Lawrie Williams – Thu 25 Feb, 2016

Gold bears fighting a losing battle!

Here is the latest post by Lawrie Williams written by Julian Phillips. Larwie and Julian always brings up some good points but when reading his articles I always keep in mind they take a bullish gold argument the majority of the time.

The real noteworthy stat continues to be the inflows into gold ETFs (this time SPDR). ETFs can be such a huge player when they are buying and have money coming in the door that price moves usually go hand in hand. Demand from ETFs far outweigh any retail physical buying in terms of moving price. If this trend continues which it seems to be doing this year we should continue to see gold move higher.

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Gold Today –Gold closed in New York at $1.229.20 up from $1,225.00 on Wednesday. In Asia, it rose to $1,241 ahead of London’s opening. It then pulled back during the morning to be set by the LBMA at $1,235.40 up from yesterday’s $1,232.25. The dollar index is slightly weaker at 97.44 up from 97.77 on Wednesday.

The dollar is weaker against the euro at $1.1028 up from $1.0978 on Wednesday. The gold price in the euro was set at €1,120.24 up from €1,122.47.

Ahead of New York’s opening, the gold price was trading at $1,236.55 and in the euro at €1,120.62.

Silver Today –The silver price closed in New York at $15.24 down 2 cents.  Ahead of New York’s opening the silver price stood at $15.20.

Price Drivers

Wednesday saw a purchase of 8.029 tonnes into the SPDR gold ETF and a purchase of 0.75 of a tonne into the Gold Trust. The holdings of the SPDR gold ETF are now at 760.323 tonnes and at 188.25 tonnes in the Gold Trust.  In the week to date, we now see a total of 55.379 tonnes of gold bought into the two gold ETFs we follow.

The technical picture did as we forecast and broke out convincingly.

The gold price hit $1,250 at one point before being dragged down to $1,229, yesterday.

Let’s assume that this was due to physical selling by U.S. bullion banks. The tonnage bought this week must have put a serious dent in the gold holdings that can be used for trading. Should the buying continue at anywhere near these levels, we would question the wisdom of using such amounts of gold simply to hold the price down. The evidence in the physical markets is that Asian demand is so large that such a policy is doomed to fail.

If however, the price of gold yesterday was simply a function of the COMEX futures and Options contracts then physical gold was not involved. The achievement of holding gold prices back would then be to encourage more physical buying of gold globally, both in the developed world markets and off-market where the bulk of physical gold is traded. The price off-market is referenced to London and COMEX prices. By holding prices down [with the fall from $1,250 to $1,229] would simply incite more buying!

While global growth continues to slow, we note that the Services sector in China is still growing fast. This is directly helping to create more middle class Chinese citizens. These continue to love gold as a fundamental investment. The performance of the Shanghai Composite index remains uninspiring, so solid, safe gold that the older people promote, holds a fundamental position in middle class wealth. The slowing GDP numbers from China belie such growth, but this is and will be a fundamental driver for gold for many years ahead.

Silver – While the silver price was restrained overall yesterday, gold’s breakout will positively affect silver’s performance from now on.


Featuring:
Lawrie Williams

Comments:
  1. On February 25, 2016 at 9:10 am,
    Marty says:

    Only God knows if any gold resides in GLD or SLV.

  2. On February 25, 2016 at 9:19 am,
    Phil says:

    Sooner or later the laws of the universe take over. Gold is hitting solid resistance at ~$1250. It is overdue for a pullback, and an opportunity for people to buy in at lower prices will emerge. But yes, the gold “perma-bear” market seems like it might be over.

    • On February 25, 2016 at 10:45 am,
      Big Al says:

      I happen to agree with you, Phil

  3. On February 25, 2016 at 9:59 am,
    harry says:

    well, with all the positive calls on gold, it’s as if the push is to make the rise a self fulfilling prophecy. Yes, gold may have bottom but then again maybe not, following the same top as in October but with much more cheerleading. Personally believe gold may have another fifty bucks or so, but it is not going to the sky unless the world is to end. Problem is, the world could not be worst and have all the attributes in place for a gold mega push, mid east wars, currency wars, economic slowdown, dysfunctional US politics, and on and on. But does nothing but thread water as usual. It is obviously not the source as a safe haven investment. The gold bug contingent has been calling this tune for years and years, and anybody listening to them went nowhere fast in spite of all the rationalization. Gold could sink to 500 and would still find a positive in the drop LOL

  4. On February 25, 2016 at 1:48 pm,
    Evin says:

    Short term: Oil & Gas
    Interesting bumps up in SU, RDS.A, ECA

    Will they last into mid-march?
    I think ECA is out of steam, I think it will break below $5 and the options will be great next 2-3 months, if you love gas, these folks are a long term hold and having options will create a great timely seasonal play for investors with patience. Any QE program would send may gas higher, await march fed meeting for hints at where to play ECA.

    CNE Canacol is the most leveraged international junior to nat gas that I am following, they did well this past month… see if the hold up in march and the spring.

    SU, RDS.A are moving in ways that suggest folks are seeking safe long term div payers and they both have made acquisitions that make them look like the swallowed value at bargain prices,, but it will be a slow grind up.

    I don’t understand Gold. It does have different behaviour but seems Gold, GOLD ETFS, inverse ETFs, options, warrants, and juniors all have unusual behaviours, no definitive pattern that makes one want to plop down a buy and hold bet yet… maybe folks who think they know Currencies, Geopolitics, Technical Analysis, or believe in the Balance Sheets and honest accounting and fair equitable and efficient markets… I’m less a believer in those things… I’m more caveman… “what it do?” why it do dat?” will it do dat again for me..?” if not, I am willing to wait, until the unknown fed decisions and other speculations are more certain… then I don ‘t think I want gold as much as I want information that I can count on and trust, and I think you folks are as savvy and thoughtful as any other source but the contrast of guests and strategies makes for great insight so thanks for all your contributions.

    March is Guiness Month and I would like the other guests to join in buying mr. fleck and mr. korelin a green pint on the house tab of the kereport followers. for each comment On the joke below I will donate 0.25 toward a pint until we reach the sum of $7.50 (30 comments)

    “A single man walks into a bar by himself and he sits down and orders 3 pints from the bartender. The bartender asks him “3”? and the fellow confirms, “yes, 3 Guiness”
    The barkeeper pours 3 pints, sets them on the bar… the customer proceeds to space the 3 pints next to 2 empty chairs… he sips a bit out of each one and shuffles back and forth between the 3 chairs until eventually all 3 pints are emptied. He then pays his tab and leaves.

    The bartenders thinks to himself. (‘ hmm never seen that happen before’)

    ((3 weeks later))
    same gentleman walks in bar, same bartender working, he asks for 3 pints and the routine starts again… this time the barkeep says “why don’t you order 1 pint at a time like everybody else) the guest answers “well I usually drink with my two brothers, I haven’t seen them for months and we can’t be together right now, so this is my way of sharing a pint with each of them the” says the man. ‘I just have conversations in my head while I drink with them as if they were both here with me..’

    “Oh I understand” – says bartender.
    And so the man sips the 3 beers until dry and pays his tab and leaves…

    ((3 more weeks pass by))
    this time the man comes in and sits at the bar and orders just 2 pints of beer.. the barkeep sets the 2 pints down and watches the man drink back and forth until the pints are emptied. This time the bartender says, “tell you what mister, I see you only ordered 2 this month, I am very sorry for I am thinking something bad has happened to one of your brothers and you only ordered 2 pints this time, so tell you what it’s on the house”

    (confused look) the guest says “No, no, my brothers are both fine, they are just fine – it’s just me, you see it’s just that I quit drinking, that’s why I only ordered two today.

    • On February 25, 2016 at 10:12 pm,
      Excelsior says:

      Evin.

      Good thoughts on Oil and very funny post.

      Yes, let’s get Mr. Fleck and Mr. Korelin a green pint (or just any pint they would like).

    • On February 26, 2016 at 11:03 am,
      Big Al says:

      Too great joke!