Silver Market Morning: Oct-11-2016 -- Gold and silver consolidating!

Gold Today –New York closed at $1,259.70 yesterday after the previous close of $1,254.30. London opened at $1,263.00.

- The $: € was stronger at $1.1124: €1 from $1.1174: €1 yesterday.

- The Dollar index was stronger at 97.09 from 96.71 yesterday.

- The Yen was weaker at 103.89: $1 from 103.16: $1 yesterday against the dollar.

- The Yuan was weaker at 6.7160: $1 from 6.7010: $1 yesterday.

- The Pound Sterling was weaker at $1.2308: £1 from yesterday’s $1.2380: £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.

Currency influences on gold prices:

We thought you would find it useful to see just how gold has performed in the Yuan and in the Pound Sterling since the beginning of the year and from June this year:

6^th January 2016 Yuan: Yuan 5.5671: $1 Y7,010.24 an oz

6^th January 2016 Pound Sterling: Pound1: $1.44 £745.69 an oz

6^th June 2016 Yuan: Yuan 5.5671: $1 Y8,439.89 an oz.

6^th June 2016 Pound Sterling: Pound1: $1.44 £859.008 an oz

11^th October 2016 Yuan: Y8,423.66

11^th October 2016 Pound Sterling: £1,022.43

In percentage terms this has been a rise of :

The Yuan: +20.16%

The Pound Sterling: +37.11%

The U.S. $ +17.18%

Please further not that the gold price has retreated from $1,370 to today’s $1,260 during the last few weeks [ a $90 or a 6.6% fall].

Gold Investors need to be fully aware of the currency aspects of the gold price above, on a day to day basis. While it is a short term trading opportunity to match your gold position to a short in a weak currency, it is what gold is all about. Gold measures currency values!

As a practical application of this the charging the Finance Minister with fraud, while he is in office has led to a fall in the South African Rand from R13.60: $1 last week to today’s R14.30;$1, so far. The last time threats to Pravan Gordan were made the Rand fell to R16.92: $1. It looks like we are headed back there. Just watch the ‘carry trade’ exit the country on the back of this.

The result for gold mining companies is that they are going to get a boost to their income of the exchange rate fall as S.A. miners must convert their sales proceeds to Rands. This makes these mines far more profitable.

LBMA price setting: The LBMA gold price setting was at $1,256.40 against yesterday’s $1,262.10. The gold price in the euro was set at €1,130.92 against yesterday’s €1,130.21.

Ahead of the opening of New York the gold price was trading at $1,253.80 and in the euro at €1,131.79. At the same time, the silver price was trading again at $17.52.

Silver Today –The silver price rose to $17.62 at New York’s close yesterday from $17.32, Friday.

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

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

Price Drivers

We note that the gold price in the euro and the Yuan have been relatively steady. It is in the dollar that the gold price has weakened. The gold price is back in consolidation mode and can go either way. The downside, we feel, is pretty limited but the upside stretches a long way. Nevertheless we look to the New York market, tempered by Shanghai to point the way.

One feature that is expected to lead to inflation is that Russia and Saudi Arabia are agreeing to either a cut in oil production or a freeze at current levels. This lifted oil prices over $50 a barrel. A rise in oil prices will lead to inflation, if it is significant enough.

This is where we have a problem with forecasts of higher prices. Undoubtedly, higher prices will lead to new production and fracking increasing supply to fill any holes left by Russia and Saudi Arabia, taking prices back above the $50 area. If this happens, both Russia and Saudi Arabia may well reverse their stance on production cuts or freezes. Eventually this will lead to friction and action in the U.S. to protect their own producers. From a strategic point of view a duty on imported oil will give such protection and eventually ensure the U.S. does not need to import oil. Such a duty will be the start of “Controls” which are Capital Controls. We see this environment growing in many countries as de-globalization advances. This will lead to higher oil prices and higher inflation which is gold positive. Subscribe - GoldForecaster.com

Repeat: This is what we think at Gold Forecaster and Stockbridge Management Alliance Ltd? We see the price very close to the Technical targeted bottom. We do see current price areas we see as a major buying opportunity.

You are welcome to contact us at admin@stockbridgemgmt.com should you wish to buy physical gold in forms that are dealable all over the world and we can hold them for you in a robust manner that, we feel, removes the threat of being confiscated. We’re the only storage company that offers that!

Gold ETFs – There were no purchases or sales into or from the SPDR gold ETF. Nor were there any changes in the holdings of the Gold Trust, leaving both their respective holdings at 958.902 tonnes and 227.23 tonnes.

Since January 4^th this year, the holdings of these two gold ETFs have risen by 385.153 tonnes.

Silver – Silver prices should resume following the gold price. As we see gold price bounce, we do expect to see silver prices bounce more.

Regards,

Julian D.W. Phillips

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

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