Silver Market Morning: May 09 2017 - Gold consolidating ahead of a strong move!

Gold Today –New York closed at $1,227.20 yesterday after closing at $1,229.30 Friday. London opened at $1,224.75 today.

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

  - The $: € was stronger at $1.0904 after yesterday’s $1.0973: €1.

- The Dollar index was stronger at 99.34 after Friday’s 98.73.

- The Yen was weaker at 113.74 after Friday’s 112.68:$1.

- The Yuan was weaker at 6.9064 after Friday’s 6.9035: $1.

- The Pound Sterling was weaker at $1.2926 after Friday’s $1.2975: £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.]

The Shanghai Gold Exchange was trading at 275.40 towards the close today. This translates into $1,235.28. New York closed at a $8.08 discount to Shanghai’s close yesterday. London opened at a discount of $10.53 to Shanghai’s close today.

LBMA price setting: The LBMA gold price was set today at $1,225.15 from yesterday’s $1,229.70.

The gold price in the euro was set at €1,124.09 after Friday’s €1,124.45.

Ahead of the opening of New York the gold price was trading at $1,225.60 and in the euro at €1,124.56. At the same time, the silver price was trading at $16.23.

Silver Today –Silver closed at $16.28 yesterday after $16.38 at New York’s close Friday.

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

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

Price Drivers

The gold price is consolidating, waiting for a reason to move either way. But the trading range is getting narrower a sign that a strong move, either way, is coming.

As we have mentioned many times in the past, the falling volatility of the gold market must be attributed to the arrival of Shanghai as one of the three important gold markets. Its move to make speculation costly at the beginning of the year, has flowed through to London, but particularly New York. Arbitrageurs smooth out the price differences between the centers, but even traders can do this. If the premium/discounts between the markets rise too much it pays to trade on a subsequent narrowing of these. After all, if the physical gold price is different to the paper market a trading opportunity jumps in front of you, favoring the physical price. Before it was often the ‘paper’ gold price that led the physical, but with a market like Shanghai marching to its own beat that has changed!

Global gold prices

We have to look at the behavior of the three global gold markets to see just how they move next to each other to understand the next moves. We expected more volatility yesterday particularly after the attack on the gold price when $300 million of gold futures was dumped on the market. The fact that this had no impact on the gold price tells us that the COMEX futures gold market does not have the power over the gold price it once had. In turn, this verifies our belief that, over time, the global gold markets will become less volatile than in the past and that the control over the gold price in the west is waning.

In the future, should any large bank want to move the gold price it will take a much larger amount of physical gold than in the past to do so. If such a ‘raid’ were done for speculative reasons, the risks would be too large. Hence, we do not expect such speculative moves to be made in the west for fear of large losses.

An emasculated President

Looking forward from the Macron victory we find it extraordinary that a President without the backing of any political party can hope to enact his policies. His new political party is fighting for seats on the 11^th and 18^th June. It may well be that the French find an election of Parliamentarians is a very different matter to a Presidential election. So if either are to have an impact on the gold price it is surely going to be in June. On the face of it, we expect Macron to find his presidential powers are severely curtailed because of this. But the major factor for the gold price was whether France would leave the E.U. or not. This fear has evaporated. [For our forecasts, subscribe through www.GoldForecaster.com ]

Gold ETFs – Yesterday saw sales of 1.184 tonnes from the SPDR gold ETF but no change in the holdings of the Gold Trust. Their holdings are now at 851.891 tonnes and at 201.69 tonnes respectively.

Since January 4^th 2016, 252.227 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust. Since January 6^th 2017 42.171 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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