Negative data driving Fed policy, boost for gold
Here is the latest post over at our friend Lawrie Williams site. The biggest question that investors looking at gold need to answer is… Has the sentiment and narrative changed?
click here to visit Lawrie’s website for other great precious metals focused articles.
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The New York gold price closed Wednesday at $1.125.80 up from $1,121.40 up $4.40. In Asia on Thursday, it pulled back to $1,118.35 ahead of London’s opening and then the LBMA set it at $1,119.00 up from $1,116.50 with the dollar index down at 98.85 from 99.00 on Wednesday. The euro was up at $1.0910 $1.0874 against the dollar with a wide spread. The gold price in the euro was set at €1,025.66 down from €1,026.76. Ahead of New York’s opening, the gold price was trading at $1,119.65 and in the euro at €1,026.26.
The silver price in New York closed at $14.48 down 2 cents at Wednesday’s close. Ahead of New York’s opening, the silver price stood at $14.42.
Price Drivers
Wednesday saw no purchases or sales to or from the SPDR gold ETF but a purchase of o.72 of a tonnes into the Gold Trust. The holdings of the SPDR gold ETF are now at 669.229 tonnes and at 165.85 tonnes in the Gold Trust. We expect the gold price try to climb in consolidation mode, today.
The story of the day was the Fed’s decision yesterday and the comments attending the announcement. With a vast array of commentary on this and the future of rate hikes, we suggest readers keep an eye on the overall perspective surrounding the announcement.
To us it was clear that the Fed is data driven and the data is negative. Pertinently, the Fed announced it would monitor the global economy carefully. We have to factor in the changing global cash flow and note that the U.S. is not an island, but very much a part of the global economy, so it must take note of the impact of U.S. interest rates, no matter how small.
The Fed is thus seeing the U.S. in a global context, not just with its eye on the U.S. economy. The recent plunging of global markets bears testament to this. In particular, the level of the U.S. dollar exchange rate has become very, very important. We see the Fed as not being happy with it going any stronger and wants it to remain below 100, on the dollar index or lower.
The importance of this lies in the impact on U.S. exports and imports which are very much a part of the global economy. Evidence of this is the declining market share of Boeing, losing to Europe’s Airbus. We see exchange rates in 2016 becoming a major focus of the global economy and a telling factor on gold prices, particularly in the dollar.
But gold prices do not just reflect exchange rates and inflation. If they reflected inflation they would be moving around $15 a year at present, but we have seen that in the last week. The changing shape of global gold demand and supply alongside fundamental structural changes in the gold markets will decide the gold price in 2016.
Silver should take a breather today alongside gold.
Note to above story………….it was reported two days ago on PBS, that Boeing would receive some orders……………….
this memo……..should have been placed by itself, and not under FLASH CRASH.
Frank, did you watch the lastest Bill Holter interview on the Comex that I posted yesterday on The Wrap?
He pretty much laid it all out as you said he would!
Comex days are numbered!
I just brought another 100ozs of Silver Eagles.
Yes, and thanks for the input………..appreciate. I also, see the LBMA…….screwed up this morning and priced silver 84cents below the $14.40 number…..per zerohedge just posted.
I just received a letter from Heritage auction two days ago….on some Silver Eagles, and they were offering them at $29 over spot. The mint is running behind on the eagles and all are taken as soon as they are offered.
On this mint delay and quota thing, it has been there for so long. It is not like we are handling million tons. PM production is always small amount. These delays and quota can explain one time thing and not chronicle problems. I believe they are used as the excuses to limit the supply.
Dragonite…….the mint is just a side issue.
The Comex and LBMA…….are the big issues of the past two day.
If they limit the supply, the premium will be high. It results in physical and paper price deviation. However, they can pretend it is the manufacturing not shortage of physical. They will say there is plenty of supply at the spot price but not for you to buy. Can we fire somebody?
It was interesting in London this morning in silver…….It took a long while before the LBMA came up with a fix.
This to me was a sign of physical shortage, and some phone calls were made before they dared to come up with a fix!
Saw the same info…..seconds ago at zerohedge………PROBLEMS FOR SURE, ….the house of cards is falling quick…………..YESTERDAY…..COMEX…..TODAY LBMA.
Yeah, but the LBMA has been out of gold!
These are the last days for these clowns!
Yesterday was gold, today was silver. The system is now broken down.
This is the first time for back to back problems since I have been following this daily for 11 years, that I can remember, if anyone else knows different please reply….thanks
Years and years have gone by with people claiming things are about to blow up due to physical shortages but it will likely not be allowed to happen. They will come up with something. Germany never got its gold and gave up not too long ago. There is plenty of invisible gold stored underground and plenty of paper to shuffle around-a shell game.
PAUL……..Germany got back 366 ton……..check out zerohedge 1-27-2016
IF, you can not find it………go to sgtreport….1-28-2016
Wonder who actually get the story line first……zerohedge, sgtreport,
Seems like most are just coping the news, from other sources…….
I see that sgt, got the news for David Morgan, I am sure he got it from someone like zerohedge………..
Heck for all we know, Morgan got the info from reading KER…..
but now I see that zerohedge, got it from bulliondesk…..
The whole thing is a mess just like their rigged stock market………..it’s just a matter of time now!
I got the news first from you guys Mark and Frank – Thanks! A
Thanks for the acknowledgement……….FFM
You bet!
LAST night was just a FLASH CRASH………………….zerohedge