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Silver Market Morning: May 17 2017 - Gold going stronger in the dollar, weaker in the euro!

Julian D. W. Phillips
|
Wednesday, May 17th

Gold Today New York closed at $1,236.50 Tuesday after closing at $1,227.90 Monday. London opened at $1,244.00 today.

 

Overall the dollar was weaker against global currencies, early today. Before London’s opening:

  - The $: € was weaker at $1.1116 after yesterday’s $1.0864: €1.

- The Dollar index was weaker at 97.87 after yesterday’s 98.82.

- The Yen was stronger at 112.18 after yesterday’s 113.75:$1.

- The Yuan was stronger at 6.8814 after yesterday’s 6.9047: $1.

- The Pound Sterling was stronger at $1.2964 after yesterday’s $1.2961: £1.

 

Yuan Gold Fix

Trade Date

Contract

Benchmark Price AM 1 gm

Benchmark Price PM 1 gm

2017 5 17

2017 5 16

2017 5 12

SHAU

SHAU

SHAU

/

276.56

273.62

/

276.49

274.02

$ equivalent 1oz @ $1: 6.8814

$1: 6.8919

$1: 6.9047

 

/

$1,248.13

$1,237.66

/

$1,247.81

$1,238.34

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East 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.]

 

The Shanghai Gold Exchange was trading at 277.94 towards the close today. This translates into $1,251.27. New York closed at a $14.77 discount to Shanghai’s close Friday. London opened at a discount of $7.27 Shanghai’s close today, but then tried to catch up to Shanghai’s prices during London’s day.

 

Shanghai continues to rise, pulling London higher but primarily because the dollar and the Yuan are weakening together against all other currencies, particularly the euro. You will note that the $ and the Yuan are weakening against gold as well as against other currencies.

 

LBMA price setting: The LBMA gold price was set today at $1,244.60 from Friday’s $1,231.50.

 

The gold price in the euro was set at €1,119.65 after Friday’s €1,122.20.

 

Ahead of the opening of New York the gold price was trading at $1,250.00 and in the euro at €1,124.30. At the same time, the silver price was trading at $16.96.

 

Silver Today –Silver closed at $16.82 yesterday after $16.44 at New York’s close Friday.

 

Gold (very short-term) The gold price should have a stronger bias in line with the dollar’s fall, in New York today.

 

Silver (very short-term) The silver price should have a stronger bias in line with gold, in New York today.

 

Price Drivers

The main feature of the day is the fall in the dollar, which has fallen heavily over the week. The PBoC is keeping the Yuan very close to the dollar, so it is falling just as fast.

 

The media are baying after President Trump. They scent a ‘Trumpgate’ story there or is it just all out war between the media and Trump? Is this why the dollar is falling, we think not.

 

The dollar has broken through support and looks like falling further, which will reflect in the dollar’s gold price as well as against currencies, such as the euro.

 

We have to see just how far this is a war between the media and Trump and just how far it is a real crisis. If it is Trump, the dollar will recover once his crisis is resolved, whenever that is. If it is the dollar itself, gold will benefit over a much longer period as the dollar faces a more fundamental crisis. This fundamental crisis can always be linked to the rise of the Yuan or the falling oil prices or more fundamental crises. If the current weakness of the dollar is due to a structural change in the dollar’s global role weakening [dollar hegemony giving way?], then the changes we have expected for a very long time in the currency and monetary worlds has begun!

 

But over in Europe, the clouds seem to be evaporating as the political crises dissipate and the economic prospects for the area improve. This in itself is positive for the euro. Add the two situations together and we gain a proper perspective.

 

Technical picture is positive today so the gold price should rise steadily today, barring extraordinary news that halts its rise. But the initial influence on today’s prices comes from Shanghai. While the discount of New York to Shanghai has been widening of late, it is a ‘shunt’ effect on prices as they begin to rise in Shanghai primarily, followed by London with New York slower to catch up.

 

We expect the upward pressure from Asia to continue as the dollar weakness drops Rupee prices in India. Indians are delighted that it is dollar weakness that is giving them the big opportunity to get into gold as their own currency is so strong.

 

Gold prices in different currencies are also not well understood. For instance, in India gold prices have been dropping because of the strong Rupee, which in a country where it is low prices that incite gold buying. So while demand for gold has been strong there, only because prices are now historically low and the prospect of a new tax imposition from government is accelerating buying, the rise in the value of the Rupee has given Indian buyers this current opportunity. The average Indian investor would never be prompted by some Trump pronouncement to go into the gold market. He focuses only on Rupee gold prices once they have stopped falling.

 

In China the GDP growth of 6.9% is a sure indication that individual and institutional wealth continues to grow expanding Chinese middle classes and their capacity to buy gold. Demand for gold remains robust in China.

 

North Korea

What is a major threat that would be positive for gold is North Korea and its psychopathic President intent on producing a clear and present danger to the U.S., no matter what risk this brings to North Korea’s world. The threat of sanctions and sanctions themselves may affect the people of North Korea but not the palace. It seems to us that that country’s President will not stop until stopped. But as yet we do not believe this has impacted global demand. [For our forecasts, subscribe through www.GoldForecaster.com ]

 

Gold ETFs – Tuesday saw no change in the SPDR gold ETF but buying of 0.6 of a tonne into the Gold Trust. Their holdings are now at 851.891 tonnes and at 202.29 tonnes respectively.

 

Since January 4th 2016, 252.827 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust. Since January 6th 2017 42.771 tonnes have been added to the SPDR gold ETF and the Gold Trust.

 

Regards,

 

Julian D.W. Phillips

 

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance To ensure you can benefit from the future higher gold prices we will see then, you need to hold it in a manner that makes sure it can’t be taken from you. Contact us at admin@stockbridgemgmt.com to buy physical gold in a way that we feel, removes the threat of it being confiscated. We’re the only storage company that offers that!

 

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Global Gold Price (1 ounce)

 

Today

Yesterday

Franc

Sf1,226.88

Sf1,230.56

US

$1,250.50

$1,235.50

EU

€1,124.30

€1,125.48

India

Rs.80,193.75

Rs. 79,195.55

   
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