Markets calmer, but more money printing across the world lies ahead, cheapening currencies against gold and silver!

Gold Today –Gold closed in New York at $1,317.60 after yesterday’s $1,312.40 down from $1,326.50 on Tuesday. In Asia and London the gold price held at the same levels.

• The $: € slipped to $1.1152 down from $1.1067.
• The dollar index moved higher to 95.51 from 96.01.
• The Yen weakened slightly [102.88 down from 102.50].
• The Yuan was strengthening up to 6.6441 from 6.6482 yesterday.

Yuan Gold Fix

Shanghai, New York and London were in sync in the last day with gold pausing at lower levels. The day before, Shanghai led the way, taking the gold price up to $1,323.4 at the afternoon ‘Fix’ there. There were a few days when Shanghai was playing ‘catch-up’ with London and New York. We see this as reflecting a broader global view on the reactions to Brexit.

The Yuan was relatively stable today after depreciating steadily in the last few days. We do expect an ongoing gentle decline of the Yuan over the weeks ahead as most ‘hard’ currencies join in the ‘currency war’.

While Brexit has caused the U.K. to join the ‘currency war’, with more monetary easing, we do expect to see the U.S. react strongly to a stronger dollar if we see it on the index. The prospect of a Fed interest rate hike was being pushed out to 2018by the markets today. But more will be needed to make the dollar fall with other ‘hard’ currencies. We would not be surprised to see Q.E. return in the U.S. or other similar moves, in time.

The conclusion of the ‘currency war’ has to be protectionism expressed through tariff or various forms of Capital Controls.

LBMA price setting: $1,317.00 down from Wednesday 29th June’s $1,321.50.

The gold price in the euro was set at €1,180.95 down €13.14 from Tuesday’s €1,194.09.

Ahead of New York’s opening, the gold price was trading at $1,317.40 and in the euro at €1,181.84.

Silver Today –The silver price closed in New York on Wednesday at $18.26 up from Tuesday’s $17.78 a rise of 38 cents. Ahead of New York’s opening the silver price stood at $18.40. We expect it to continue to outpace gold, particularly when gold rises itself.

Price Drivers

The amazement that Britain voted for the exit from the E.U. continues with anger showing itself in Europe. It is clear that a recession is looming in the U.K. and may well do so in the E.U., while low growth in the U.S. may start to weaken further. All were so convinced that Britain would vote to remain in the E.U. that it seems no plans were made for the exit. Politicians now realize they completely misread the voters [who like politicians, were voting for their own interests – halting immigration seems to have been the main concern]. Much as politicians want to turn back, that’s not on the agenda.

The scene of the world is changing and becoming more violent, poorer [at consumer level] while globally diasporas are growing and increasing in intensity. Politicians from the U.S. to the U.K. and Europe don’t seem to have understood the implications, so creating uncertainty. This leaves the establishment trying to protect their economies at the expense of their currencies. It is this that will continue to their losing value against gold and silver.

In such times gold and silver represent stores of value. Not only is Alan Greenspan expressing himself as a ‘gold bug’ but Marc Faber is telling investors to go for gold.

While this is right, it does not describe government’s changing views on gold and the future actions they are likely to take to shore up confidence in their currencies with gold.

Gold ETFs – On Wednesday the holdings of the SPDR & gold Trust rose 2.673 tonnes with their holding growing to 950.054 tonnes and the holdings of the Gold Trust rose 0.3 of a tonne to take the holdings to 203.71 tonnes.

Since January 4th this year, the holdings of these two gold ETFs have risen 356.978 tonnes.

Silver –Silver prices are now going full pelt higher!

Julian D.W. Phillips

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance