Gold and silver looking for direction

Gold TodayNew York closed yesterday at $1,327.00 yesterday.  London opened at $1,333.00.

    • The $: € was slightly weaker at $1.1232: €1 down from $1.1219: €1 yesterday.
    • The Dollar index was stronger at 95.30 from 94.40 yesterday.
    • The Yen was stronger at 102.18: $1 up from 102.08: $1 yesterday against the dollar.
    • The Yuan was slightly weaker at 6.6800: $1 from 6.6808: $1 yesterday.

 

  • The Pound Sterling was weaker at $1.3263: £1 from yesterday’s $1.3297: £1.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
     2016  09  13

     2016  09  12

SHAU

SHAU

286.64

285.53

286.14

286.04

Dollar equivalent @ $1: 6.6800

$1: 6.6808

$1,334.66

$1,329.33

$1,332.33

$1,331.70

Shanghai went $6 higher than New York and London followed this price at the opening before pulling back to New York’s close at the LBMA price setting. We are watching to see if this is the start of pricing in Shanghai separating itself from New York. London’s pricing seems to respect Shanghai and could be asking the same question.

We are seeing China stabilizing as the throes of developing an internal economy pull this way and that. The government appears to have an iron grip on the economy which also appears to be following the course it wants. The benefit for gold is that is middle classes continue to grow steadily. They continue to have affection for gold and will continue to do so for the foreseeable future.

LBMA price setting:  The LBMA gold price setting on Monday was at $1,328.50. Yesterday it was at set at $1,327.50.

The gold price in the euro was set at €1,182.26 against yesterday’s €1,183.05.

Ahead of the opening of New York the gold price was trading at $1,325.90 and in the euro at €1,179.89.  At the same time, the silver price was trading at $19.09.

Silver Today –The silver price was lifted to $19.13 at New York’s close yesterday up from $19.07, Monday.  

Price Drivers

Yesterday, another Fed spokesperson spoke on the market obsession of when a rate hike is to occur. She encouraged prudence and caution on when this might happen. This has been read that a hike in September is not going to happen even though it is to be discussed. The markets now react to any person involved in the FOMC committee. This does not make forward guidance a bit ridiculous as it is market reaction that is at fault. To us this is a reflection of the myopic nature of markets which do not seem to look at the facts but at the emotion involved with feeling in the Fed member’s statements.

The wise understand as much as is involved as possible and then take their positions. Otherwise it would be simply reacting to gossip. Traders make money and lose money this way, but investors make money understanding the fundamentals and the structure of markets.  

Gold ETFs – There were no sales or purchases from or into the SPDR or Gold Trust yesterday, leaving their respective holdings at 939.940 tonnes and 225.39 tonnes.

Silver – Like gold, the silver price appears unwilling to fall through support, at $19 in silver’s case,  for any length of time. Silver will follow gold and neither its Technical picture nor its fundamentals, a pattern set some years ago. It is still being treated as a monetary metal and has been throughout those years.

Julian D.W. Phillips GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

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Battle reigns in the physical gold markets

Gold TodayNew York closed yesterday at $1,328.90 Friday.  London opened at $1,327.00.

    • The $: € was slightly stronger at $1.1219 down from $1.1271 Friday.
    • The Dollar index was weaker at 94.40 from 94.94 Friday.
    • The Yen was stronger at 102.08 up from 102.12 Friday against the dollar.
    • The Yuan was weaker at 6.6808 from 6.6798 Friday.

 

  • The Pound Sterling was weaker at $1.3297 from Friday’s $1.3297.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
     2016  09  12

     2016  09  9

SHAU

SHAU

285.53

287.79

286.04

287.75

Dollar equivalent @ $1: 6.6808

$1: 6.6798

$1,329.33

$1,340.05

$1,331.70

$1,339.86

Shanghai has always been keen to go higher than London and New York. This is not because there is a shortage of gold, waiting for imports using premiums to attract it to the country. China’s supply from outside describes its huge appetite, which is continuing. Shanghai continues to try to keep its prices in line with other global gold markets.

Physical supplies will continue to flow into the country while New York prices are being held back.

The difference on Friday was that just under 12 tonnes of gold was sold from the SPDR gold ETF which caused the fall in the gold price.  Physical sales of gold such as these do drive the gold price down, just as earlier, 14 tonne purchases drove it up to $1,350. The battle in the physical markets is on!

LBMA price setting:  The LBMA gold price setting on Monday was at $1,327.50. Friday it was at set at $1,335.65.

The gold price in the euro was set on Monday at €1,183.05 against Friday’s 1,185.61.

Ahead of the opening of New York the gold price was trading at $1,327.10 and in the euro at €1,182.38.  At the same time, the silver price was trading at $18.85.

 

Silver Today –The silver price was pulled back to $19.07 at New York’s close on Friday down from $19.62, Thursday.  

Price Drivers

Today, we have a very important question on the shape of the global economy and in particular the U.S. economy. After so much stimuli globally, inflation should have taken off by now. It hasn’t. All it has managed to do is to counter deflation leaving both interests and inflation at extremely low levels.

But something else is happening: Liquidity levels are dropping, as is the velocity of money.

Central bank efforts, via stimuli, appear to be starting to lose the battle against deflation. In the past, when this has happened, the pressure to add more stimuli to the economy to continue to counter deflation grows. But larger and larger amounts also fail and even more stimulus is needed to counter rising deflation. More is added, then more needed and so on. At some point inflation takes off like a rocket but also fails to counter deflation, which also takes off, with an economy now starting to shrink. This is a fact of history and one very much in danger of being repeated!

Are we on the brink of that?

This time round governments will be unable to act strongly, as in many developed countries, they appear to be emasculated having not acted decisively since the ‘credit crunch’. And central banks, which should have been backed by government actions, were left holding the baby, without the full array of tools to even approach the problem. They are looking increasingly exhausted and unable to anything different, only more of the same.

The prime loser will be the value of currencies as they fall in value against gold [and silver].

Gold ETFs – There was a massive sale of 11.871 tonnes from the SPDR gold ETF but no change in the holdings of the Gold Trust, leaving their respective holdings at 939.940 tonnes and 225.39 tonnes. This sale did not cause the gold price to breakdown convincingly. We expect the next moves by large SPDR gold investors may give the gold price the direction it is looking for.

Silver – The silver price tumbled lower to just above $19.00 showing the typical exaggeration of the moves in the gold price. Silver price volatility will continue.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

The Chinese hold their gold reserves through their people

Gold TodayNew York closed yesterday at $1,337.50 yesterday.  London opened at $1,335.80.

    • The $: € was slightly weaker at $1.1271 down from $1.1267 yesterday.
    • The Dollar index was stronger at 94.94 from 94.78 yesterday.
    • The Yen was weaker at 102.12 down from 101.62 yesterday against the dollar.
    • The Yuan was weaker at 6.6798 from 6.6640 yesterday.

 

  • The Pound Sterling was weaker at $1.3297 from yesterday’s $1.3348.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
     2016  09  9

     2016  09  8

SHAU

SHAU

287.79

289.20

287.75

289.35

Dollar equivalent @ $1: 6.6798

$1: 6.6640

$1,340.05

$1,349.81

$1,339.86

$1,350.51

Shanghai was roughly in line with New York’s close and London slipping a little lower.

When it comes to measuring either the increase in Chinese gold reserves or the gold imports to China we must say that the information provided by the Chinese is only what they want us to know. With last month’s announcement of a 5 tonne increase in official gold reserves we read into it that they want all to know they are continuing to increase their reserves but not at a visibly aggressive rate. There are several ways they can increase their reserves but not take them onto their books, ‘officially’.

We remind readers that they “own gold through their people”. That includes all gold currently inside their borders but primarily directly through state controlled institutions.

LBMA price setting:  The LBMA gold price setting on Friday was at $1,335.65. Yesterday it was at set at $1,348.00.

The gold price in the euro was set on Friday at €1,185.61 against yesterday’s 1,194.08.

Ahead of the opening of New York the gold price was trading at $1,336.55 and in the euro at €1,188.20.  At the same time, the silver price was trading at $19.48.

Silver Today –The silver price was pulled back to $19.62 at New York’s close down from $19.78, yesterday.  

Price Drivers

Yesterday did not see any purchases of gold into the gold ETFs and a small sale. As a result the gold price slipped back a little. All was quiet on the currency fronts leaving both silver and gold to mark time today. Physical demand of good sizes drives the gold price with dealers translating gold prices in line with exchange rate movements.

Gold ETFs – There was a small sale of 1.187 tonnes from the SPDR gold ETF but no change in the holdings of the Gold Trust, leaving their respective holdings at 951.811 tonnes and 225.39 tonnes.

Silver – The silver price followed gold lower to close at $19.62 yesterday and will be sensitive  to gold slippage.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold and silver rising?

Gold TodayNew York was closed on Monday but closed at $1,325.60 on Friday after Thursday’s close at $1,313.30.  London opened at $1,330.

    • The $: € was almost unchanged at $1.1167 down from $1.1165 yesterday.
    • The dollar index was slightly weaker at 95.59 from 95.65 yesterday.
    • The Yen was almost unchanged at 103.26 from yesterday’s 103.28 against the dollar.
    • The Yuan was slightly stronger at 6.6800 from 6.6770 yesterday.

 

  • The Pound Sterling was stronger at $1.3338 from yesterday’s $1.3328.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
     2016  09  6

2016  09 5

SHAU

SHAU

285.59

284.84

285.73

285.24

Dollar equivalent @ $1: 6.6800

$1: 6.6770

$1,329.77

$1,326.87

$1,330.42

$1,328.73

After a lackluster day in London, when the gold price sat around $1,326 all day, Shanghai took the gold price higher to $1,330 and London held it there at the open. Will New York follow suit?

The Yuan was slightly weaker against the dollar once more. The pound continued to strengthen as you can see.

LBMA price setting:  The LBMA gold price setting this morning was at $1,330.05. Yesterday it was at set at $1,328.30.

The gold price in the euro was set on Tuesday at €1,191.05 up strongly on yesterday’s 1,189.91.

Silver Today –The silver price held its level while New York was closed at $19.36, after $19.39 yesterday.  

Price Drivers

With New York closed we saw London do nothing and then follow Shanghai this morning. With London being the center of physical demand and supply one would have expected London to lead the way, but is followed both New York and Shanghai. But we do need to see strong moves to see clearly which market holds pricing power. At the moment it is New York and has been for a long time. Gold itself wanted to drift higher, which should set the tone for New York today.

Another underwhelming G-20 meeting was held in Shanghai where only the nicest things were said about China’s hosting the event and the inclusion of the Yuan in the currencies that make up the SDR of the IMF.  Essentially, it is recognition of the present and growing use of the Yuan in the world monetary system. Having set that milestone in place we expect to see a steady erosion of the use of the dollar in global trade at the expense of the dollar over time.

We see the role of gold growing in this structural change largely being used to ‘smooth out’ the transition’.

In our next issue of the Gold Forecaster we will discuss just what strategy will tremendously increase your returns in a time when gold prices are rising and just how to maximize returns, when it is not.

Over in China, we note there is a number that is not issued and could well have a big impact on the volumes imported into China. While Chinese officials point to the withdrawals from the Shanghai Gold Exchange as a measure of imports into China, the size of gold holdings in the SGE are not published. It is possible that these could be growing solidly, increasing the levels of imports. While the People’s Bank of China uses SAFE and others to hold gold for them before these are included in “Official reserves” we note that the PBoC controls the SGE and may well also hold gold through the SGE? Usually “Official Gold Reserves” are imported separately and not included in SGE numbers but there is no reason why they should not be, in reality, part of these.

Gold ETFs – As New York was closed yesterday there were no sales or purchases into or from the SPDR gold ETF or from or to the Gold Trust, leaving their respective holdings at 937.89 tonnes and 225.39 tonnes.

Silver – The silver price is keen to follow gold but needs to see action in New York after the holiday yesterday before we see any big moves.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold and silver recovering above $1,320

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

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

 

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

 

Yuan Gold Fix

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

2016  09 2

SHAU

SHAU

284.84

282.69

285.24

282.50

Dollar equivalent @ $1: 6.6770

$1: 6.6823

$1,326.87

$1,315.81

$1,328.73

$1,314.93

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

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

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

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

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

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

Price Drivers

We wish those of our readers who are in the U.S. enjoy their holiday today, ready for a stronger gold market on their return. In our next issue of the Gold Forecaster we will discuss just what strategy will tremendously increase your returns in a time when gold prices are rising and just how to maximize returns, when it is not.

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

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

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

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

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

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

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

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

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

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

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Could be a volatile long weekend for gold as U.S. holiday kicks in

Gold Today –Gold closed in New York at $1,313.30 on Thursday after Wednesday’s close at $1,308.30.  London opened at $1,310.

–         The $: € was weaker at $1.1182 down from $1.1134 yesterday.

–         The dollar index was weaker at 95.79 from 96.11 yesterday.

–         The Yen was almost unchanged at 103.57 from yesterday’s 103.55 against the dollar.

–         The Yuan was slightly weaker at 6.6823 from 6.6801 yesterday.

–         The Pound Sterling was stronger at $1.3267 from yesterday’s $1.3140.

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
      2016  09  2

2016  09 1

SHAU

SHAU

282.69

282.32

282.50

281.63

Dollar equivalent @ $1: 6.6823

$1: 6.6801

  $1,315.81

$1,314.52

$1,314.93

$1,311.31

After New York pulled up from its lows around $1,305 to $1,313 Shanghai stabilized too, following New York, as did London.

The Yuan weakened against the dollar while the dollar weakened against other currencies. It was a day when the U.S. began to wind down ahead of the long weekend.

LBMA price setting:  The LBMA gold price setting on Friday was at $1,311.50. On Thursday it was at set at $1,305.70.

The gold price in the euro was set on Friday at €1,172.34 up slightly on Thursday’s 1,171.45.

Ahead of the opening in New York the gold price was trading at $1,314.05 and in the euro at€1,174.20.  The silver price is trading at $18.87 ahead of New York’s opening. Gold surged in New York following the poorer than expected nonfarm payroll increases in August.  At one time spot gold rose to over $1,130 before coming back down to the mid to low $1320s as trading progressed.

Silver Today –The silver price closed in New York at $18.87 Thursday up from $18.65 Wednesday. 

Price Drivers

Today in New York markets should be quiet as the long weekend has begun for so many. While the trading desks will have few dealers on hand the day is a great opportunity for those large speculators who like to create big movements in prices.

This week alone has seen attempts on COMEX to crush the gold price with High Frequency Trading dumping $1.5 billion worth of Futures contracts onto the market. The day before yesterday and yesterday saw over 17 tonnes of gold dropped into the physical market [which should feed through to London] and yet the gold price in the last day has bounced off $1,306.

With markets now closed from end of business today until Tuesday, there may well be position-squaring to minimize exposure for such a long time [three days in markets is a long time]. Perhaps that is what happened this week, as it is also a week when one month ended and another began.

Nevertheless, the markets are vulnerable to great volatility.

Some may say that it is the dire situation in Venezuela that’s caused the sell-off in gold. We have difficulty with that as this would be seen in London’s market and prices, not in New York, on COMEX or in the SPDR gold ETF. They would be selling directly to willing buyers and more likely to be courted by those looking for large tonnages which would go direct to the sellers and not through the market place.

Gold ETFs – In New York yesterday there was another large sale of 5.342 tonnes from the SPDR gold ETF (GLD)but no change in the holdings of the Gold Trust (IAU). This left their respective holdings at 937.89 tonnes and 225.44 tonnes.

Silver – The silver price was higher at London’s opening, after New York again took it higher. It simply took gold to stabilize at current levels for silver to continue rising. Market stability has certainly made both dealers and buyer feel that the silver price has fallen too far.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold and silver see strong support above $1,300

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

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

 

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

 

Yuan Gold Fix

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

2016  08  29

SHAU

SHAU

284.81

283.32

284.56

283.68

Dollar equivalent @ $1: 6.680

$1: 6.680

$1,326.13

$1,319.20

$1,324.97

$1,320.87

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

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

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

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

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

Price Drivers

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

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

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

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

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

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

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

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

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold and silver blasted down by HFT

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

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

 

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

 

Yuan Gold Fix

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

2016  08  26

SHAU

SHAU

283.32

284.19

283.68

284.44

Dollar equivalent @ $1: 6.680

$1: 6.6687

$1,319.20

$1,325.49

$1,320.87

$1,326.66

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

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

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

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

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

Price Drivers

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

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

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

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

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

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

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

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Gold and silver await Jackson Hole

Gold TodayGold closed in New York at $1,338.60 on Tuesday after Monday’s close at $1,343.40.  London opened at $1,341 again.

    • The $: € was at $1.1275 from $1.1335 yesterday.
    • The dollar index was at 94.67 from 94.39 yesterday.
    • The Yen was at 100.20 from yesterday’s 100.15 against the dollar.
    • The Yuan was weaker at 6.6536 from 6.6447 yesterday.

 

  • The Pound Sterling was at $1.3230 from yesterday’s $1.3184.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  24

2016  08  23

SHAU

SHAU

286.76

286.47

286.73

286.56

Dollar equivalent @ $1: 6.6536

$1: 6.6447

$1,340.51

$1,340.96

$1,340.37

$1,341.37

Once again, overall, all global gold markets, together with global currencies seem to be moving sideways today with an emphasis on a slightly stronger dollar. But this strength is small. So we have gold prices in the dollar falling and those in the euro rising.

Friday’s Jackson Hole comments by Mrs. Yellen of the Fed will be the focal point of the week with markets finely measuring the emphasis she puts on her words, looking for the smallest sign of what the Fed is going to do and when. This is what she doesn’t want, so how she is going to play it with so much influence each word will have, is a difficult one.

She would do well to repeat her last speech so as not to give room for wrong impressions. Unfortunately, unless she does repeat her last speech, any emphasis that inclines hearers to believe that a rate hike is due in September, or later this year, will have all financial markets moving strongly, one way or the other. This includes the precious metal markets.

LBMA price setting:  $1,337.90 after yesterday’s $1,338.50.

The gold price in the euro was set at €1,187.03 up €5.34 from yesterday’s €1,181.69.

Ahead of the opening in New York the gold price stood at $1,338.15 and in the euro at €1,187.46.  It took a knock when the New York market opened falling back to the mid-$1,320s on renewed nervousness ahead of Jackson Hole, and on a slightly stronger dollar.

Silver Today –The silver price closed in New York at $18.88 yesterday down from $18.99 Monday.  Ahead of New York’s opening the price was trading at $18.90.  Like gold it fell immediately after New York markets opened.

Price Drivers

The market in gold has a very tight trading range around $1,340, but in London the gold price keeps trying to slip. Some have postulated that this is Venezuela selling off its reserves at $1,350 – 55. No one can say whether it is or it isn’t.

But we would have thought that any central bank still acquiring gold, such as China, would have negotiated a deal to take all available amounts direct, at a particular price, or with reference to the market price at the time of delivery. It does not make sense to open oneself up to the risk of either not reaching a particular price, or seeing prices fall. Selling directly into the market is a way to ensure a low price or a price that will go much lower if it becomes known that they are sellers in the open market. It hints at desperation!

On the buy side it would pay to take that gold off the market at say, $1,350 in one chunk and allow the overhang to be removed to see prices rise thereafter.

Gold ETFs – In New York on yesterday there was no change in the holdings of either the SPDR gold ETF or the Gold Trust. This left their respective holdings at 958.369 tonnes and 223.85 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen by 384.604 tonnes.

Silver –Silver prices now holding around $18.87 showing that they will remain sensitive to even small moves in the gold price.

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

GLD and the GSR guides to gold and silver price direction?

Where will the gold price be heading once the U.S. institutions and traders get back from their summer breaks in the Hamptons, the Caribbean and elsewhere and the market gets fully back on track after a relatively thin trading market over the peak of the northern summer?  That is the question which many precious metals investors will be asking themselves as the end of the holiday season approaches with memories of 2011 in mind, when gold soared over the summer, reaching new highs and with the expectation that prices would continue onwards and upwards.  This was just not to be as the gold price then stuttered and started turning downwards heralding the start of a four and a half year bear market in precious metals.

I commented on this in a little more detail in an article on sharpspixley.com and an edited verison of this article, with some additional comment, is included below:

This year the gold price has been rising ever since the beginning of January, accompanied by a big rise in the holdings in gold ETFs.  This has been notably so in the biggest of them all, SPDR Gold Shares (GLD), which had added a massive 340 tonnes of gold peaking at around the July 4th Independence Day holiday in the USA at a total of 982.7 tonnes, the highest level since June 2013 – then a time when holdings were falling quite sharply.  But since July 6th this year, atlthough the holdings have fluctuated up and down, the predominant movement has been downwards and has seen sales out of the biggest ETF of 24.3 tonnes.  (It did add 2.38 tonnes yesterday so the movement has not only been downwards, but that has been the general trend.)

The overall fall in GLD has also coincided with a sharp fall in retail purchases of gold coins and bars in the U.S. in particular and the worry for the gold investor is whether this has been due to weaker seasonal demand because of the northern hemisphere summer holiday season, or whether it represents a change in overall sentiment from being gold positive to gold negative or gold indifferent!.

Recently, gold researcher Koos Jansen writing on www.bullionstar.com looked at the statistical relationship between the gold price and gold demand in the West and in Asia.  He concluded that when Asian gold demand has been strong and Western demand weak, the gold price has fallen and conversely when Western demand has been strong and Asian demand weak the gold price has risen.  We think this may be something of a misinterpretation in our being uncertain how relevant Asian demand has been at all in this respect.  Whereas strong Asian demand may well have meant that the gold price did not fall as far as it might have done without it, we would suggest that up until now it has very much been Western demand which has been influencing the gold price most strongly and the sharp fall-off in Asian demand we have seen this year has been largely irrelevant, given that it still seems to be the Western gold futures markets – notably COMEX – which have been the prime gold price drivers.

While this may be the case up until now, it seems to be becoming increasingly apparent that the GLD holdings are in a current downwards trend, although whether this is due to the northern summer holiday season when many of the big fund and institutional managers are away and markets are consequently a little thinner, remains a possibility.  We will have to wait until after Labor Day on September 5th – which is seen as the end of the holiday season in the USA – to see whether this is the case.  But while many see the return of the markets to full swing as being potentially a positive for gold, one only needs a short memory span of 5 years to recall that it was effectively Labor Day in 2011 that saw the true beginning of the recent bear market in gold after an abnormally strong summer for the yellow metal.  Could this happen again?

Unlike 2011 though, this year the gold price has also taken something of a summer holiday.  After the post Brexit surge it has actually remained in a fairly tight trading range which some see as price consolidation.  But again we will have to wait for the market to become fully functional again before we  can see a new trend developing.

With markets jittery again over the possibility of a Fed rate rise in September – perhaps still unlikely with December, if then, perhaps a more possible timing – we could well see continuing gold price uncertainty until after the September FOMC meeting which takes place September 20-21 and a volatile market for the yellow metal continuing in the meantime.  If the recent moves in price are indeed consolidation then general prospects for the precious metals could be seen as positive given that the really big drivers of unprecedented global debt and the seemingly increasing imposition of negative interest rates around the globe are well set.

At the moment gold seems to have been pressuring downside resistance at around $1,330, but riding this particular storm fairly well.  For silver it is also notable that the Gold:Silver ratio (GSR) has risen back to over 70 after falling to below 65 but some see this too as an indicator of where the gold price is headed.  We could well be in for a very uncertain month ahead for precious metals. But keep an eye on GLD movements and the GSR.  They could both be giving us a guide as to whether the medium term outlook is positive or negative.

Fundamental change in gold price structure under way

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

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

 

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

 

Yuan Gold Fix

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

2016  08  18

SHAU

SHAU

288.02

288.80

288.68

288.84

Dollar equivalent @ $1: 6.6517

$1: 6.6324

$1,346.79

$1,354.36

$1,349.87

$1,354.55

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

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

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

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

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

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

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

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

Price Drivers

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

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

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

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

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

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Shanghai beginning to call the gold price tune?

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

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

 

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

 

Yuan Gold Fix

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

2016  08  17

SHAU

SHAU

288.80

287.60

288.84

287.39

Dollar equivalent @ $1: 6.6324

$1: 6.6330

$1,354.36

$1,348.61

$1,354.55

$1,347.63

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

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

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

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

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

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

Price Drivers

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

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

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

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

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

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

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

 

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

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

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

Yuan Gold Fix

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

2016  08  16

SHAU

SHAU

287.60

287.48

287.39

288.47

Dollar equivalent @ $1: 6.6330

$1: 6.6270

$1,348.61

$1,349.27

$1,347.63

$1,353.92

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

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

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

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

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

Price Drivers

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

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

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

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

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

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance

Could we see strong gold demand continue in H2?

Gold TodayGold closed in New York at $1,346.70 on Wednesday after Tuesday’s close at $1,340.60.  London opened at $1,346.

    • The $: € was barely changed at $1.1144 from $1.1146.
    • The dollar index fell to 95.82 from 95.82 Wednesday.
    • The Yen was stronger at 101.28 from Wednesday’s 101.84 against the dollar.
    • The Yuan was stronger at 6.6406 from 6.64 Wednesday.

 

  • The Pound Sterling was weaker at $1.2958 up from Wednesday’s $1.3050.

 

Yuan Gold Fix

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  11

2016  08  10

SHAU

SHAU

287.34

288.63

287.36

289.47

Dollar equivalent @ $1: 6.6406

$1: 6.6400

$1,345.85

$1,352.02

$1,345.95

$1,355.95

All three chief global gold markets were in line in the last day. Looking at the Technical picture, we see that the gold price is showing a ‘quiet before the storm’.

The gold and silver markets are no place for the cautious now. Even a small bit of gold related news will trigger a strong move. Question is, “Which Way will it go”.

LBMA price setting:  $1,344.55 after Wednesday 10th August’s $1,351.85.

The gold price in the euro was set at €1,206.20 down €3.79 from Wednesday’s €1,209.98.

Ahead of the opening in New York the gold price stood at $1,345.45 and in the euro at €1,206.47.  

Silver Today –The silver price closed in New York at $20.17 on Wednesday up from $19.85 on Tuesday.  Ahead of New York’s opening the price was trading at $20.16.

Price Drivers

The most positive news today for gold and silver is the rapid approach of the “Gold Season” in September.

  • At this point the summer holidays for the developed world are coming to an end and the focus in the gold market is for jewelry producers to buy for the festive season at the end of the year.
  • In India, after falling to the lowest in seven years in the first half, demand for gold is certain to rise because of the excellent monsoon rains achieved this year since May continuing into September. This will boost rural demand during the festive season, starting in September.
  • In China, the expectation of a lower Yuan is broadcast in the Chinese media, encouraging growing demand in line with internal trends we mentioned in earlier newsletters from the Gold Forecaster.
  • In the last quarter of the year we expect U.S. demand for physical gold from investors in the shares of their Exchange Traded Funds to continue steadily.

     So far in 2016 investment demand for gold has overtaken the previous-ever high of 917 tonnes in 2009 [First half]  to reach 1,064 tonnes.

Gold ETFs – In New York on Wednesday there were no sales or purchases to or from the SPDR gold ETF (GLD) or the Gold Trust (IAU). This left their respective holdings at 972.618 tonnes and 221.24 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen by 396.243 tonnes.

Silver –Silver prices jumped back to over $20 in the last day and will hold and move strongly when we see the strong move, either way, which we now expect from gold prices.

Julian D.W. Phillips

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

Gold firms after fall to support again

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

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

 

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

 

Yuan Gold Fix

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

2016  08  8

SHAU

SHAU

286.29

286.78

285.87

286.54

Dollar equivalent @ $1: 6.6615

$1: 6.6614

$1,336.73

$1,339.00

$1,334.77

$1,337.88

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

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

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

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

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

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

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

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

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

Price Drivers

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

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

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

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

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

Julian D.W. Phillips

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

 

Gold picks up a little after BoE drops interest rates, adds stimulus

Gold TodayGold closed in New York at $1,358.10 on Wednesday after Tuesday’s close at $1,364.50.  

    • The $: € was up at $1.1135 from $1.1197.
    • The dollar index rose to 95.67 from 95.09 Wednesday.
    • The Yen was weaker at 101.48 from Wednesday’s 101.06 against the dollar.
    • The Yuan was weaker at 6.6409 from 6.6291 Wednesday.
    • Yuan Gold Fix

 

Trade Date Contract Benchmark Price AM Benchmark Price PM
2016  08  4

2016  08  3

SHAU

SHAU

289.78

291.04

289.08

291.42

Dollar equivalent @ $1: 6.6409

$1: 6.6291

$1,357.22

$1,365.55

$1,353.94

$1,356.11

Shanghai prices saw prices consolidate at lower levels ahead of the Bank of England’s statements today. But the main driver of the day was a correcting U.S. dollar in what we see as a normal market reaction to its recent weaknesses.

LBMA price setting:  $1,351.15 after Wednesday 3rd August’s $1,364.40.

The gold price in the euro was set at €1,213.75 up €4.46 from Wednesday’s €1,218.21.

Ahead of the opening in New York the gold price stood at $1,356.90 and in the euro at €1,219.03, but moved back up to over $1,360 as trading progressed.

Silver Today –The silver price closed in New York at $20.41 on Wednesday down from $20.61 on Tuesday.  Ahead of New York’s opening the price was trading at $20.32, but again silver advanced during the day to stand at around $20.38 at midday in New York.

Price Drivers

The Bank of England lowered interest rates by 0.25% and said it had scope to do more if needed, including taking the key rate close to zero, they also announced a plan to lend as much as £100 billion ($132 billion) to banks to ensure the measures reach the real economy. In addition, the Monetary Policy Committee will buy £60 billion of government bonds over six months and as much as £10 billion of corporate bonds in the next 18 months. In total, the balance sheet could expand by £170 billion.

The bank cut its growth forecast for next year to 0.8% from 2.3% and lowered its 2018 prediction to 1.8% from 2.3%. The pound dropped over a percent to $1.3135 immediately after the statement, but this still higher than its level immediately post the Brexit vote..

The dollar’s performance is largely going unnoticed as it continues to trade between 95 and 97 on the dollar index. On the basis of its economy’s performance it should be much stronger. On the basis of its Trade balance the dollar should have collapsed long ago, but the U.S. accounts as the dominant world power which has made the dollar a haven for all other currencies. But this situation is starting to change as its role as the sole currency with which to pay for oil is changing, as is its role as the last resort currency haven. The credibility of currencies as the monetary expression of government is weakening in line with the destabilization of the monetary world.  Gold is not a monetary alternative for many reasons, but it is a vehicle with which to shore up confidence, particularly if it can be eliminated as competition to currencies.

Gold ETFs – In New York on Wednesday there were sales of 0.052 of a tonne sold from the SPDR gold ETF but no change in the Gold Trust holdings. This left their respective holdings at 969.648 tonnes and 219.65 tonnes.

Silver –Silver prices were more cautious today than gold prices ahead of the Bank of England’s announcement.

Julian D.W. Phillips

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