Silver Market Morning: April 3 2017 - Gold consolidating at resistance/support!

Gold Today –New York closed at $$1,247.30 Friday. London opened at $1,246.20 today.

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

  - The $: € was at $1.0670: €1.

- The Dollar index was at 100.48.

- The Yen was at 111.34:$1 against the dollar.

- The Yuan was at 6.8836: $1.

- The Pound Sterling was at $1.2508: £1.

Yuan Gold Fix

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.]

We have been away from the desk since last Tuesday. Today the Shanghai Gold Exchange is closed and will be closed until Wednesday for “Tomb Sweeping Day” when graves [and ancestor’s bones?] are cleaned. This happens once a year. Hence there are no prices to report. More importantly, gold prices today will not see any Chinese demand. As a result today’s prices will not reflect global demand, only London and New York. While the chances of a fall in the gold price globally is higher for today and tomorrow, Wednesday should see Chinese demand return, if that happens.

LBMA price setting: The LBMA gold price was set today at $1,246.25 from Friday’s $1,241.70.

The gold price in the euro was set at €1,169.42.

Ahead of the opening of New York the gold price was trading at $1,246.25 and in the euro at €1,169.42. At the same time, the silver price was trading at $18.17.

Silver Today –Silver closed at $18.21 at New York’s close Friday.

Gold _{(very short-term)} The gold price should consolidate, in New York today.

Silver _{(very short-term)} The silver price should consolidate, in New York today.

Price Drivers

We were away next to a river full of hippopotami and crocodiles, last week. It was like being next to Wall Street or in the City of London, just quieter. Since we left the dollar index has recovered slightly. This is particularly evident against the euro. We saw little news to tell us that the dollar should rise or news to tell us the euro should go lower. Against the euro the gold price is very strong.

There are two pieces of news that should be noted by gold investors today. One is Credit Suisse, where raids have occurred on assumed, tax evading clients of Credit Suisse and seizure of their assets. These were not moves against Swiss banks, but against Tax evaders.

Switzerland shares international views on Tax evasion and will not tolerate it if it is found by them.

This is why in the UBS case only 4,500 names were handed to the U.S. The IRS and the Swiss withheld the names of 40,500 U.S. clients from them. The media leaps on such stories and usually portrays the Swiss as supporting tax evasion. Nothing could be further from the truth. No raids were carried out in Switzerland or inside the banks, simply against individuals in the jurisdiction of the raiders [such as France]. The Swiss would never allow non-Swiss authorities to enter their jurisdiction for such purposes. That’s why we believe Switzerland is the only really secure country in which to hold one’s gold, but it has to be held in a particular way or there is no point in holding gold away from one’s home country, because it is just as vulnerable as holding it at home.

The second item is South Africa where President Zuma fired Pravan Gordhan his Finance Minister and a few more Ministers. The Rand has fallen around 11.5% since it happened while we were away, as a result. We expect further falls. The replacement Finance Minister has no financial experience.

The story demonstrates superbly just how important gold can be in preserving wealth. In South Africa, where Exchange Controls still persist, buying gold is one of the few genuine Rand hedges for South Africans. Those holding gold in the last week, did not suffer the loss of wealth this incidents caused through a weaker Rand. On April 7^th the ratings agencies will decide to rate South Africa as Junk status, as current opinions go.

The last time Zuma did this, the Rand fell to over R16 to the U.S. $1. If S.A. is rated as Junk, then we expect to see the Rand fall lower than it did before. We do not see a no-confidence vote against Zuma today as the Speaker, a supporter of Zuma, will not recall Parliament. Indeed the thinking in S.A. is that while he may see a loss of considerable support in his own party, his voters will likely not vote, rather than vote for an opposition party.

But the event is helping S.A. gold mining companies as with the Rand hitting a high of R12.21 against the dollar [now at R13.57: $1], this has brought their income back to where it was a few weeks ago. They have to sell their dollar proceeds back to the Reserve Bank and be paid in Rands.

Gold ETFs – Since Monday of last week, we have seen sales of 2.961 tonnes from the SPDR gold ETF and purchases of 1.13 tonnes into the Gold Trust. Their respective holdings are now at 832.324 tonnes and 199.85 tonnes.

Since January 4^th 2016, 231.144 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust. Since January 6^th 2017 21.088 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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