News articles of '2017' 'February'

SILVER BULLION outpaced gold prices yet again on Thursday morning in London, touching what analysts called “strong resistance” at $18.13 per ounce as world stock markets retreated from new all-time highs.

Gold set a 1-week high at $1239 per ounce, but silver bullion recorded its first London benchmarking above $18 since mid-November, immediately after Donald Trump’s victory in the US presidential election.

Global equities meantime touched a new all-time record on the MSCI World index after another record-high Wall Street close. But European stock markets then retreated as the Euro rose for the second day running against the Dollar.

Copper prices edged back but held their “breakout” from the metal’s 5-year downtren as talks to end a strike at BHP Billiton’s giant Escondida mine in Chile were postponed until at least Saturday.

Silver’s price rise, outpacing gold bullion and adding almost $2 per ounce so far in 2017, pushed down the Gold/Silver Ratio of the two precious metals’ prices to 68.3 this morning, falling from the New Year’s peak at 71.5 ounces of silver for each ounce of gold.

Near a 5-month low for gold’s value relative to silver, Thursday morning’s reading held right in the middle of the Gold/Silver Ratio’s trading range of the last 30 years.

Finding half its annual demand from industry, versus less than 10% for gold, silver broke its 5-year price decline relative to the yellow precious metal in mid-2016.

“The industrials remain well bid,” says a note from Swiss refining group MKS’s Asian desk, “[with] silver still probing the $18.00 level.

“Strong resistance [is] sitting at $18.13…the July 2016 to Feb 2017 downtrend line.”

Looking at the breakout in copper prices, “Equity prices boomed during the copper bear market,” notes French investment bank Societe Generale’s global strategist Albert Edwards.

“[So] it beggars belief how equity investors have flipped from seeing the deflationary backdrop…as good for equities, to rising bond yields and commodity prices also being good for equities.

“The breadth of base metal price increases is of particular note…with five of the metals up a steamy 30% over the past year and zinc turning in a sparkling 70% performance.”

Gold prices in China rose Thursday to 1-week highs against the Yuan, helping Shanghai premiums – over and above London quotes – hold at $12 per ounce.

More than 4 times the typical incentive to new imports, Thursday’s premium extended the strongest post-Lunar New Year stretch since China’s record gold demand of 2013.

Major government bond prices meantime recovered as equity markets slipped back, rising after yesterday’s strong US inflation data followed Federal Reserve chief Janet Yellen hinting that the next Fed rate hike will come sooner than later.

Betting on US interest-rate futures jumped to put the odds of a March rate hike at 31% on Wednesday, up from 18% the day before.

Betting on forthcoming Fed decisions now sees the odds of a rise in or before May’s meeting as greater than evens – one month sooner than previous market-based forecasts.

Disclaimer

This publication is for education purposes only and should not be considered either general of personal advice. It does not consider any particular person’s investment objectives, financial situation or needs. Accordingly, no recommendation (expressed or implied) or other information contained in this report should be acted upon without the appropriateness of that information having regard to those factors. You should assess whether or not the information contained herein is appropriate to your individual financial circumstances and goals before making an investment decision, or seek the help the of a licensed financial adviser. Performance is historical, performance may vary, past performance is not necessarily indicative of future performance. This report was produced in conjunction with ABC Bullion NSW.

SILVER PRICES hit new 3-month highs and gold rose to the highest in 11 weeks against the Dollar on Thursday as world stock markets stalled near record highs amid news of new US president Donald Trump slamming down the phone on key Pacific ally Australia’s prime minister Malcolm Turnbull.

“He didn’t let diplomatic niceties get in the way of how he felt about [the] refugee policy,” Australia’s ABC News quotes Philip Rucker, the Washington Post journalist who broke the story, referring to what Trump called “a dumb deal” on Twitter.

Trump also today attacked long-time US antagonist Iran, as well as former president Barack Obama’s policy towards the Middle Eastern state.

Silver bullion rose to fresh 12-week highs at $17.70 per ounce as bond yields fell and commodities held flat overall, still some 16% below last summer’s 2-year highs in the wake of the UK’s Brexit referendum shock.

Gold’s jump to $1223 today still left it 11% lower from July’s 2-year high in Dollar terms, but recovered two-thirds of the metal’s sharp post-US election slump.

Gold priced in Sterling meantime reversed all of last week’s 2.7% drop as the Pound fell 1.5 cents after a vote of ‘no change’ from the Bank of England – now holding £445 billion ($556bn) of QE bond purchases with interest rates at 0.25% despite raising its own 2017 economic forecast dramatically – followed last night’s parliamentary vote to let the Conservative Government trigger Article 50 and proceed with taking the UK out of the European Union.

“Clearly, money managers want to be diversified in these turbulent times,” reckons a note from Canadian brokerage TD Securities, “as markets question Mr.Trump’s ability to deliver strong growth.”

Favored hedge-fund vehicle the giant SPDR Gold ETF (NYSEArca:GLD) yesterday saw a 10-tonne inflow, needed to back extra shares issued to meet investor demand in the trust-fund product – the heaviest creation of new shares since early October.

Seeing only three 10-tonne-plus days in the 3 years starting 2013 – all of them in 2015 – the GLD saw 14 in 2016, helping grow its bullion holdings 28% from the lowest levels since 2008.

Silver’s largest ETF however – the iShares Silver Trust (NYSEArca:SLV) – saw a net outflow of metal as shareholders liquidated stock on 3-month price highs.

With no mention of gold meantime, yesterday’s new budget from the government of India disappointed dealers hoping for a cut in India’s 10% import duty and a higher threshold for purchases to need reporting to the tax authorities.

Instead, the new Union Budget added 12.5% tax to all silver bullion, including coins, in what finance minister Arun Jaitley’s department called an “anti-avoidance measure” to follow the shock demonetisation of India’s largest banknotes last November.

As tax and curbs on gold imports rose over the last 5 years, India’s silver investment demand rose more than 4-fold, almost matching the United States’ world-leading private purchases of coin and bar before easing back according to data from specialist analysts Metals Focus.

The long-awaited decision on India’s General Sales Tax – aimed at unifying and simplifying the system, and likely to bring extra value-added tax to jewelry – is yet to come.

Disclaimer

This publication is for education purposes only and should not be considered either general of personal advice. It does not consider any particular person’s investment objectives, financial situation or needs. Accordingly, no recommendation (expressed or implied) or other information contained in this report should be acted upon without the appropriateness of that information having regard to those factors. You should assess whether or not the information contained herein is appropriate to your individual financial circumstances and goals before making an investment decision, or seek the help the of a licensed financial adviser. Performance is historical, performance may vary, past performance is not necessarily indicative of future performance. This report was produced in conjunction with ABC Bullion NSW.

The private-sector ADP Payrolls report said US employers added 246,000 net jobs last month, well ahead of the 165,000 forecast by analysts.

World stock markets had already risen sharply after Eurozone manufacturing saw its best month since 2011 and UK manufacturers reported their strongest January in 3 years on the Markit data agency’s PMI surveys.

Copper meantime touched new 2-year highs above $6,000 per tonne after workers at the giant Escondida mine in Chile – owned by BHP Billiton (LON:BLT) – rejected a new wage offer, risking strike action.

With government bond prices falling to nudge market interest rates higher, silver touched $17.62 per ounce for the third time in 2 days, while gol held below yesterday’s top of $1215 per ounce.

That pushed the Gold/Silver Ratio of the two precious metals’ relative prices down to 68.75, the lowest value of gold in terms of silver since mid-December.

The last 10 years’ average stands at 61.55 ounces of silver to 1 ounce of gold, barely changed from the Feb’ 1997 to Jan’ 2007 average.

Despite Tuesday’s sharp jump in gold and silver prices, both the SPDR Gold Trust (NYSEArca:GLD) and iShares Silver Trust (NYSEArca:SLV) attracted no new demand for their shares, keeping the quantity of metal held to back the legal trusts’ values unchanged.

The GLD has added metal only twice since Donald Trump’s victory in November’s US election, shrinking instead on 33 of those 51 trading days as shareholders liquidated their positions.

“We’re in Phase III of the Trump rally,” reckons Mohamed El-Erian, chief economic adviser at German insurance and asset-management giant Allianz, writing at Bloomberg.

“Post election…first US stock markets soared, then they traded in a narrow range. Now [they] have entered a period of greater volatility underpinned by a tug of war between the expectation of reflationary policies and the risk of stumbling into stagflation.

“Where we end up will be predominantly a political call.”

Trump’s avowedly “reflationary economic policies” mean that real interest rates – after accounting for the rising cost of living – “may stay favourable to gold,” writes Jonathan Butler at Japanese conglomerate Mitsubishi Corporation in the new LBMA 2017 Forecast competition, pointing to “higher inflation [and] increased fiscal spending.

“[But] we see the potential for silver to outperform gold,” Butler adds – forecasting a 3.7% drop in gold’s average price but a 6.5% gain in silver for 2017 as a whole – “as investors become cognizant of it being under valued on a relative and absolute long-term basis.

“Rising physical offtake will also help silver, especially in the Asian jewellery markets and in the solar photovoltaic sector.”

“Gold is one of the few things you should own,” says UK hedge-fund billionaire Crispin Odey, apparently urging clients to stick with his bearish view of equities, UK government bonds and the Pound Sterling after losing half their money in 2016.

Disclaimer

This publication is for education purposes only and should not be considered either general of personal advice. It does not consider any particular person’s investment objectives, financial situation or needs. Accordingly, no recommendation (expressed or implied) or other information contained in this report should be acted upon without the appropriateness of that information having regard to those factors. You should assess whether or not the information contained herein is appropriate to your individual financial circumstances and goals before making an investment decision, or seek the help the of a licensed financial adviser. Performance is historical, performance may vary, past performance is not necessarily indicative of future performance. This report was produced in conjunction with ABC Bullion NSW.