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 -- Published: Monday, 20 March 2017 | Print  | Comment - New! 

Gold Today –New York closed at $1,228.80 Friday after closing at $1,226.30on the 16th March. London opened at $1,232.75 today. 

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

 -         The $: € was weaker at $1.0765: €1 from $1.0754: €1 Friday.

-         The Dollar index was weaker at 100.16 from 100.38 Friday. 

-         The Yen was stronger at 112.74:$1 from Friday’s 113.44 against the dollar. 

-         The Yuan was stronger at 6.9051: $1, from 6.9068: $1, Friday. 

-         The Pound Sterling was stronger at $1.2419: £1 from Friday’s $1.2343: £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.]

At the close in Shanghai today, the gold price was trading at 277.50 Yuan, which directly translates into $1,249.98. But allowing for the difference of gold being traded this equates to a price of $1,244.98. This more than $16.18 higher than the New York close and $12.22 higher than London.

The price differential between the three centers is widening again as China once again is leading the way on gold prices. But you will note that Chinese gold prices have barely changed in the last two days leading to the conclusion that Shanghai is making the gold price but exchange rate changes are changing prices in other currencies. The dollar continues to weaken taking gold prices higher there.

LBMA price setting:  The LBMA gold price was set today at $1,233.00 up from Friday’s $1,228.75. 

The gold price in the euro was set at €1,146.34 after Friday’s €1,144.51.

Ahead of the opening of New York the gold price was trading at $1,232.10 and in the euro at €1,145.71 At the same time, the silver price was trading at $17.40. 

Silver Today –Silver closed at $17.38 at New York’s close Friday against $17.32on the 16th March. Silver prices have begun rising slowly in line with gold’s dollar prices.

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

Silver (very short-term) The silver price should consolidate with a stronger bias, in New York today.

Price Drivers

When we look at the G-20 meetings we are always underwhelmed. But this last one contained more significance as the U.S. refused to support, in the final communiqué, the words that implied all were agreed against ‘protectionism. President Trump has made it clear that he will ‘make America great again’ putting its interests over its trading partners. This is very definite ‘protectionism’. His highest profile targets are Mexico, China and now Germany. His objection is that there are Trade deficits with each of these countries. He wants a Trade Balance that has no deficit. This has great implications for gold prices.

The U.S. has had a Trade deficit for as long as we can remember. It has been described as the ‘exorbitant privilege’ [of being able to pay for goods with printed paper and not through the sale of its goods] So why is the elimination of the Trade deficit of importance to the new administration? Yes, it will bring jobs back to the U.S., but seen through monetary eyes it is a step away from dollar hegemony to a dollar that can stand internationally on its own valuation through a balance, or surplus, on its Balance of Payments. 

It is preparation for a multi-currency monetary system in which Trump hopes the dollar will stay as strong as it is now. Protectionism through tariffs will go a long way to ensure this objective. This is why we see tariffs on oil imported into the U.S. in the future. It will stabilize the ‘fracking’ oil companies and move them away from international oil price dependency.  This would be gold positive!

Evidence of Trump acting on a hard line on this came over the weekend with his meeting with Merkel of Germany.

Gold ETFs – Friday saw sales of 2.962 tonnes from the SPDR gold ETF but no change in the Gold Trust.  Their respective holdings are now at 834.100 tonnes and 197.82 tonnes. 

Since January 4th 2016, 230.89 tonnes of gold have been added to the SPDR gold ETF and to the Gold Trust.  Since January 6th 2017 20.834 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Regards,

Julian D.W. Phillips