Silver Market Morning: Nov-17-2016 -- Gold And Silver Consolidating!

Gold Today –New York closed at $1,224.90 yesterday after the previous close of $1,228.00 London opened at $1,229.55 then rose in London’s morning to be in line with Shanghai.

- The $: € was a slightly stronger at $1.0695: €1 from $1.0699: €1 yesterday.

- The Dollar index was a slightly weaker at 100.35 from 100.43 yesterday.

- The Yen was slightly stronger at 109.24: $1 from yesterday’s 109.69 against the dollar.

- The Yuan was slightly stronger at 6.8697: $1 from 6.8741: $1 yesterday.

- The Pound Sterling was slightly weaker at $1.2425: £1 from yesterday’s $1.2437: £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 and London are in line with each other this morning and higher than New York prices. The gold quality differential is around $5, so we take that off London and New York prices to get a valid comparison. This leaves Shanghai and London around $5 above New York’s levels somewhat similar to yesterday.

At the moment, in New York, sellers are present but in small numbers compared to the earlier part of the week. Buying continues in Shanghai and as we see in prices in London too. But just before the opening of New York, London moved into line with New York’s close, leaving it trying to match both gold markets.

The dollar is calming down and correcting after days of surging against other currencies, but remains over the 100 level on the dollar index. We expect post-Trump turbulence to begin calming in the short term.

LBMA price setting: The LBMA gold price setting was at $1,232.00 against yesterday’s $1,225.70. The gold price in the euro was set higher at €1,148.29 against yesterday’s €1,143.89.

Ahead of the opening of New York the gold price was trading at $1,226.95 and in the euro at €1,145.29. At the same time, the silver price was trading at $16.96.

Silver Today –Silver fell to $16.95 at New York’s close yesterday from $17.07, the day before.

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

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

Price Drivers

With the London gold price opening in line with Shanghai then moving down just before New York’s opening it is not clear where gold’s pricing power lies. With the difference only around $6, we see the current pressure on the gold price from Shanghai pulling it higher. In the next few days we will see if New York follows higher, showing us that Shanghai is leading the way in pricing power. But for us to be certain we need a couple of weeks of Shanghai dominating the gold price for this to become established. If Shanghai is dominating, large [but not huge] ETF sales will not impact gold prices.

There is a calming of the post-Trump election market volatility, but we don’t see it lasting long. The bond market declines continue, but with only the Fed looking to raise interest rates, [We expect only South Africa to raise them soon] as Japan remains in a very long term environment of no moves on the interest rate fronts. We reiterate that gold will respond to real interest rates. We see the Fed hoping to be behind the curve on this. Hence we do not see a Fed hike hurting the gold price all except temporarily. Any fall in the gold price at the time the Fed hikes rates will be a good buying opportunity, if we see it.

India’s draconian money controls. – As a result of Finance Minster Arun Jaitley statement that India’s business community should prepare for cashless economy using checks, cards, payment gateways or digital transactions, we are now seeing havoc played out across the Indian economy in nearly all of India’s industries. Over 4.5 million trucks sit idle having not completed their journeys. In this cash society such heavy handed, ill prepared moves has slowed the economy dramatically. With an ill-prepared banking system to change the banknotes, Modi’s government has messed up the plan to take full control of the ‘black’ financial system as well as the legitimate one, forcing it to use the banking systems electronic banking methods in all parts of the economy.

Nothing could have reinforced the lack of confidence in the banking system more and persuaded the ‘black’ financial system to remain. The undeclared income stashed away in the old notes has come to the surface, but in ways that keep the owners out of sight as they pour this money into buying anything that can be resold for new notes [Rolex watches, gold, etc] and that continues to hide that income. We see that the national sport of hiding profits and business dealing from government eyes will continue leaving only around 1% of the nation paying tax. Gold will remain the foundation of the ‘black money’ system, hidden from official eyes. Hence we do not trust the official figures of gold imports as a rising volume of gold comes in through the back door!

[We will discuss this in depth in the next issue of Gold Forecaster for subscribers!] - Subscribe - GoldForecaster.com - 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!

Gold ETFs – There were sales of 1.186 tonnes of gold from the SPDR gold ETF and sales of 0.9 of a tonnes from the Gold Trust yesterday, leaving their respective holdings at 926.260 tonnes and 21o.12 tonnes.

These sales of gold from the SPDR gold ETF and from the Gold Trust appear to be almost stopping letting the gold price settle at these levels.

Since January 4^th this year, 335.371 tonnes of gold has been added to the SPDR gold ETF and to the Gold Trust.

Silver – Repeat: Silver is stabilizing around $17 in line with gold finding a bottom around $1,220. The selling pressure is easing on both metals ahead of a rally.

Regards,

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance [Gold Storage geared to avoid its confiscation]

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