Silver Market Morning: Feb 8 2017 - SPDR investors now include large hedge funds!

Gold Today –New York closed at $1,233.00 on the 7^th February after closing at $1,234.70 on the 6^th February. London opened at $1,232.00 today.

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

  - The $: € was weaker at $1.0672: €1 from $1.0666: €1 on yesterday.

- The Dollar index was weaker at 100.45 from 100.62 on yesterday.

- The Yen was weaker at 112.38:$1 from yesterday’s 112.19 against the dollar.

- The Yuan was weaker at 6.8860: $1, from 6.8790: $1, yesterday.

- The Pound Sterling was stronger at $1.2514: £1 from yesterday’s $1.2363: £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.]

Shanghai was trading in gold at 275.00 Yuan during today’s session before London opened. This equates to $1,242.15. Shanghai is $4 higher than New York and more than $5 higher than Lomdon.

LBMA price setting: The LBMA gold price was set today at $1,235.60 up from yesterday’s $1,231.00.

The gold price in the euro was set higher at €1,160.51 after yesterday’s €1,152.89.

Ahead of the opening of New York the gold price was trading at $1,237.00 and in the euro at €1,161.78. At the same time, the silver price was trading at $17.74.

Silver Today –Silver closed at $17.71 at New York’s close Friday against $17.73 on the 6^th February.

Gold _{(very short-term)} The gold price will be stronger, in New York today.

Silver _{(very short-term)} The silver price will be stronger, in New York today.

Price Drivers

While U.S. based gold investors have returned to the gold market via the SPDR [GLD] gold ETF, we had not heard of any large gold investors returning until now. Today we have received reports that Drukenmiller, having exited the gold market in December, has returned to it.

He is a short to medium trader but a very large one, with his fund. So he can exit just as fast. But he is the type of gold investor that leads the way for others.

We had almost forgotten Greece’s debt problems and then suddenly it’s back. The expected economic recovery is just not producing the results creditors wanted. It will not be able to meet its obligations shortly, so Germany wants more austerity and less pensions.

This may be the straw that broke the camel’s back. Will Greece leave the euro and E.U.? At this stage, bearing in mind Prime Minister Tsiprias’ actions last time, we think not, but certainly it adds to the negative situation in the E.U. Add to that France’s elections and Italy’s woes and we see a Europe on the brink and unlikely to survive in its present form. This is gold positive.

With Japan now dumping U.S. Treasuries as yields rise, causing capital losses the U.S. bond market is falling and very vulnerable to more large falls as yields continue to rise. It was inevitable. With so many simmering sources of trouble the natural inclination to see only the best may not serve us well.

Gold ETFs – Yesterday we saw 8.295 tonnes of gold bought into the SPDR gold ETF and 0.39 of a tonne into the Gold Trust. Their respective holdings are now at 826.948 tonnes and 200.30 tonnes.

This large purchase yesterday into the SPDR gold ETF doubled the amount bought by U.S. investors into U.S. gold ETFs since the beginning of this year.

We expect U.S. Investors to follow the lead of these hedge funds.

Since January 4^th 2016, 226.638 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust. Since January 6^th 2017 16.557 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Regards,

Julian D.W. Phillips

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