Commentary for Friday, Nov 21, 2014 (www.golddealer.com) – Gold closed up $6.80 to at $1197.00 on additional quantitative easing news from both the Bank of China and the European Union. This was the third day this week that gold has moved above the important $1200.00 mark – today’s high being $1207.00. On the week however gold only managed a $12.00 increase in light of a raging stock market.
Gold’s push to the upside today was created by ECB President Draghi’s confirmation that Europe might soon be in the bond buying business. And it was helped along when the Bank of China also decided to lower interest rates in another accommodative financial move. But there are more moving parts pushing the price of gold today including resumed dollar strength – the Dollar Index today trended higher at 88.28 which capped gold’s early gains.
War and sanctions create a volatile gold mix - this from FXEmpire – “Selling by gold funds resumed after a brief pause this week. The world’s largest gold-backed exchange-traded fund, SPDR Gold Shares, said its holdings fell 0.3 percent to 720.91 tonnes on Wednesday. Reuter’s reported that Ukraine slashed its gold reserves by more than a third in October, data from the International Monetary Fund showed, as the near-bankrupt country reels from fighting a pro-Russian separatist movement in the east. The reserves data from IMF also showed Russia raised its gold holdings for a seventh straight month in the same period – the country’s longest such buying spree in more than a year. Ukraine ended last month with 26 tonnes of gold, down by 14 tonnes from September, while Russia added another 18.9 tonnes, taking its total to 1,168 tonnes – still the fifth biggest holding by a central bank.”
And cheap money is the elixir of life when it comes to the US stock market. As long as interest rates stay near zero there is no stopping that machine. This raging market has to draw down money which would otherwise be attracted to the physical gold market.
How long record setting stocks will last is a crap shoot – but there is always the chance that in 2015 our economy will actually get more traction so this can’t be good for gold.
The latest inflation numbers show some activity but not enough to get the Fed’s attention. So for the time being everyone is guessing about when they will raise interest rates. The college guys claim sometime mid-2015 is in the cards. Higher interest rates will also not be good for gold. But before you decide immediate interest rate hikes are already baked into the cake consider Europe.
Central Banks around the world are committed to a loose money policy. And the coming interest rate hike in the US will not play well with the rest of the world. The US is the mother of all QE – it owns the show so to speak and it cannot easily back away from this monster by unilaterally raising interest rates – it would have dangerous consequences for Europe. Getting into this universal QE mentality was easy enough – but getting out may pose big problems - remember central banks of the world are now trying to create inflation.
Flat to lower oil – a recovering economy – a negative long term technical picture for gold – a raging stock market – the end of US quantitative easing – negative ETF interest and gold is still holding the lower end of its current trading range. Even showing some life if today is any measure – but being defensive can’t hurt the long-term plan.
I happen to like gold and I like cheaper gold better. Sorry for the phraseology but so does the consistent world accumulation of both India and China. And many of the world’s central banks continue to add to their gold reserves - so while there are a number of reasons to be negative on gold there are still many hard core proponents.
Finally don’t overlook the physical US gold investor. Yes big gold money in this country has been absent but we are seeing signs that “big boy” buys are coming back to test the waters. To qualify here the order has to be several hundred thousand dollars or more and while these size orders have been dry for months they are once again showing up.
Whether these early birds sense a bottom or not remains to be seen but one thing is sure – they remain interested in taking physical possession of gold bullion.
This from Associated Press - Dutch Move 122 Tons of Gold out of U.S. - Gold, valued at $5 billion, is moved from New York to Amsterdam - The Dutch Central Bank says it has recently shipped 122.5 tons of gold worth around 4 billion euros ($5 billion) from safekeeping in New York back to its headquarters in Amsterdam.
In a statement Friday morning the bank said that its 612.5-ton national gold reserve is now divided 31 percent in Amsterdam, 31 percent in New York, 20 percent in Ottawa, Canada and 18 percent in London.
"With this adjustment the Dutch Central Bank joins other banks that are keeping a larger share of their gold supply in their own country," the bank said in a statement. "In addition to a more balanced division of the gold reserves...this may also contribute to a positive confidence effect with the public."
Silver closed up $0.26 at $16.39 and the steady grind of smaller sales continues – something interesting is happening with $1000.00 face 90% silver bags. Premiums are relatively high because supply seems to be thinning. I don’t see this continuing because when premiums on 90% approach those on American Silver Eagle Monster boxes – the boxes usually win. Also note that silver’s close at $16.39 today is a $1.00 higher than the most recent low close on Nov 6th.
Platinum closed higher by $23.00 today at $1227.00 and palladium was also higher by $27.00 at $794.00.
Precious Metal Closes & Dollar Strength – Nov. 17 through Nov. 21 – 2014
Gold Silver Platinum Dollar Index
Mon $1183.00 $16.05 $1201.00 $88.01
Tues $1196.70 $16.17 $1204.00 $87.64
Wed $1193.60 $16.29 $1198.00 $87.71
Thurs $1190.70 $16.13 $1204.00 $87.67
Fri $1197.50 $16.39 $1227.00 $88.42
Mon $768.00 $1230.00
Tues $776.00 $1230.00
Wed $770.00 $1210.00
Thurs $767.00 $1210.00
Fri $794.00 $1210.00
Our Patented Employee Survey - Gold's Direction Next Week?
Of course it’s not really patented but we do have some fun along the way. This is what the GoldDealer.com employees think – 5 believe gold will be higher next week – 3 think gold will be lower and 2 believes it will be unchanged.
Our Patented Customer Survey - Gold's Direction Next Week?
Like the employees our actual customers were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 transactions – unscientific yes but worth considering because these people actually took action: 41 people thought the price of gold would increase next week – 33 believe the price of gold will decrease next week and 26 think prices will remain the same.
This from Kira Brecht (Kitco) – Lessons From Babylon: Build Wealth One Day At A Time - The rules that govern wealth building are the same in today's fast-paced modern world driven by technology as in the times of prosperous Babylon, a famous ancient city, which was the capital of southern Mesopotamia six thousand years ago.
Building wealth is a process, and you need a plan. Sure a lucky few have a windfall —maybe a big life-changing inheritance, stellar profits in the stock market, a big profit from a home sale or yes, maybe even winning the lottery.
But, for most of us, wealth building is a slow and steady process, one day, one month, one year at a time. You remember the tortoise and the hare? Slow and steady wins the race.
The Richest Man In Babylon by George S. Clason, first published in 1926, holds many nuggets of wisdom that were true then and are still true today.
The same advice given to chariot builders six thousand years ago still applies to anyone seeking to build wealth in today's modern society. The principles of wealth building don't change. The book is well worth a read as you plan out your path to wealth.
Building wealth doesn't generally happen without a plan. It takes foresight, discipline and commitment to following through on the plan.
A few tried and true guidelines include:
· Pay yourself first
· Live below your means
· Limit debt to "good" debt (ie. an mortgage), avoid "bad" debt (ie. credit cards)
· Dollar-cost average your investments
· Diversify, don't put all your eggs in one basket
· Use time to your advantage —every month of savings adds up handsomely over years of time
"The First Law Of Gold: Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family."
- The Richest Man In Babylon.
Wealth building starts with saving. Saving and then investing. For those who choose to diversify their portfolios with non-correlated assets, such as physical precious metals, regular dollar-cost averaging could be a strategy to consider.
While dollar cost-averaging is often thought of in relation to investing sums into the stock market—the same principles apply to building up a physical gold portfolio. Dollar cost averaging is designed to reduce overall market risk (think price fluctuations) by employing systematic purchases of specific amounts at regular intervals. For example, while the men of Babylon were taught to save one coin out of every ten earned. The same type of principle could apply to dollar cost averaging into physical gold positions. Whether one aims to hold 5%, 10%, or less or more of their overall portfolio in precious metals, the time honored rules of wealth building apply. Save more, spend less and invest regularly.
The walk-in cash trade today was busy – mostly small to mid-size buyers with a nice mix between gold and silver bullion. The phones were just average but there has been a jump in the percentage of new visitors to our website (golddealer.com) – this may indicate new potential business.
The GoldDealer.com Unscientific Activity Scale is a “6” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 4) (Tuesday – 4) (Wednesday – 5) (Thursday – 4). The scale (1 through 10) is a reliable way to understand our volume numbers. The Activity Scale is weighted and is not necessarily real time – meaning we could be busy and see a low number – or be slow and see a high number. This is true because of the way our computer runs what we call the “book”. Our “activity” is better understood from a wider point of view. If the numbers are generally increasing – it would indicate things are busier – decreasing numbers over a longer period would indicate volume is moving lower.
Email confirmation using a PDF File when buying or selling is functional. It also includes the various forms of payment and includes bank wire instructions. And you can now see your actual invoice or purchase order on your computer screen.
When you buy or sell please check to see if we have your current email on file and that your computer will accept our email (no spam).
About shipping information – when buying or selling your rep will walk you through your current mailing information. Thanks for keeping us up to date if you have moved.
Our four flat screens downstairs with live independent pricing (BullionDesk.com) are a big hit with the cash trade. Live pricing moves all the buy/sell product prices on a real time basis. Yes - you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. When buying from us remember if you exceed $10,000 in cash (the real green kind) a Federal Form is necessary.
In addition to our freshly ground organic coffee offered visitors throughout the day we have added cold bottled water, cokes and Snapple. We have also added fresh fruit in a transparent attempt to disguise our regular junk food habits.
Like us on Facebook and follow us on Twitter @CNI_golddealer.
We will be closed Thursday and Friday (Nov 27th and 28th) for Thanksgiving.
Thanks for reading - your friends at GoldDealer.com. Enjoy your weekend and we appreciate your business.
Disclaimer – The content in this newsletter and on the GoldDealer.com website is provided for informational purposes only and our employees are not registered financial advisers. The precious metals and rare coin market is random and highly volatile so it may not be suitable for some individuals. We suggest before deciding on a course of action that you talk with an independent financial professional. While due care has been exercised in development and dissemination of our web site, the Almost Famous Gold Newsletter, or other promotional material, there is no guarantee of correctness so this corporation and its employees shall be held harmless in all cases. GoldDealer.com (California Numismatic Investments, Inc.) and its employees do not render legal, tax, or investment advice.