by Peter Schiff, Schiff Gold:
Gold and silver drifted lower this week before a modest recovery Friday morning, which can be put down to bear closing. Meanwhile, gold hit record levels in yuan and yen terms.
Here’s a breakdown of this week’s gold and silver markets.
In European trading this morning, gold was $1918, unchanged from last Friday’s close after testing the $1900 level yesterday. Silver was $23.05, down 3 cents, after testing $22.30. Comex volumes in gold were moderately healthy, and they picked up in silver yesterday on the sell-off.
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The performance of gold and silver has been disappointing for dollar bulls, but looking at it from the bears’ point of view prices refused to go lower yesterday when the ECB raised its deposit rates and the dollar’s TWI powered ahead. The TWI is next.
Perhaps the bears need a little more time. Their hopes will devolve on interest rates and bond yields going higher or at least remaining firm, which is seen to be bearish for gold. The short positions of the Swaps on Comex have reduced in value, but probably not enough. The next chart is of their net position, and it can be seen that before 2019 the average net short position was less than today.
With de-dollarisation by the Global South, it would appear to be a struggle for the Swaps to reduce their shorts much more.
One story consistently hitting the headlines this week has been the gold price premiums on the Shanghai Gold Exchange, hitting as much as 6% — taking it to over $2000 equivalent. Certainly, the demand on the SGE is real, but this is driven by gold being the only hedge available to resident Chinese against a falling yuan (due to currency controls). Our next chart shows how weak the yuan has been, despite zero price inflation.