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]

 

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Trump takes lead in U.S. polls. Gold may benefit if lead continues

For those who believe that the election of Donald Trump as U.S. President in November is as unlikely as a vote for the UK was to leave the EU – be afraid, be very afraid!  The latest survey of opinion polls in the USA puts the Donald in the lead.  Here are a couple of screenshots from U.S. website realclearpolitics.com, which monitors the latest opinion polls, which show a Trump surge into the lead over Democrat rival Hillary Clinton, following the end of the Republican National Convention and the beginning of the Democratic one.

trumpvclinttab

trumpvclintchart

For better clarity in the above chart and table, and for updates click on: http://www.realclearpolitics.com/epolls/latest_polls/elections/ 

Now there are still a little over three months to go before the US Presidential Election takes place  on November 8th, but for the anti-Trump sector of the US electorate  – which has some  strong demographic parallels with the anti-Brexit voters in the UK, the latest trends have to be extremely worrying.  Although as the UK learnt, polls can turn out to be very wrong in a strongly divided nation.  And this forthcoming US Presidential election is perhaps the most politically divisive yet.

By all logic, Donald Trump’s bombastic campaigning statements should have alienated Women, Blacks and Hispanics alongside died-in-the-wool Democrats which would suggest he is unelectable.  But, in Hillary Clinton, the Democrats have chosen a candidate who is anathema to virtually all Republicans of any gender or race, and may well prove to be equally unpopular with a significant sector of voters who would normally support the Democrat ticket – primarily male blue collar and working class voters.  The US may have been ready for a black leader in President Obama, but are they ready for a woman?

So, as we noted here pre the Brexit vote in the UK, there was sufficient underlying anti-EU feeling in the country to make the eventual outcome decidedly uncertain.  There thus may well be sufficient underlying anti-Hillary sentiment in the US, fuelled by an ongoing, and effective, Republican campaign casting doubts on Hillary Clinton’s financial dealings and past decisions – including the hugely contentious use of her private email account to handle matters of national security – as to her suitability to occupy the Oval office.

Three months is an enormously long time in politics – particularly in one of the most vicious Presidential campaigns ever.  But some mud will undoubtedly stick and the eventual  outcome may well depend on which of the contenders it sticks to most!

As election day approaches, and if the polls still suggest a close race – and in particular if they continue to put Trump in the lead – one should probably expect a strong safe haven move into gold.  The Donald is believed to favour gold and may also be more inclined to review the position of the U.S. Federal Reserve and its policies.  It could be a very interesting three months ahead.

A Trump Presidency would be positive for gold and silver

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

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

 

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

 

Yuan Gold Fix

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

2016  07  21

SHAU

SHAU

285.37

282.87

284.88

282.96

Dollar equivalent @ $1: 6.6722

$1: 6.6742

$1,330.30

$1,318.25

$1,328.01

$1,318.67

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

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

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

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

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

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

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

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

Price Drivers

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

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

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

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

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

A President Trump would be gold & silver price positive!

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

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

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

Julian D.W. Phillips

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

 

Brits and Europeans may find Gold attractive as Brexit possibility looks stronger

 

Here’s a lightly edited version of an article I published on the info.sharpspixley.com website a day or so ago following the two Guardian opinion polls – one by telephone and one online – suggesting that a UK vote to leave the EU (the Brexit option) is a real possibility.  One suspects one result will be a redoubling of the Remain campaign in the 3 weeks up to the actual referendum and with most of the big guns supporting it, this may swing the final vote back to Remain.  But the Remain camp will now be much more nervous about the final result!

In recent weeks the majority of opinion polls in the U.K., and perhaps even more significantly the bookmakers, had been predicting that the U.K. electorate would be voting to Remain in the European Union by a comfortable margin rather than the Leave the EU option (Brexit).  Indeed some commentators had virtually written off the likelihood of Britain voting for Brexit.  The fear of the unknown in terms of the potential effects on the British economy, in particular, which has been highlighted by the Remain camp, almost ad nauseam, appeared to be winning the day.  True there had been the occasional outliers suggested by some online polls which were often disregarded as being less likely to be accurate than telephone polling which was consistently showing strong support for Remain.

But the latest polls for The Guardian newspaper by polling company ICM, which conducted simultaneous online and telephone polls, have really put the cat among the pigeons with both suggesting a 52%-48% Brexit lead, despite most of the country’s heavyweight politicians, including the leaders of the major political parties – Conservatives, Labour, Liberal Democrats and Scottish National Party – all being strongly in the Remain camp.  The only political party wholly in favour of a Brexit is UKIP, led by the charismatic Nigel Farage, which the mainstream supporters of a vote to leave have tried to sideline given the perceived make-up of  many of UKIP’s followers – seen in something of the same light as Marine Le Pen’s Front National in France.  The remain camp has been supported in its dire warnings of what an economic disaster it would be for the U.K. to leave the EU by such major global figures as U.S. President Barack Obama, German Chancellor Angela Merkel, IMF Head Christine Lagarde and a host of other global political and economic heavyweights.

The trouble is that a large sector of the British public is ever more distrustful of statements from major politicians and just doesn’t believe, or don’t care about, the figures being bandied about.  They are probably prepared to accept a limited downturn in the U.K. economy in exchange for winning on the arguments which may appeal most to the person-in-the-street.  These include regained Sovereignty (in other words getting away from U.K. laws being subject to override by EU ones, and the pre-eminence in the legal system of the European Court of Justice); fear of potential unlimited immigration by EU nationals (probably not a problem when the EU was much smaller only incorporating the most wealthy European nations, but now with a 28-nation EU, and the prospect of it being further enlarged as time goes, by including countries with some much poorer economies, it becomes a worry in terms of the nation finding it hard to cope with the demands of high immigration levels completely outside its control); and border security in terms of terrorists coming in via the EU open borders (which is an additional aspect of the same worry).

Perhaps the most interesting assessment of what would happen to the U.K. economy came from the well-respected Institute for Fiscal Studies (IFS), an independent think tank (if anyone in this argument can be truly seen as truly independent).  It assessed that leaving the EU would lead to two more years of austerity as the economy struggles to get back on track post a Brexit decision.  However it also suggested that some of the economic disaster figures being put about by the vote Leave campaign were somewhat exaggerated and the U.K economy would eventually recover, but that it could take some time.  It also assessed, on the other hand, that the economic predictions put out by the Brexit campaign were ‘absurd’.  No words minced there then!

Latest analysis from the OECD also confirms the opinion that the U.K.’s economy would be hit significantly in post Brexit years should there be a leave vote but that also there would be “substantial negative consequences for the United Kingdom, the European Union and the rest of the world”.

But it could be the sovereignty issue which wins the day.  The British, as an island nation, are inherently insular and while the populace largely accepts the country is part of Europe geographically, the idea of closer political union into a European Federal State – the avowed aim of many EU intellectuals – appals them.  And whatever the politicians say and promise, if Britain remains in the EU, there is a strong belief that there will indeed be an ultimate progression into absorption into a European mega-state – by then probably incorporating additional nations including the latest political football in this respect – Turkey.  Someone on the Brexit side gave an undoubtedly hugely exaggerated estimate that 12 million Turks would want to move to Britain if it became an EU member (and would have the right to do so through the EUs open borders policy).  This is undoubtedly a ludicrous figure, but such numbers stick in people’s minds.

So what does all this mean for gold?  The geo-economic uncertainty engendered by a Brexit vote would probably lead to a higher price.  However an immediate knee-jerk reaction would likely see a dive in the value of the pound sterling against the US dollar and a likely decline in the value of the euro too given the boost a Brexit would give to anti-EU sentiment in many other member states.  Given that the gold price is set in US dollars there would seem to be a strong logic for investors in the EU, and in the U.K. in particular, to add some gold to their portfolios as insurance – and an insurance which could well appreciate even more given that the yellow metal would likely react positively to a Brexit decision.

There is obviously a slight risk in this policy.  Should the Remain vote prevail – and believe me there will be a huge amount of effort by the big political guns and most of the media, which tends to be Remain supportive, to persuade the general public of doom and gloom should the electorate vote to leave – there would be a collective sigh of relief and the pound and euro would likely rise as a result and thus the gold price fall in the pound and euro.  But we feel any such surge would be shortlived and there would be a quick return to the status quo prevailing beforehand.  But the positive fundamental prospects for gold in the medium to long term would remain given doubts about physical gold supply availability in the light of still huge demand and some major global geopolitical uncertainties .  The downside risks are thus quite low, but the positive upside should Brexit happen would be strong.  Gold has always been a wealth protection insurance asset and this possible short term event, and its likely immediate effects, would seem to make this a very wise insurance policy to follow.  Indeed the positivity would likely be further advanced as there would be some significant destabilising global knock-on effects, as the OECD warns, which would also be likely gold price positive.

And looking only a few months further ahead there is also the possibility, growing by the day it seems, of a Trump Presidency in the USA.  Now what would that mean for gold?………..

Is the force now with gold?

Excerpt from my latest posting on sharpspixley.com entitled: All change in gold sentiment, but can it persist.

Back in December gold had few, if any, friends among the mainstream analysts.  The US Federal Reserve was going to start raising rates and all the experts knew that so doing would lead to a rise in the value of the US dollar and a consequent fall in the gold price.  Apart from the usual suspects, gold had virtually no supporters.  But three weeks after the Fed did indeed start to raise interest rates, the whole sector began to turn completely around.  General equities fell and gold started to rise, while the dollar rose, then stuttered backwards.  So much for expert opinions.

Gold’s performance has been little short of spectacular so far this year, with an increase to date of around 18% in just over 2 months.  Equities have made something of a recovery in the past few days, but as a guide the S&P 500 is down a couple of percent year to date.  In Europe the UK’s FTSE 100 is flat, Germany’s DAX is down 4% and in Asia Japan’s Nikkei 225 has fallen nearly 8% while China’s SSE Composite is down almost 13%.

Gold thrives on uncertainty and in the US and Europe there are some huge political uncertainties out there……….

To Read full article click here

 

Gold price resilient and set for an interesting year

How things have changed in terms of market sentiment towards gold in just a couple of months!  Heading into the end of 2015 virtually every bank analyst was predicting doom and gloom for gold as Fed rate rises would make holding gold less and less attractive.  They were falling over each other to predict ever lower prices – $1050, $1000, $900 or even less.  The only way was down.

There were some marginally conflicting analyses coming out – but only marginal – most seeing a continuing downturn in the first half or three quarters of 2016 but perhaps something of a pickup towards the year end.  But this all made depressing reading for the gold investor despite some fundamental supply/demand factors suggesting that this outlook might have been too pessimistic…

The above are the opening paras from an article I have just published on news.sharpspixley.com   To read the full article click here

Physical Precious Metals will Eventually Trump Bubbly Financial Assets

By Stefan Gleason, President of Money Metals Exchange 

As the presidential primaries quickly approach, the establishment is in panic mode over the prospect of losing control. It’s not just about Donald Trump. The political class, the “mainstream” media, Wall Street, and the central banking cartel are all losing credibility in the eyes of the public.

2016 is shaping up as the year of “We’re not gonna take it anymore” – in more ways than one. It’s an encouraging development for precious metals investors and sound money advocates.

Rank-and-file Republican voters are in open rebellion against their own party. They forced John Boehner out of his Speakership last fall. Now the GOP’s voter base is refusing to line up behind any of the establishment-backed presidential candidates.

This election has thrown conventional politics and conventional wisdom among pundits out the window. The two leading candidates for the Republican nomination at the moment are Donald Trump and Ted Cruz. Trump operates completely outside of the Beltway establishment, while Senator Cruz is loathed by virtually all the politicos inside it.

Senator Cruz has undoubtedly made quite a few enemies at the Federal Reserve. He is an original co-sponsor of the Audit the Fed bill (bitterly opposed by Fed chair Janet Yellen) taken up by the Senate yesterday. The measure won 53 votes, but failed to achieve the 60 votes needed to break the Democrats’ filibuster.

Cruz also wants to take away the Fed’s powers to arbitrarily fix interest rates and create currency in unlimited amounts. During a recent GOP debate, Cruz championed “sound money, ideally tied to gold.”

Donald Trump recently berated Republican leaders in Congress for pushing through a bloated $1.1 trillion spending bill. In a stump speech the billionaire businessman called the budget a “disaster,” exclaiming, “we have debt like we’ve never had before.” Trump also made reference to the unsound monetary system that enables runaway debt spending. “We’re printing money,” he said, warning “we could be in a big fat bubble.”

Trump has gained traction in large part by defying political correctness and running against the politically correct media. It’s a strategy that works because the public no longer trusts the media. A Gallup poll last year found that Americans exhibited historically low levels of “trust and confidence in the mass media to report the news fully, accurately and fairly.”

Media bias has long been a source of frustration for gold bugs. The financial media are funded (through advertising revenues) by banks, brokerages, mutual fund companies, and other Wall Street interests.

They’ll report on multi-billion dollar interest rate rigging scandals on one hand; then on the other dismiss complaints about precious metals markets manipulation as wild conspiracy theories. In recent years, virtually every market you can name – from LIBOR to penny stocks to crude oil futures – have come under media scrutiny due to manipulation. If gold and silver markets aren’t manipulated by governments or banks or rogue traders, then they would be the only truly free and fair markets in the world!

It would be nice if that were the case, but unfortunately it’s not.

The good news is that the big Wall Street centric financial media outlets are becoming less relevant. CNBC’s ratings have been tanking since 2009. Fewer investors depend on the Wall Street Journal for actionable information.

When it comes to the gold market, the Journal apparently can’t even be bothered to check the history on how gold performs during periods of rising interest rates before concluding that “a shift to higher rates is expected to hurt gold.” In fact, as recent history proves, gold prices tend to rise along with rising rates.

The Internet now blooms with alternative financial media sites like ZeroHedge that provide real insights into the precious metals markets, including how they may be manipulated. Precious metals investors have no need for TV or radio when they can listen to unfiltered expert insights on podcasts such as the Money Metals Exchange Weekly Market Wrap.

It no longer really matters whether the mainstream media want to report on precious metals markets or sound money issues accurately. If they don’t, then they will increasingly be seen as part of the irrelevant dinosaur media. They can try to ridicule gold as a relic of the past, but it is they who are becoming relics of the past. That reality may finally be starting to sink in for them.

As alternative media trumps conventional media, alternative ideas about restoring a sound monetary system may have a chance to trump the Federal Reserve. And no doubt, alternative investments including physical precious metals will eventually trump bubbly financial assets. Precious metals prices are being suppressed with the help of inordinate and obscene levels of leverage in the futures markets. But physical fundamentals will ultimately trump paper shenanigans.

If you want to position yourself to benefit from the eventual swing from conventional assets into hard assets, then acquire precious metals in physical form. Avoid Wall Street ETFs and derivative products tied to precious metals. If you can actually hold it, then they can’t control it.