DMR–Gold continues trek higher on yuan strength, short-covering


Gold continued its trek higher this morning rising another $10 to trade at $1241.50.  Silver is up another 22¢ at $14.63.  Lost in the media focus on trade and interest rates has been the on-going reduction in short positions on the COMEX in both metals, an indication that traders might have begun the process of squaring those positions before year end.  We will know more about that at the end of week when the Commitment of Traders of report is released for public consumption.

In addition to the possible short-covering, we also take note of the improving scenario for China’s yuan over the past few days. Note the upward spike that began in Asian trading immediately after the Trump-Xi dinner. As noted in the Bloomberg article below by John Authers, tellingly a stronger yuan/weaker dollar is what Trump and Xi wanted. Gold, in the process,  has become one of the beneficiaries.


Quote of the Day
“Sir Isaac Newton was asked by the British Treasury officials and financiers of his day why the monetary pound had to be a fixed quantity of precious metal. Why, indeed, must it consist of precious metal, or have any objective reality? Since paper currency was already accepted, why could not notes be issued without ever being redeemed? The reason they put the question supplies the answer; the government was heavily in debt, and they hoped to find a safe way of being dishonest. But Newton was asked as a mathematician, not a moralist. He replied: ‘Gentlemen, in applied mathematics, you must describe your unit.’ Paper currency cannot be described mathematically as money.” – The God of the Machine, Isabel Paterson (1943)

Chart of the Day

Table courtesy of the World Gold Council/GoldHub

Table note:  Global gold demand in physical form for jewelry, central bank reserves and private investment continues to grow steadily.  Private investment demand stands out as particularly robust – up 30% from 2010 through 2017.

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