnes of gold into the SPDR gold ETF but no movement was seen in the holdings of the Gold Trust on Wednesday. The holdings of the SPDR gold ETF are at 749.774 tonnes and at 164.02 tonnes in the Gold Trust.  The purchase was not, of itself, sufficient to cause the gold price to rise, but the accompanying short covering as the dollar index dropped to 98.81 and to over $1.07 against the euro, were.

Speculators were given quite a fright as they misread the Fed, the dollar and the state of the gold market. With traders and speculators in command of the U.S. gold market, while Asia continues to buy all available volume of gold offered, short covering drove the gold price as high as $1,182 at one point in the U.S., but the market then settled down to close at $1,171. This was the strong move that we were expecting.

Now the gold market must digest the Fed’s words and the likelihood of a longer wait before rate hikes happen, at a glacial pace, and in small rises, until inflation is confirming it will reach 2% in the  medium term. This is positive for gold as it does indicate that the dollar’s rise will falter.

It is clear that the Fed is unhappy with the financial market’s propensity to take small changes in wording as a definitive indication that rates will rise on a certain date.  Janet Yellen, made it clear that the timing of rate rises will be ‘data driven’ as they have not decided when they will raise rates. A major concern of the Fed is the volatility caused by financial market’s determination to translate every word into impending action. Nevertheless, financial markets and commentators will not change. Hence, the Fed will wait longer than needs be before acting as this will cause the least disruption to the U.S. economy and financial markets.

It is possible that the Fed will act anytime between June and next year on rates, a positive for gold and silver.

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

 

New York market sees little physical gold activity but still drives prices

Julian Phillips’ update on what has been/is happening in the major precious metals markets and with the big SPDR gold ETF

New York closed yesterday at $1,153.30 down$0.70 as the gold price began to stabilize as did the euro for now. Asia lifted the gold price to $1,159 and London held it there before it was Fixed at $1,156.50 down $4.75 and in the euro, at €1,091.244 down €3.655, while the euro was at $1.0598, almost unchanged.  Ahead of New York’s opening, gold was trading in London at $1,156.45 and in the euro at €1,092.07.

The silver price closed at $15.57 up 7 cents. Ahead of New York’s opening it was aslo trading at $15.57.  Silver is currently seeing a more positive tone than gold.

There were sales of 2.09 tonnes of gold from the SPDR gold ETF but none from the Gold Trust on Thursday. The holdings of the SPDR gold ETF are at 750.947 tonnes and at 164.02 tonnes in the Gold Trust.  The euro now stands at $1.0586 and, as we wrote this, was starting to slide again.

Asian demand was seen again before London’s opening which indicates a ‘bottoming’ is now taking place. With today being the most active day of every week and the superstitious noting it is 13th with the ‘ides of March’ on Sunday, today could be interesting! Of course this should have no impact on Asian markets which have their own superstitions, making life complicated.

During the past few weeks we have noticed Asia showing either strength or holding steady, then London at best, holds the gold price steady or starts its fall. New York starts to push prices down rapidly and may then recover towards the end of the day.

And yet, New York see very little physical gold action currently. This is primarily due to inefficiencies in the structure of the markets. If the prices in the different centers truly reflected net demand and supply figures, rather like water finding a common level between joined dams, they would smooth out differences.

In the gold market there remains a need for arbitrageurs in the different markets to have pools of accessible liquidity to make this happen. This may start to when the London Gold Fixing process changes next Friday.

A harsh reality is now coming into the Greek debt crisis. The Prime Minister has stated that the only solution for Greece’s debt is to re-structure it. History shows that the only time this has happened is when a country has already defaulted. Only then will creditors try to salvage what they can through extraordinary debt measures. Today’s meeting on the subject may be one of the last straws before Greece’s default. Then what?

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

 

Gold and silver brought down but Asia may pick it up again

Julian Phillips’ latest analysis of what is happening in and driving the gold and silver markets.

Gold and Silver Today

New York closed at $1,165.70 down $33.30 in a thin market but with heavy ETF sales, but still dominated by currency issues. Asia took the gold price up slightly to $1,174.00 before London opened. London then Fixed the gold price at $1,173.75 down $22.75 and in the euro, at €1,077.972 down €12.63, while the euro was at $1.0889 down nearly a cent. Ahead of New York’s opening, gold was trading in London at $1,174.60 and in the euro at €1,079.74.

The silver price closed at $15.87 down 35 cents. Ahead of New York’s opening it was trading at $15.95. We expect the silver price will continue to fall with gold but not at the same pace. Once Asian demand comes in we expect the silver price to recover quickly.

SPDR gold ETF Sales

There were sales of 4.478 tonnes of gold from the SPDR gold ETF but none from the Gold Trust on Friday. The holdings of the SPDR gold ETF are at 756.321 tonnes and at 165.46 tonnes in the Gold Trust.  In a thin gold market U.S. investors sold a heavy but not huge amount of gold. But it did have an impact triggering stop loss selling and taking the gold price down to $1,165.70.

The news out of the U.S. was positive with new jobs created in the last month hitting 295,000 and unemployment down to 5.5%. This convinced investors that the U.S. economy has gained traction and will continue to grow at a strong rate. Some therefore believe that a rate hike will come far earlier than expected, possibly in June. If the growth continues at this rate, this is likely although the conservative view is that September remains the more likely date. In this case it is better to be too late than too early.

Consequently, 10-yr bond yields rose from 2.22% to 2.256% in the day, with more rises expected to come shortly. The dollar index rose to 97.61 up from record levels of 96.80 last week while the euro continued its tumble to $1.0858.

The Technical picture for gold degenerated, as support was seen to be broken. However, the Technical indications are for a very limited downside. If Asian demand comes in strongly in the next few days we could see the picture change again. Either way, we do foresee the gold and silver markets being extremely volatile for the next fortnight.

On Friday India was closed, but is back in business today. There has been a bounce to $1,173 in Asia as Asians see these prices as giving excellent value. They will likely restrain buying until they see the fall slow to a stop. We again note that Asian demand does not flow through immediately to the New York markets, as gold markets are not globally efficient. It takes a little time, but we should see the Asian response feed through in the week. As a reminder to gold investors to keep their perspective gold demand east of Greece accounts for over 75% of global gold demand.

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

Chinese and Indian growth targets will benefit gold hugely

Julian Phillips’ daily roundup of what is happening in the gold and silver markets and the market forces driving them

The gold price remains under the influence of arbitrageurs working the gold price, the euro and the dollar exchange rates even after the announcement, with details of the E.C.B.’ quantitative easing policies. The immediate impact of this statement and following details was to see the euro continue to fall, as Draghi wants. The process of digesting the statements will continue today and fully impact next week. In the meantime, gold is now sitting just below $1,200 but not so far as to break down.

Please note that the dollar index has jumped this week to 96.80 a new high. But gold has just about kept pace with the rise, taking gold up against all other currencies.

Asia too has been lackluster this morning. The government of China announced yesterday that growth [GDP] will only target 7% this year. This number does not tell the full story at all. The government has built the infrastructure for the nation, now it needs to get its people to use it fully and develop a consumer [demand] driven economy that brings with it sustainable growth. This is the hard part. But from a gold investor’s standpoint this is positive news as it is the new wealth and the growing wealth of the current middle classes that will buy gold. Efforts to increase their wealth, as is the target of the government, will benefit gold hugely. Bear in mind a greater Chinese level of demand for gold will take it beyond the capacity of the gold market supplies to satisfy it.

With Modi’s government in India setting similar goals for his middle classes Indian demand for gold will steadily increase too.

ETFs and Markets

There were no sales or purchases from or into the SPDR gold ETF or the Gold Trust yesterday. The holdings of the SPDR gold ETF are at 760.799 tonnes and at 165.46 tonnes in the Gold Trust.

New York closed at $1,198.00 down $1.40 in a thin market still dominated by currency issues. Asia took the gold price up slightly to $1,198.90 before London pulled it down to $1,194. London then Fixed the gold price at $1,196.50 down $3.25 and in the euro, at €1,090.602 up €4.561, while the euro was at $1.0971 down nearly three quarters of a cent again. Ahead of New York’s opening, gold was trading in London at $1,196.40 and in the euro at €1,093.25.

The silver price closed at $16.21 up 3 cents. Ahead of New York’s opening it was trading at $16.05. We feel that the silver price may well drop much faster than gold if the gold price falls further, but as Asian demand comes in we expect the silver price to recover quickly once more.

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

 

Big SPDR gold ETF sale fails to dent support

Julian Phillips’ latest analysis of what is happening in the gold and silver markets with pertinent comment on a big sale from the SPDR gold ETFs and on the proposed Indian gold deposit scheme.

There was a large sale from the SPDR gold ETF yesterday of 7.763 tonnes which pulled the gold price back in New York, but did not penetrate support. It was accompanied by a sale of 0.46 of a tonne from the Gold Trust on Monday. The holdings of the SPDR gold ETF are at 763.487 tonnes and at 165.97 tonnes in the Gold Trust.  The fact that support remained so resilient demonstrates the strong underlying tone, above $1,200. Asian demand remains robust and this price area attractive to Asian investors. The longer the gold price remains above $1,200 the more chances there are that prices will hold.

We have seen “gold Deposits schemes” being touted in the Indian budget as though this will free up gold, tightly held, in India. In the past such schemes have failed, just as Indian gold ETFs have failed. Will the present schemes succeed?

There is an underlying problem in India that has proved insurmountable for many decades. The Indian public has seen so much corruption in government and in government bureaucracy which has hurt gold investors so much they hidden the fact that they own gold. There is an entire ‘black’ financial world out of sight of government, based on property and gold. Until government sorts out corruption, such schemes will continue to fail. The corruption is so deep rooted that we do not expect any future anti-corruption measures in India to succeed. We expect Indian investors keep their financial affairs as far away as they can from public eyes because of this. To subscribe to any public, gold deposit scheme would mean the veil would have to be lifted something we  do not believe will happen.

The euro tried to recover in Europe yesterday but is struggling to stay above $1.12 today with the dollar index rising to 95.47 from 95.17. Equity markets are blooming, reaching new highs, but most believe this is on the back of quantitative easing and record low interest rates. For sure the markets can go higher still for as long as markets believe that interest rates will not rise. It is clear that the Eurozone equity markets will be encouraged by low interest rates for far longer than will be the case in the U.S.A.

Markets

New York closed yesterday at $1,205.50 down $5.60. Asia took the gold price up to $1,210 before London pulled it down to $1,208. London then Fixed the gold price at $1,207.75 down $9.00 and in the euro, at €1,081.196 up  €3.735, while the euro was almost unchanged at $1.1170 down nearly half a cent. Ahead of New York’s opening, gold was trading in London at $1,208.40 and in the euro at €1,082.07.

Thus the silver price is still cautiously moving with the gold price, despite the struggle gold is having in moving higher at the moment. It appears that silver investors are ready to take the silver price higher. Only a break in gold’s support will bring on ‘brutal’ falls we feel.

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

 

Indian gold demand to ‘gently accelerate’

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

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

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

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

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

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

Markets and SPDR gold ETF

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

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

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

 

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

 

Gold technical picture not yet turned negative

Julian Phillips’ report on the gold and silver markets and SPDR ETF movement notes that the drop in Chinese demand for the New Year holiday will likely keep gold trade thin for the next week and put further pressure on the gold price.

New York closed yesterday at $1,208.50 down $14.00. In Asia the gold price was lifted to $1,210.45. London Fixed the gold price at $1,206.50 down $15.25 and in the euro, at €1,059.356 down €13.201, while the euro was almost unchanged at $1.1389. Ahead of New York’s opening gold was trading in London at $1,206.10 and in the euro at €1,059.56.

The silver price closed at $16.51 down 44 cents. Ahead of New York’s opening it was trading at $16.45.

There were no sales or purchases into or from the SPDR gold ETF and none from the Gold Trust on Tuesday as gold prices slipped back as Chinese demand wound down as the Chinese Lunar New Year began. It last from now until the 24th February. As Chinese demand has been such a support for the gold price, its absence will leave the gold price vulnerable to further falls. The holdings of the SPDR gold ETF are at 768.263 and at 167.03 tonnes in the Gold Trust.  We expect support to be really tested for the next week and a half. Indeed, from now until the end of the month, the gold market may well see thin trade and give speculators and traders free rein to move the gold price wherever it wants to. Below current levels in the gold price lies very well tested support so the extent of gold’s vulnerability should not be over estimated.

It seems to us that the new Greek government is ensuring every effort is made to get some accommodation from the E.U. but it seems to have zero expectations. Hindsight will then confirm they tried every option before having to choose the inevitable. We also get the impression that the E.U.’s intransigence is immovable and that both sides expect an inevitable conclusion. To us our main question will be, “Will action be taken to leave the Eurozone this weekend or next weekend.” The flow of capital and the massively falling tax revenues to the government well may force the decision earlier rather than later.

Yesterday we said, “But we do not believe it will end up a Greek tragedy. We see that within one year Greece will start to thrive.” We explain this, in detail, in our next issue of the Gold Forecaster, as Capital/Exchange Controls are implemented in Greece.

We note that the Technical picture for gold has not turned negative so we look forward to an indecisive week in terms of the direction of both gold and silver. However, the news out of the U.S. is that Paulson’s fund, the largest shareholder of the SPDR gold EZTF continues to leave its huge holdings unchanged.

The silver price took another knock yesterday and may well find the next week will see it fall further. The decision investors much make in the next week is, “Are they being presented with a wonderful buying opportunity or have they waited too long to sell?”

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

 

Next two weeks a watershed for gold and silver

Julian Phillips’ latest analysis of what’s going on in the gold and silver markets and the geopolitical price drivers that are, or should be, impacting prices.

New York closed at Friday at $1,228.50 up $6.50. In Asia the gold price lifted last night to $1,237.00. London took it down slightly after which it was Fixed at $1,233.50 up $7.75 and in the euro, at €1,081.117 up €8.016, while the euro was slightly weaker at $1.1409. Ahead of New York’s opening gold was trading in London at $1,234.10 and in the euro at €1,080.65.

Meanwhile the silver price closed Friday at $17.29 up 43 cents. Ahead of New York’s opening today it was trading at $17.35.

There were sales of 2.79 tonnes of gold from the SPDR gold ETF but none from the Gold Trust on Friday, but gold prices bounced up to the 50-day moving average. It rose through that, in Asia, the week before the Chinese Lunar New Year on Thursday. The holdings of the SPDR gold ETF are at 771.513 and at 167.03 tonnes in the Gold Trust.

Last week Chinese demand remained strong as huge levels of demand are being seen there at consumer levels and at bank levels. We should point out that while consumer demand peaks this time of the year demand from the banks will only be interrupted during the holiday itself.  Thereafter we hit month end, when several important events for gold kick in.

Attention returns to Greece again this week and next as the political shows continue. What is not understood by most is the confidence and strength that accrues to a desperate debtor when he cannot repay and things can’t get worse. The creditors in this case face the worst dangers because in such a situation they stand to lose the debt entirely. In this case they may not see that but they may well lose control over it.

To us it appears that the Prime and Finance Ministers of Greece need to ensure their political futures and that of their parties. A half hearted easing of the terms of the bailout will not do it. It needs to be dramatic. So we put it to you that the greatest kudos is to be gained by the debtor re-writing the terms of the debt, as they feel it should be.  We discuss this at length in the current issue of the Gold Forecaster and point not only to how it can be done, but the way it can be done to give Greece a booming future, both commercially and financially. The consequences of what we expect around the 28th February for the Eurozone will be far more damaging than most think, on a different front to the one being put forward by most.

The silver price will likely continue to react strongly to any gold price move, particularly on the upside for silver investors are still waiting for a clear strong direction to be given by gold. Once it is given, then we will see long-term investors move in and not just day-traders.

The next two weeks should prove watershed periods for both gold and silver.

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

Will we see a Greek tragedy start to unfold today?

As Greece’s make-or-break neogotiations with the EC come to a peak, Julian Phillips ponders on the outcome of the talks and its potential effects on the Euro

While there is only a week before the Chinese New Year on the 19th February, demand in China is not being allowed to feed through to London or New York as we mentioned yesterday, while traders and speculators move prices around on the back of euro prospects. As gold supplies have fed through to Asia, steadily and persistently at levels that are outrunning newly mined and scrap gold supplies, Asian demand is encouraged by current low prices and likely to increase. But we do expect Chinese demand to lessen in the next week as the holiday begins.

There is an almost surreal atmosphere on financial markets in Europe as they await the outcome of today’s meeting to discuss Greece’s demand to lessen the debt burden of Greece. They are facing a wall of opposition from the other member states. Greece has committed itself to getting better terms. We are in no doubt that the new government has extrapolated the possible reactions of the E.U. members and know precisely what steps they will take in each scenario. In true negotiating style the chest beating has to precede the meeting.

Looking at the eventualities, we do see the Eurozone losing more than Greece if the Greeks exit from the E.U. simply through a rapidly strengthening euro on foreign exchanges. The E.U. cannot afford that. A weak euro is the blessing Greece brings to the Eurozone. Posturing over debt obligations and the commitments of the previous Greek government will, we expect, bring considerable financial market tension and ensure a Greek exit. It is a choice for Greece to simply fail to pay the debt it can’t afford to and depart with ignominy or to fail in its challenge to the E.U. then, leave the E.U. with bravado, ahead of the default. Let’s see if we see a Greek tragedy or not?

Gold and silver markets today

Meanwhile on the precious metals markets, gold in New York closed yesterday at $1,234.00 down $6.70. In Asia the gold price lifted to $1,238. London took it down and it was Fixed at $1,235.50 down $2.00 and in the euro, at €1,092.396 down €4.387, while the euro slightly stronger at $1.1310. Ahead of New York’s opening gold was trading in London at $1,234.00 and in the euro at €1,091.41.

The silver price closed at $16.91 down 12 cents. Ahead of New York’s opening it was trading at $16.92.

There were no purchases or sales from or into the SPDR gold ETF or the Gold Trust on Tuesday, once again, despite the slippage in gold prices. The holdings of the SPDR gold ETF are at 773.305 and at 167.75 tonnes in the Gold Trust.


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

SPDR Gold ETF continues to show increase as geopolitical factors weigh

Julian Phillips’ latest market commentary shows more purchases into the big SPDR gold ETF (after a small sale the previous day) and considers the impact on the gold price of slipping oil prices (again) and the Greek/EU/German impasse.  Something will have to give here sooner rather than later!

New York closed yesterday at $1,265.30 up $4.10. In Asia gold rose to $1,270.6 ahead of London’s opening where it returned to $1,266.6. At the Fix gold was set at $1,263.75 down $17.25 and in the euro, at €1,106.708 down €2.092, while the euro was weaker by nearly 1.5 cents at $1.1419. Ahead of New York’s opening gold was trading in London at $1,262.30 and in the euro at €1,103.94.

There were purchases of 2.986 tonnes of gold into the SPDR gold ETF and a purchase of 0.24 of a tonne into the Gold Trust on Wednesday. The holdings of the SPDR gold ETF remain at 767.929 and at 167.75 tonnes in the Gold Trust.  The tone of U.S. investors into physical gold remains solid. The gold price rose in the U.S. but more so in Asia.

Overnight two events have taken place that could indirectly impact the gold price. The first is the oil price has begun to fall again. We remain aware of Saudi Arabia’s indication that it could fall much lower. We would not be surprised to see an eventual oil price of $35, particularly if Canadian oil swamps the oil market, in an already oversupplied market. The Saudis are taking the line that they are not holding prices down it’s the new boys in town flooding the market. We see this situation lasting for years, not months. Despite gold rising with oil in 1973 we see falling oil prices indirectly helping gold to rise.

The second event is in the Eurozone where the ECB has announced that from February 11th it will not be taking Greek bonds as collateral for funding and likely to be the case going forward in E.U. Q.E. This is an early ploy to put Greece in its place. Germany is likely to follow suit. As we look from a distance at the progress of these re-negotiations we see a major factor on each. The ECB and Germany just cannot afford to see Greece exit. The benefits of the decade and a half of a low euro have left the Eurozone with considerably more than €250 billion in profits and global trade, which they would not have had if the Deutschmark were still in existence. Therefore, faced with the threat of a Greek exit, we see that both the E.C.B. and Germany will make concessions. But they need to believe that Greece will exit before they concede. By playing hardball, Germany and the E.C.B. ensure a weak Greece and a weak euro, too great a benefit to lose! Get ready for the ride!

On the Greek side, they need to be fully prepared to exit the euro and the Eurozone if they want to make real progress. They have already indicated that they will not consider that. We see this as dragging matters out through several dramas to come.

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

Global Gold Price (1 ounce)
Today Yesterday
Franc Sf1,169.96 Sf1,173.48
US $1,262.30 $1,267.60
EU €1,103.94 €1,107.85
India Rs.77,972.90 Rs. 78,344.02

SPDR gold ETF purchases up again

Julian Phillips’ latest take on gold and silver market activity and movements in the big SPDR gold ETFs

The economic news out of the US was not good as a drop in durable sales and the awareness that the low oil price is hitting the main cause of the rise in U.S. employment as the ‘fracking’ oil industry is having to pull back. Add to this the downturn in the global economy and the prospects of an interest rate rise at the half year, this year appears slight. Some have pushed out this prospect to 2016.

The gyrations of the euro and dollar are impacting the gold price too up in one and barely changed in the other. We note that Asia is not chasing prices but buying below $1,300, which is why the rise has slowed over the last few days.

Germany needs a weak euro to stay competitive globally Greece can’t pay its debt and has to hold its elected position. If Greece were a corporation, an individual or a Municipality, court protection from creditors would spring into action. This is missing among Eurozone member states. So the somewhat Neanderthal fight between debtor and creditors has to take place. If the borrower was unable to handle its debt, why was it lent so much? Where this responsibility is apportioned will decide the outcome of Greece’s debt position, but the battle will be bruising. Whether it is a partial write-off, a lowering of interest rates, or an extension of maturities, or all at once, we are certain that a compromise will be reached now. Perhaps it was this realization that caused the euro to recover so strongly up now to $1,1354 up from below $1.12.

The Netherlands has denied that it bought over 9 tonnes of gold last month. If it were true, then you will hear a great deal more from us on this subject.

Markets and ETF purchases

New York closed yesterday at $1,294.70 up $14.30. In Asia gold slipped to $1,289. The Fix saw the gold price set at $1,287.00 up $8.00 and in the euro, at €1,131.926 down €1.035, while the euro was ¾ of a cent stronger at $1.1137. Ahead of New York’s opening gold was trading in London better, at $1,290.3 and in the euro at €1,135.43.

The silver price closed at $18.09, up 20 cents. Ahead of New York’s opening it was trading uncertainly at $18.00.

There were purchases of 9.259 tonnes into the SPDR gold ETF but a sale of 0.30 of a tonne from the Gold Trust on Tuesday. The holdings of the SPDR gold ETF are at 752.697 and at 167.54 tonnes in the Gold Trust. Again, a strong, seemingly institutional purchase, in the U.S. yesterday, appears to have been the cause of the gold price rise overnight.

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

More major gold purchases into SPDR ETFs as gold hits $1300

Julian Phillips’ latest market commentary for gold and silver

New York closed on Tuesday at $1,292.70 up $1.00 as the euro started to weaken again. In Asia and early London the gold price moved up to $1,300 with the euro at $1.1561. The Fix saw the gold price set at $1,298.00 up $5.75 and in the euro, at €1,121.673 up €8.048, while the euro was at $1.1572. Ahead of New York’s opening gold was trading in London at $1,298.40 and in the euro at €1,122.21.

The silver price closed at $17.93, 19cents higher. Ahead of New York’s opening it was trading at $18.16.

There were purchases of 11.351 tonnes of gold into the SPDR gold ETF and a purchase of 1.8 tonnes into the Gold Trust on Tuesday. The holdings of the SPDR gold ETF are at 742.243 and at 165.42 tonnes in the Gold Trust.  These were, once more, substantial purchases, showing a changed attitude among U.S. investors to gold.

Once again Asian physical demand came through overnight pushing the gold price to $1,300 ahead of London’s opening. With Asian demand sucking just about all available newly mined gold in, there is little room for new demand except at higher prices.

We thus attribute the price rise to Asian demand not developed world demand. This is what we are seeing now, so while U.S. and European demand is growing, so is Asian demand. The laws of supply and demand are imposing their will now.

As we said yesterday, “With a new ‘big figure’ [$1,300] now firmly in the sights of the gold price, we would expect the gold price to consolidate before rising further. That is, unless there remain substantial short positions that need covering at that level, in which case the covering of these may cause a further price spurt.” We are seeing this play out now.

€500 billion worth of bond buying is what the most qualified believe will be unveiled tomorrow by the E.C.B.. They also say that this is not enough to achieve the objective of stimulating the Eurozone economy. We agree and point to the very low levels of confidence in that area.

Expectations of deflation are high, so whatever the E.C.B. does it has to turn that around. Without the support of Germany, this seems unlikely. The Eurozone will stay in the spotlight through 2015 and the euro will fall alongside declining confidence, despite Draghi’s best efforts. The only questions investors need an answer to is, “How much and how fast will the euro continue to decline?”

The silver price is starting to catch up and will do so as gold convinces investors it can hold above $1,300.


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