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.

Are Gold And Silver Breaking Down?

By Julian D.W. Phillips

Gold closed in New York at $1,217.20 down from $1,220.10 on Thursday. On Tuesday morning in Asia, ahead of London’s opening it was lifted back to $1,219.45 up $3.00. London pulled it back to see the LBMA price setting at $1,216.45 the same as Thursday of last week.

While the precipitous fall in gold and silver was harsh, we see the gold and silver prices having limited downsides.

The Technical picture has registered serious changes, but we question whether a couple of days selling on tiny volumes is sufficient to change the trend.  This points to a volatile market ahead, with the upside favored. Having said that, we need to see U.S. investors into gold ETFs return with buying orders in large amounts, as we have seen in the last few weeks.

After a holiday weekend we expect to see activity pick up today and may well bring a few surprises.

Initial reports blamed the report that Venezuela had been selling its gold reserves aggressively over the last few months on the fall in the gold price. But at around 12.5 tonnes a month these amounts have already been absorbed with the gold price rising higher at the same time. Such sales are not hurting the gold price.

But the U.S. media attributes it to talk of a potential Fed hike. When we look at the data coming out of the U.S. we see it as mixed and certainly not sufficient to warrant a Fed hike.

What we saw last week was prices falling in Asia and the falls continuing in New York, with sales on COMEX but little, if any, physical sales. This implies that should the gold ETF buyers re-emerge, we will see prices rebound strongly.

Gold ETFs

There were purchases of 2.081 tonnes into the SPDR gold ETF 0.3 of a tonne into the Gold Trust last Thursday.  The holdings of the SPDR gold ETF are now at 823.742 tonnes and at 193.02 in the Gold Trust. But COMEX and dealers held sway with little to no physical sales in sight and marked prices down, last week. Will this change after April 19th?

Silver

The silver price was hammered heavily last week’s end dropping from a peak of $15.96 to $15.11 a fall of over 5% while its fundamentals continue to improve and investment buyers come into the market. We continue to believe silver is priced as a monetary metal, not on its fundamentals.

 

  • Michael

    “There were purchases of 2.081 tonnes into the SPDR gold ETF 0.3 of a tonne into the Gold Trust last Thursday. The holdings of the SPDR gold ETF are now at 823.742 tonnes and at 193.02 in the Gold Trust.”

    I frequently see you reference this data point but I don’t know how much I’d 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.”