Silver Market Morning: July 18 2017 - Gold and silver markets continue to climb!

Gold Today –New York closed yesterday at $1,234.00. London opened at $1,237.00 today.

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

 - The $: € was much weaker at $1.1559 after yesterday’s $1.1457: €1.

- The Dollar index was much weaker at 94.64 after yesterday’s 95.21.

- The Yen was stronger at 112.14 after yesterday’s 112.44:$1.

- The Yuan was much stronger at 6.7481 after yesterday’s 6.7704: $1.

- The Pound Sterling was weaker at $1.3026 after yesterday’s $1.3066: £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.]

New York closed $2 lower than Shanghai’s close yesterday, with London opening today at a discount to Shanghai’s trading today of $7.10, the same discount to Shanghai we saw yesterday. But London is being pulled up by Shanghai. Shanghai in turn was pulling back today from its high as the Yuan strengthened, bringing Shanghai’s gold price to the same differential as it had yesterday.

We see the dollar now in a ‘bear’ market so we expect gold to continue to rise in dollar terms, alongside currencies. This is a time to be long in dollar terms, as opposed to the euro or other solid currencies.

Silver Today –Silver closed at $16.12 yesterday after $15.95 at New York’s close Friday.

LBMA price setting: The LBMA gold price was set today at $1,237.10 from yesterday’s $1,229.85. The gold price in the euro was set at €1,070.25 after yesterday’s €1.071.03.

Ahead of the opening of New York the gold price was trading at $1,237.75 and in the euro at €1,071.65. At the same time, the silver price was trading at $16.17.

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

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

Price Drivers

The gold price continues to rise towards $1,250 at which point we may see it turn down or break through higher. That is a key level for gold. At the moment we look at the euro price of gold to see what the underlying behavior of gold really is. With the dollar weakening so much, the gold price in the dollar reflects the falling dollar not the gold price. Technically it has risen above its 200-day moving average.

You will see that in the euro it fell a euro at the fixing in London. However it continues to rise in the Yuan as the Yuan itself, rises against the dollar.

Gold ETFs

As you can see below the sales from the SPDR gold ETF are tapering off. They are now not large enough to impact the gold price.

ECB

All eyes are on Draghi of the E.C.B. They are waiting to see if he raises rates [which we doubt] or delays the peeling back of the Bond buying program. Inflation figures in the E.U. are doing the same as they are doing in the U.S.A.

Meanwhile the markets are discounting an earlier unwinding of stimulus from the E.C.B. But the E.U. is seeing falling inflation, just as is being seen in the U.S. and likely for similar reasons. Wages are not rising as they should be in healthy economies. Artificial intelligence is decimating jobs there too, so the quality of jobs being gained is not such that workers can push for higher wages.

It may be that Draghi therefore, expresses caution when discussing the tapering of stimuli, sending the equity markets higher and the euro slowing the pace of its rise against the dollar.

Gold ETFs – Yesterday saw sales of 1.775 tonnes from the SPDR gold ETF but no change in the holdings of the Gold Trust. The SPDR gold ETF and Gold Trust holdings are at 827.067 tonnes and at 211.41 tonnes respectively.

Since January 4^th 2016, 188.578 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust. Since January 6^th 2017 26.063 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Regards,

Julian D.W. Phillips

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