Gold and Silver Market Morning: Dec 6 2016 - Gold and Silver starting to find support!

Gold Today–New York closed at $1,176.50 yesterday after closing at $1,175.70 on the 2^nd December.London opened at $1,171.00 today.

Overall the dollar is weaker against global currencies today.

-The $: € was weaker at $1.0739: €1 from $1.0663: €1 yesterday.

-The Dollar index was weaker at 100.32 from 100.69 yesterday. 

-The Yen was weaker at 114.04: $1 from yesterday’s 113.56 against the dollar. 

-The Yuan was stronger at 6.8802: $1 from 6.8832: $1 yesterday. 

-The Pound Sterling was stronger at $1.2754: £1 from yesterday’s $1.2714: £1.

Yuan Gold Fix

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle Eat eastward metric measurements are used against 0.9999 quality gold.[Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

Gold prices in Shanghai are $14.64 higher than New York’s close and$20.14higher than London’s opening [allowing for the difference in the quality of gold priced in the different markets].

With the gold price differential continuing to drain liquidity from London to Shanghai and with the Chinese New Year on the horizon we are sensitized to the speed with which gold prices move against sales or no sales of physical gold from the U.S. based gold ETFS. When these sales fall off prices are now rising. If purchases come in we expect to see almost disproportionate rises as the lack of stock makes itself felt.

LBMA price setting:The LBMA gold price setting was at $1,171.15 this morningagainst yesterday’s $1,164.90. 

The gold price in the euro was set higher at €1,091.09 after yesterday’s €1,088.18. Ahead of the opening of New Yorkthe gold price was trading at $1,173.80and in the euro at €1,087.86.  At the same time, the silver price was trading at $16.86.

Silver Today –Silver closed at $16.89 at New York’s close yesterday from $16.68 on the 2^nd December.

Gold_{(very short-term)} The gold price will react to ETF sales or purchases, in New York today.      

Silver_{(very short-term)} The silver price remain stronger than gold, in New York today.

Price Drivers

As we pointed out yesterday, the sales from the SPDR gold ETF or the Gold Trust will dictate the direction of the gold price. Yesterday saw barely any sales from the SPDR gold ETF so the price began to recover. We have no doubt that the sales of late from these funds have been moved to the east, leaving little stock available in the developed world. The gold price moves higher when these sales stop. Any buyers that come to get physical gold now will be forced to pay up for it, to get ounces. We suspect that the resulting rise in prices could be more than thought because of the draining of liquidity in London. Bear in mind that SPDR gold sales will be seen in London’s market, not in the U.S.

2017 is shaping up to be a dramatic year across the world. With the Eurozone becoming increasingly unpopular among the populations of the member states, Italy’s banking system beginning to threaten the euro’s value we cannot expect to see “more Europe” in the Eurozone. Quite the reverse. This will favour gold investments.

In the U.S. it seems that the Republican party has still not embraced their new President nor lined up behind him. He will impose his dominant personality on not just his party but on the relations between the U.S. and the world. He has made it clear that he will not ‘fit into’ the government, but the government will fit into his way of doing things. No doubt the fur will fly.

He is also making it clear that he will take a heavy hand to trade relations with China. We expect him to inject a great deal of testosterone into the coming division between the U.S. and China. As we have forecast for a long time now the friction arising from this will favour gold as part of the changing monetary system. We write more on President Trump in the latest issue of the Gold Forecaster.

Gold ETFs – Yesterday, there were sales of 0.323 of a tonne from the SPDR gold ETF and no change in the Gold Trust holdings, leaving their respective holdings at 869.897 tonnes and 199.29 tonnes. 

Since January 4^th this year, 268.178 tonnes of gold has been added to the SPDR gold ETF and to the Gold Trust. 

Silver –Silver is moving up at the slightest stabilization of the gold price as we see today. We see this pattern continuing, particularly if gold has found a bottom on support.  

Regards,

Julian D.W. Phillips 

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