Gold not reflecting true balance of demand and supply
Julian Phillips says the gold market is reflecting only the balance of the demand and supply routed through London and other developed world markets and their distribution systems.
Posted: Tuesday , 05 Nov 2013
Gold Today –Gold closed slightly weaker at $1,314.20 down $0.60 in New York on Monday. Asia held it a dollar lower before London took it lower to Fix at $1,311.25, as did London. Gold is still in consolidation mode. It Fixed at $1,314.25 down $0.50 over Friday’s Fix. In the euro it Fixed at €971.296 down €1.64 over Monday’s Fixing. Ahead of New York’s opening the dollar weakened to $1.3494: €1 with gold at $1,313.10 and in the euro at €973.10.
Silver Today – Silver rose to $21.62 down 22 cents in New York. Ahead of New York’s opening it traded at $21.70.
Gold (very short-term)
The gold price should continue to consolidate, in New York, today.
Silver (very short-term)
The silver price should continue to consolidate, today in New York.
There were no sales from the SPDR gold ETF and 0.04 of a tonne from the Gold Trust holdings which left their holdings at 866.317 tonnes and 171.54 tonnes.
You will note that the closing price of gold for the last three days has been close to $1,314, showing us how only day-traders and dealers moving prices around, in line with $: €, caused movements. These positions are closed out at the end of the day. What we are seeing now is either gold building strength on top of solid support at $1,300 in the face of tiny sales, but small demand, or that support is being quietly eroded. Each investor must decide for himself what to do. [Find out more from www.GoldForecaster.com and www.SilverForecaster.com to subscribe to our newsletters and visit www.StockbridgeMgMt.com to hold gold so it can’t be seized]
With the fragmentation of the gold market [as we are describing in our current series on the gold market] the gold price is not reflecting the true balance of demand and supply. It is reflecting only the balance of the demand and supply that is routed through London and other developed world markets and their distribution systems. This no longer represents the entire gold market. And yet gold prices paid between buyers and sellers in the entire gold market are still referenced to the developed world gold markets.
There are only two ways forward if the gold price is to represent the entire gold demand and supply balances.
- The first is for the current bullion banks to set up an efficient distribution system in Shanghai, with its own Fixes to directly supply Chinese buyers and sellers.
- The second is for Chinese banks to set up and copy the operations of the London Bullion Banks. We expect the London Bullion Banks to lose out if they don’t adapt.
‘D-Day - 72’.................... As Japan’s economic resuscitation begins to fade, Greece, once again, talks on more bailout money and the rest of the developed world tries to convince us all that economic recovery is alive and well, structural faults won’t go away. It is clear that extreme times lie ahead unless some major changes of attitude are seen soon!
Silver – The silver price will continue to mark time with gold!