Lawrence Williams

About the Author Lawrence Williams

Former CEO of Mining Journal Ltd. and subsequently General Manager of Mineweb.com - a position relinquished in October 2012 to continue as a freelance writer. Graduate mining engineer from London's Royal School of Mines (part of London University) - has worked on gold, platinum and uranium mines in South Africa, copper in Zambia, uranium in Canada and holds a South African Mine Manager's Certificate. Joined Mining Journal originally as Financial Editor and worked for the company for over 30 years spending 13 years as CEO. Particular follower of the gold and platinum market and has written numerous articles on precious metals for Mining Journal and Mineweb and has also written for London's Financial Times as well as for other media and publications including SeekingAlpha. Has been regular writer for mineweb.com - and now has own blog - www.lawrieongold.com as well.

Could This Be the Beginning of Gold’s Return to Record Price Levels?

The New York gold price closed Tuesday at $1,121.40 up from $1,108.30 up $13.10. In Asia on Wednesday, it held over $1,120 ahead of London’s opening and then the LBMA set it at $1,116.50 up from $1,114.70 with the dollar index down at 99.00 from 99.36 on Tuesday. The euro was up at $1.0874 from $1.0831 against the dollar. The gold price in the euro was set at €1,026.76 down from €1,029.18. Ahead of New York’s opening, the gold price was trading at $1,117.80 and in the euro at €1,027.86.

The silver price in New York closed at $14.50 up 26 cents at Tuesday’s close.  Ahead of New York’s opening, the silver price stood at $14.40.

Price Drivers

Tuesday saw purchases of 5.057 tonnes of gold into the SPDR gold ETF and 3.31 tonnes into the Gold Trust. The holdings of the SPDR gold ETF are now at 669.229 tonnes and at 165.13 tonnes in the Gold Trust. This was a surge of physical demand showing a broader section of the investor community is now turning to gold. We expect this to continue.

Overhead resistance is out of the way until the gold price moves much higher and then it is not a significant resistance. There was little dealers and speculators could do, except to bow to the upward pressure. Closing short positions will gain momentum now.  Bear in mind this is not physical buying, simply closing financial transactions related to the gold price.

We expect nothing dramatic from the Fed today except cautionary warnings on the state of global growth and an awareness of the damage dollar strength could do. This will be positive for gold!

We find it significant that Apple described global market conditions as ‘never before seen’. We ignore the demand for Apple i-phones and factor in the commentary on the state of the global economy, which they see as dramatically slowing. Against a background of currencies weakening in the ‘race to the bottom’, the global debt mountain will see a diminishing global cash flow with which to service such debt. This will place extreme pressure on the economic structures around the world. It’s a case of where the next fracture is going to come from?

With Asia having drawn off gold supply so extensively the news that gold discoveries have collapsed confirmed the future supply squeeze in the years to come.  As it is, this year we expect gold supplies from mining to peak. We do see demand for gold being much higher than the bulk of forecasters think particularly from China. This could be the beginning of gold’s return to record price levels! –   Silver is running full pelt now.

 

  • Mr. L

    “Tuesday saw purchases of 5.057 tonnes of gold into the SPDR gold ETF and 3.31 tonnes into the Gold Trust. The holdings of the SPDR gold ETF are now at 669.229 tonnes and at 165.13 tonnes in the Gold Trust.”

    I don’t know if I can trust this data. How reliable are GLD’s holding reports? GLD does not give retail investors the right to redeem for any of its mystery physical gold holdings. This fact alone ensures the GLD shares to be nothing more than paper at the end of the day. GLD also has a glaring audit loophole in their prospectus that states they have no right to audit subcustodial gold holdings. To this day, I have not heard of a single good reason for the existence of this backdoor to the fund. Some other red flags I’ve stumbled upon, verified and welcome everyone else to verify for themselves:

    “Did anyone try calling the GLD hotline at (866) 320 4053 in search of numerical details on GLD’s insurance? The prospectus vaguely states “The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody.” When I asked about how much of the gold was insured, the representative proceeded act as if he didn’t know and said they were just the “marketing agent” for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors.

    I remember there was a highly publicized visit by CNBC’s Bob Pisani to GLD’s gold vault. This visit was organized by GLD’s management to prove the existence of GLD’s gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this “GLD” bar was actually owned by ETF Securities.”