Sign In

    Gold Closes Up - Tepid and Not Firm

    Last updated 17 hours ago

    Commentary for Friday, Oct 24, 2014 (www.golddealer.com) – Gold closed higher up $2.70 at $1231.10. Gold was steady in Hong Kong and London overnight trading but after a failed attempt to move above the $1240.00 range yesterday this market remains defensive and needs more time to redevelop a trend.

    Still it remains steady on both sides of $1230.00 going into the weekend.

    The dollar and rates were up on the week and this creates problems for gold. Also the picture for oil remains negative – WTI Crude this month has moved from $95.00 to $82.00 and there is some talk it might break down – a move below $80.00 would also create further pressure on gold. 

    The two big factors to watch relative to the price of gold are first the results of next week’s Federal Open Market Committee (FOMC). Most believe the Fed will end the current quantitative program – and this will result in higher interest rates.

    The jury is still out here as there is reasonable disagreement on the outcome because the Federal Reserve claims it will keep rates low for the “foreseeable future”.

    The second important factor is how Mario Draghi will play the big slowdown in the European Union. Here too there is disagreement about what exactly is happening in Europe – is there a slowdown and deflation or has the Ebola scare just given everyone the jitters?

    If EU President Draghi figures out a reliable way to inflate it will be good for gold. But here too there is a push – pull because a weaker euro usually means a stronger dollar.

    Still Europe may produce a wave of safe-haven buying if anything goes off the tracts with its smaller countries. This weekend the results of European stress testing will be announced – a kind of check list for their financial institutions.

    The idea alone that they are testing should at least raise some reasonable questions about liquidity. Will anything of substance happen? Probably not- but if the EU has problems it could turn into a worldwide disaster – and the run to safety would be big for gold.

    So you can see there are plenty of cross currents and that is why gold will most likely remain trend less over the next week or two going into November – even skiddish as everyone tries to cover both sides of what appears to be a big divide.

    Finally keep in mind that support for gold looks big around $1200.00 and there is reason to believe this level will hold just supported from physical demand. Real buyers like world central banks and Asian demand from China and India.

    Silver closed up a quiet $0.02 at $17.13 – buyers and sellers are hiding.

    Platinum closed down $4.00 at $1251.00 and palladium was up $4.00 at $781.00.

    Precious Metal Closes & Dollar Strength – Oct. 20 through Oct. 24 – 2014

                   Gold             Silver                Platinum      Dollar Index     

    Mon    $1244.00         $17.30             $1268.00         $85.04

    Tues    $1251.00         $17.50            $1283.00         $85.40

    Wed    $1244.80         $17.18             $1271.00         $85.85      

    Thurs  $1228.50         $17.11             $1255.00         $85.95      

    Fri       $1231.20         $17.13             $1251.00         $85.71     

               Palladium       Rhodium    

    Mon    $761.00           $1230.00      

    Tues    $775.00           $1230.00      

    Wed    $775.00           $1230.00

    Thurs  $777.00           $1230.00

    Fri       $781.00           $1230.00

    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 – 4 believe gold will be higher next week – 4 think gold will be lower and 3 believe 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: 55 people thought the price of gold would increase next week – 36 believe the price of gold will decrease next week and 9 think prices will remain the same.

    This is interesting from Kitco’s Bodo Albrecht - Sapphire Vs. Gorilla Glass – A Win For Precious Metals - Alongside the introduction of Apple’s new iPhone 6, the bankruptcy filing of GT Advanced Technologies made headlines last week. GTAT was Apple’s designated supplier for sapphire glass screens which analysts widely expected to make its debut on the new products. It didn’t happen, and while we can only speculate on what went on commercially, here is a technical explanation.

    To begin with, what is sapphire glass? Sapphires are naturally occurring minerals reflecting light in a variety of bright colors, depending on the impurities they contain. Only very pure sapphires are completely transparent and glass-like. Various processes were developed to artificially produce pure sapphires and have been in existence for a very long time. Starting material is alumina oxide (Al2O3). Large amounts of heat and pressure are required to first turn it into a blob of sapphire called a “boule”, which is then cut into thin wafers.

    The art of all of the processes used lies not only in the cutting technique but also in the way the crystals themselves are grown in the process. Crucible materials vary but there is widespread agreement that iridium crucibles, despite the process taking the metal to its physical limits, will provide for the best temperature uniformity.

    Sapphire glass, which has been used in watches for a long time is already used in some other smartphones and in parts of the iPhone (the fingerprint ID buttons). It is much harder than conventional glass and more scratch resistant but not indestructible as some sources claim; depending on the type of impact it will still shatter. Alas, because of the complicated production method it is also a lot more expensive than its rival, Gorilla glass.

    Gorilla glass, developed by Corning Inc specifically for the first generation iPhone, has built a reputation of strength and scratch resistivity over many years. Now available in its third generation, it is used not only by Apple but also by many other producers of smartphones, tablets and the likes.

    To make Gorilla glass, Corning uses large equipment made of platinum to melt, stir and pour the glass. Other glass manufacturers around the globe do as well, making technical glass a major application for fabricated platinum. Forever increasing demands for more purity and the prevention of inclusions have pushed platinum technology forward with the products it creates.

    Whichever way the market develops, platinum and iridium will play a key role in making high quality technical glass, be it sapphire or Gorilla glass. So this battle of giants already has a winner: precious metals.

    The walk-in cash trade was so quiet the staff started talking about lunch about 9:30 AM. The phones were equally uninteresting – it seems like gold’s failure to show strength above $1240.00 has really taken all the buzz out of the short term physical market.

    The GoldDealer.com Unscientific Activity Scale is a “3” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 5) (Tuesday – 3) (Wednesday – 4) (Thursday – 3). 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 very busy and see a low number – or be very 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 – perhaps a week or two. 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.

    Thanks for reading - your friends at GoldDealer.com. Enjoy the 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.

    Gold Turns Lower against a Stronger Dollar and Continued Profit Taking

    Last updated 1 day 18 hours ago

    Commentary for Thursday, Oct 23, 2014 (www.golddealer.com) – Gold closed down $16.30 at $1228.50 taking all the fizz out of recent action around the $1240.00 level. The dollar was strong as the Dollar Index saw a trading range of 85.66 through 85.88.

    I think today’s loss also represents further profit taking first seen yesterday.

    Also some of the fear trade from a not so promising European Union – struggling with how to get on the quantitative easing train was questioned - at least for today.

    NEW YORK (MarketWatch) — The euro rebounded against the dollar Thursday after dropping sharply Wednesday on data that showed better-than-expected growth in the eurozone’s manufacturing and services sector.

    European manufacturing improved in October, after Markit Research Group said the October Purchasing Manager’s Index came in at 50.7, compared to 50.3 in September. Germany led the region with a 51.8 reading, up from 49.9 in September, more than compensating for tepid growth in France.

    “The German data was particularly encouraging because it suggests that the dip in September was temporary, caused by the geopolitical tensions in the region rather than a secular decline in demand,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management.

    There was some commentary that gold’s strong recent move from the $1180.00 range to around $1250.00 might be the beginning of a run to $1300.00 – but a look at gold’s 60 day price chart makes today’s close of $1228.50 look more like the first bounce off lows in a chart which looks like more consolidation.

    Chicago Mercantile Exchange reports for the last 5 trading days – so we are looking at the trading volume numbers for the December Gold contract: Thursday 10/16 (180,590) - Friday 10/17 (117,545) - Monday 10/20 (96,271) - Tuesday 10/21 (151,078) and Wednesday 10/22 (113,405). Trading volume days look rather average.

    Silver closed down $0.07 at $17.11 and the across the counter business has slowed dramatically in the past few days. The real silver bullion action has lost its buzz which is confusing. A week ago this market was hot – the world mints were talking about allocation and product was flying off the shelves.

    Platinum closed down $16.00 at $1255.00 and palladium was up $2.00 at $777.00. 

    According to Jeff Starck (Coin World) – “The release of the 2015 Panda silver and gold bullion coins and related Proof collector offerings might be notable for what the coins don’t contain.

    The 2015 Panda coins lack inscriptions confirming their metal content, weight and fineness. Since 1983, China’s Panda coins have included these inscriptions on the reverse, and since 2009 the wording has been located below the oft-changing panda design.

    According to a representative of the firm that sells the coins in the U.S. market, the inscriptions were removed from the designs, according to his sources. The 2015 program is being released during the Beijing International Coin Exposition Oct. 24 to 26.

    While other Chinese collector coins do not contain such markings, the Panda coin series at its core a bullion program and markings with weight, purity and alloy are commonly included on world bullion coins. The lack of inscriptions may make it easier for collectors and dealers to be fooled by counterfeit coins.”

    I can’t believe the China Mint would not use specific weight designations – it would damage their stellar reputation and create uncertainty with the public. The article goes on to say that this step might have been taken because the mint wants to eventually use gram weights to accommodate their own national market.

    My bet is that this is misinterpreted and the Chinese will not change the way they have identified weights in the past. But you never know these days so keep your eyes open.

    This from Reuters (Andreas Framke, Eva Taylor and Paul Carrel) - ECB looking at corporate bond buys, could act as soon as December – “The European Central Bank is considering buying corporate bonds on the secondary market and may decide on the matter as soon as December with a view to begin purchases early next year, several sources familiar with the situation told Reuters.

    European shares rallied on the news, led by banks and shares in peripheral countries. The euro fell more than half a cent against the dollar and credit indices tightened sharply.

    Policymakers are desperate to revive the euro zone economy, which is barely growing and dogged by low inflation of 0.3 percent, far below the ECB's target of just below 2 percent.

    The ECB has already carried out work on corporate bond buying, which would widen out the private-sector asset-buying program it began on Monday. It is hoping these measures will foster lending to businesses and thereby support the euro zone economy.

    "The pressure in this direction is high," said one person familiar with the work inside the ECB, speaking on condition of anonymity.

    An ECB spokesman, however, said of such purchases: "The Governing Council has taken no such decision."

    The ECB has already cut interest rates to record lows, offered banks cheap loans and begun buying covered bonds, which are backed by high-quality assets. It also plans to start buying asset-backed securities, or bundled loans, later this year.

    Stressing that the ECB alone cannot tackle the euro zone's woes, central bank president Mario Draghi has urged crisis-hit countries to get their economies into shape with reforms.

    He has also made a thinly veiled appeal for Germany to embark on a round of deficit-funded investment spending. But with Germany wedded to strict budget discipline and other countries taking time to implement structural reforms, markets are looking to the ECB to do more.

    DECEMBER MEETING - The ECB's policymaking Governing Council could discuss the possibility of making corporate bond purchases at its December meeting, two of the four sources Reuters spoke to said. All four said such plans were being discussed.

    The policymakers could decide at the December meeting to go ahead with the purchases, but such a step is not certain. Should the Council decide in December to proceed, the purchases on the secondary market could begin in the first quarter of 2015, one of the sources said.

    The ECB will also release updated economic forecasts from its staff at the December meeting.

    Draghi has heightened investors' expectations by saying the ECB's asset purchases should help expand its balance sheet back towards levels seen in early 2012, when it briefly topped 3 trillion euros. The balance sheet now stands at some 2 trillion.

    Buying corporate bonds would allow the ECB to add more stimulus, taking it closer to the target without having to buy sovereign bonds -- a problem for Bundesbank chief Jens Weidmann, who opposes such purchases on the grounds that they amount to central bank financing of governments.

    Draghi has also repeated that the ECB stands ready to use additional unconventional instruments, and "alter the size and / or the composition of our unconventional interventions" should it become necessary.

    "This makes a lot of sense in a lot of ways," RBS economist Richard Barwell said of the news the ECB is considering corporate bond purchases.

    "It fits with the notion that some people on the Council want to do more. It fits with the notion that others on the Council don't want to buy sovereign bonds. You're then just looking for Plan Bs -- and this is one," Barwell added.

    The ECB began buying covered bonds on Monday, part of the private-sector asset-purchase program that will also see it buy ABS later this year.

    However, there is concern at the ECB that these measures may have an insufficient impact to help support the economy.

    "In the view of many Governing Council members, the economic picture has recently taken a turn for the worse," one of the sources told Reuters.”

    President of the European Central Bank Draghi has talked about some sort of quantitative easing for some time but the about Reuters article is a real hint at what might be in store for a struggling European union. Talk of a recovering EU is confusing but bonds from smaller countries like Greece, Spain and Portugal are trading lower indicating that further bail-out funds might be necessary. It was not long ago that possible default rumors in smaller EU nations created some gold safe-haven buying but possible reforms in their debt structure and refinancing of debt seemed to have quelled financial fear.

    While the US has shown economic improvement it appears Europe is not only stuck but may be experiencing deflation. And with the end of US quantitative easing right around the corner there is fear that if the US wobbles – and recent Russian sanctions create more economic trouble the EU could prove more unstable.

    Worry over Europe – in the wider view creates uncertainty and mild fear because of a possible domino effect to the worldwide economy. This always creates some safe haven demand for gold. It won’t create a stampede unless the whole business goes south but it does keep the short players in check and provide a kind of cushion to gold prices. 

    It remains to be seen just what President Draghi will actually do as the EU does not have a system similar to our Federal Reserve. But one thing is clear – their own form of quantitative easing will involve buying bonds and creating more paper liquidity.

    This attempt at solving their economic problems is problematical because it will create more fear of default encouraging safe-haven gold buying but at the same time will push the euro lower relative to the dollar and a stronger dollar will dampen gold prices. So expect more volatility in the price of gold and more indecision relative to price direction.    

    The walk-in cash trade was very subdued all day and the phones were also quiet. It is funny how a down day in gold is such a cooler – the jewelry demand is still there and the central banks are still buying – but for the moment the public is more interested in the World Series.  

    The GoldDealer.com Unscientific Activity Scale is a “3” for Thursday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Friday – 5) (Monday – 5) (Tuesday – 3) (Wednesday – 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 very busy and see a low number – or be very 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 – perhaps a week or two. 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.

    Thanks for reading - your friends at GoldDealer.com. Enjoy your evening 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.

    Harry always treats us with the utmost respect

    Last updated 1 day 22 hours ago

    • on GoldDealer.com
    • It is essential to do business with people you trust who have your best interest in mind. Harry always treats us with the utmost respect and never fails to deliver with his expertise and experience. I highly recommend doing business here.

      More
      N/A

    Gold Moves Lower on a Stronger Dollar and Profit Taking

    Last updated 2 days 18 hours ago

    Commentary for Wednesday, Oct 22, 2014 (www.golddealer.com) – Gold closed down $6.20 at $1244.80 reacting to a stronger dollar and profit taking.

    Gold was steady in the overnight Hong Kong and London markets but dipped in domestic trading as a strong dollar – moving as high as 85.67 on Dollar Index created some drag on gold prices.

    There are other factors as well which caused gold to move lower – the Consumer Price Index data released this morning shows a 1.7% year on year increase – meaning inflation is still under control and more importantly there does not seem to be any deflation as we are seeing in Europe.

    Still there are anomalies in the CPI number which might cause concern – food was up 3% - a big number with consumers.

    The Federal Reserve “target” of 2% inflation is important – today’s CPI number of 1.7% is below that target so a continued low interest rate Federal policy seems intact.

    There are a lot of moving parts in the CPI number and a lot of speculation. CNBC this morning pointed out that the windfall which had been hoped for with lower oil might be muted as food prices rise. Still generally inflation looks like it is no problem and so pressures gold lower.   

    Gold’s recent move from around $1180.00 to above the $1240.00 level has long traders in a profit position. So we are also seeing a bit of profit taking in an otherwise positive short term technical market.

    Supporting gold is the flattening out of a generally negative oil market. This morning WTI Crude is trading at a higher $82.81 a barrel - so oil’s generally down market looks like it is getting traction which helps support gold prices.

    Still in the longer term gold must show strength above the important overhead resistance number of $1280.00.

    And the case for a continued stronger dollar remains - even though the Dollar Index has flattened out recently today it moved to the higher end of its 5 day trend. Previous Dollar Index close (85.40) today we saw a low of 85.23 and a high of 85.75. Hedge fund manager John Burbank made the case that all US companies which can create a global presence are doing so and this changes the trading paradigm - this expansion will continue to support the dollar.

    On the positive side the physical demand for gold is picking up as China (now 50% bigger than it was 5 years ago), India and Russia seem to have picked up their game.

    Finally, many now believe gold has put in a solid floor around $1200.00 so we might see a sideways market in the shorter term as the international threats like Ebola and ISIS seem to be moderating for the present.

    Look for further direction from the coming Federal Reserve Open Market Committee next week as traders wonder if Yellen will end quantitative easing as promised.

    Silver closed down $0.32 at $17.18. And physical buying or selling of silver bullion today was subdued.

    Platinum closed down $12.00 at $1271.00 and palladium was unchanged at $775.00.  

    Dealer Surety Bonds - perhaps a growing trend in the gold bullion business. This from our friends at ICTA (Industry Council for Tangle Assets) - Since the Minnesota bullion coin dealer law (Chapter 80G) became effective on July 1, 2014, ICTA has been receiving many inquiries from its members and non-members about how the law may or may not affect them.

    There is a lot of confusion about whether coin dealers need to comply with the law. The statute affects dealers residing in Minnesota, and any coin dealer outside of Minnesota, who buys or sells to Minnesota residents, regardless of where the transaction takes place.

    The law requires dealers to obtain a bullion-coin dealer license for themselves and their representatives. The law also requires dealers and their representatives to comply with its sales practices / prohibited conduct, surety bond, and screening requirements.

    I have included the above because there is a growing trend today more consumer protection within the gold bullion business. Within the last few years a number of large so-called bullion dealers have been closed either through bankruptcy or fraud prosecution and the states are now taking precautionary measures to protect the consumer. Minnesota was the first to pass a law requiring a Dealer Surety Bond.

    The gold trade has made a bigger deal out of this than is necessary claiming that the process is onerous and expensive. In fact it is not – it took GoldDealer.com about 2 months – it requires background checks for owners and employees – and the ability to acquire a surety bond.

    Surety bonds in the securities business are commonplace and may soon become a necessity for bullion dealers. They are simply an insurance policy which guarantees you get what you paid for – simple. The cost to the dealer depends on size and volume numbers but most honest bullion dealers will pay between $1000.00 and $2000.00 a year. Many fake gold dealers – more recently called telemarketers or “expert” IRA specialists will not qualify because they can’t get through the screening process.

    So why should this be important to you? It might be something to look at when you are deciding on a good bullion dealer. A dealer which holds a Minnesota Surety Bond is one which follows the law and all his employees pass background checks to the satisfaction of Minnesota. So actually it’s kind of a cool idea – although that may be a minority position in the coin business. A surety bond will not solve all the problems caused by coin market telemarketing fraud but it is a step in the right direction.  

    This from MineWeb (Lawrence Williams) - Chinese and Indian gold buyers back in market in a big way - The gold price has been falling but physical gold demand appears, counter-intuitively, to have been rising dramatically over the same period. What has been particularly strange about the gold market over the past two years is that the stronger the physical demand appearing for gold, the weaker the gold price has tended to get.

    In the past few months, the gold price has fallen back from around $1,340 down at one time to $1,190 and now hovering back seemingly trying to breach $1,250 on the upside again, yet by all accounts demand in the two biggest consuming nations has been soaring and they are, between them, taking in virtually everything the world’s gold mines can produce.

    The two countries are India and China. A mild relaxation of some of the import controls put on gold in the former saw gold imports rise to around 95 tonnes in September, while the weekly withdrawal statistics from the Shanghai Gold Exchange show that gold demand has latterly also picked up extremely well in China after a good start to the year, but then a marked downturn from March to August.

    Indeed the latest weekly figures from the SGE could be seen as particularly strong given that the markets were closed for half the period due to China’s Golden Week holiday. While the total for the two weeks at around 68 tonnes may not seem spectacular, given that these purchases were actually made in only five days (September 29th and 30th and October 8th, 9th and 10th) due to the long holiday market closure could suggest that Chinese demand is indeed soaring enormously.

    Of course another interpretation might be that the very high sales on the days markets were open were because jewellers and traders primarily were stocking up ahead of the holiday and restocking after it, but one suspects the reality is something of a combination between the two. Subsequent weekly withdrawal figures will show a better light on these figures, but in general withdrawals from the SGE since the end of August have been running at far stronger levels than in the previous six months.

    Overall looking at the more recent SGE withdrawal figures we are looking at Chinese total demand for the year reaching close on 2,000 tonnes and, if one subtracts China’s own gold production and scrap from the total this suggests gold imports near 1,300 tonnes this year – which is yet another nail in the coffin for the belief that Hong Kong net gold exports to the mainland are representative of total Chinese imports. They patently are not and have not been since around February this year as other points of import for gold have begun to dominate.

    The other principal global gold consumer is, as noted above, India. Gold imports here have been so great that they have had a decidedly adverse effect on the country’s balance of payments and the previous government too action to mitigate this through imposing some fairly drastic import restrictions including a 10% tax level on gold imports and a regulation that 20% of imported gold would have to be re-exported (the 80:20 rule). It was widely hoped among the very significant Indian gold fabrication sector that the new Modi government, which took office earlier this year, would reverse this decision, but so far has not done so, again in recognition of the country’s current account deficit. There has been a minor relaxation of the 80:20 rule, but even this seems to have led to a massive increase in the country’s gold imports in recent months with September figures particularly high at $3.75 billion- equivalent to around 95 tonnes. August imports were put at around 60 tonnes plus.

    Gold imports soar 450% in India - Of course these figures do not represent the full picture for Indian gold imports. The 10% tax regime on imported gold in particular has also led to substantial amounts of smuggled gold coming into the country. While recent reports have suggested that increased seizures have led to this becoming less attractive one suspects these are only the tip of the iceberg with thousands of Indian workers coming home daily from contract work in the Middle East, as well as more professional smugglers taking advantage of India’s long land borders and coastline.

    So gold hungry China and India continue to accumulate gold, between them at a rate which probably accounts for close to the full total of global mined supply. And there are another group of Asian nations with similar gold hoarding proclivities, not quite at the same scale, but cumulatively significant.

    One may ask that, if indeed they are collectively accumulating more than global new mined supply, and with scrap supplies falling with the gold price, where all this gold is coming from. The gold bugs will tell you it is gold leased from the world’s central banks which now can never be returned because it now resides in strong hands – yet remains on their books because it is leased rather than sold. Last year it may have come from gold ETF liquidations which amounted to perhaps more than 700 tonnes, but although there have been some sales out of the gold ETFs this year they have been on nothing like the scale of 2013. So the conundrum remains. Demand has to be exceeding supply, yet the price keeps falling.  Surely that has to end soon.

    And, of course, there is the other big unknown in the gold market demand. Is China surreptitiously building its gold reserves, but not reporting the increase until it feels it is politically expedient so to do. There is a lot of evidence out there in speeches by top Chinese officials and academics (and in a tightly controlled country like China these would seldom be made without some kind of government approval) that China is looking to build its gold reserves to around 8,500 tonnes, thus topping the US’s  8,133.5 tonne official reserve figure.  But no-one knows for sure.

    The walk-in cash trade was quiet in the morning but picked up considerably after lunch. The phones were just average to quiet. There was an amazing rush of last minute activity across the counter yesterday – the placed was packed but that buzz is missing in action today.  

    The GoldDealer.com Unscientific Activity Scale is a “4” for Wednesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Thursday – 4) (last Friday – 5) (Monday – 5) (Tuesday – 3). 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 very busy and see a low number – or be very 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 – perhaps a week or two. 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.

    Thanks for reading - your friends at GoldDealer.com. Enjoy your evening 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.

    Gold Climbs to 5 Week High on Interest Rate Speculation

    Last updated 3 days ago

    Commentary for Tuesday, Oct 21, 2014 (www.golddealer.com) – Gold closed up a respectable $7.00 at $1251.00 as traders began to speculate that the Federal Reserve would push back interest rate hikes in an effort to further encourage a rather choppy economic recovery in the US. And at the same time the European Central Bank looks like it is encouraging its own brand of quantitative easing.

    There were other factors which also supported gold – the Chinese Gross Domestic Product was higher by 7.3% which sounds huge but was the worst we have seen in 5 years but still better than economists had predicted. This convoluted story also lifted gold because the Chinese like to buy the physical product and a better GDP puts more money in their pockets.

    The momentum players are also happier about gold as its price today moved above the 50 Day Moving Average ($1248.00) and traders are now watching carefully the 100 Day Moving Average ($1274.00). The 100 Day Moving Average at this point is big because anything above $1280.00 means there could be a serious attempt at the important $1300.00 level.

    Some gold import numbers are also shiny – Russia imported 37 tons in September which is the 7th straight month of additions to their stockpile. China imports from Shanghai amounted to 68 tons for a two week period in October and Chinese gold demand is expected to be 2000 tons this year. India is also back in the game importing 95 tons in September.

    Silver closed up $0.20 today at $17.50. We see steady accumulation with the low to mid-range buyer but not much in the whale size as yet. Silver has generally followed oil lower on fears of a global slowdown but keep in mind that real silver demand for bullion has reasserted itself many times under $18.00 and production of US Silver Eagles will slow down as usual at the end of the year as the Mint gears up for the 2015 dated coins. The gold to silver ratio is now 71.48 – so it favors trading gold bullion for silver bullion.

    Platinum closed up $15.00 at $1283.00 and palladium was up $14.00 at $775.00. The difference between platinum and gold right now is $32.00 – this encourages trading gold bullion for platinum bullion which makes sense over the longer period.  

    This from Bloomberg (Nicholas Larkin and Debarati Roy) - Gold Climbs to Five-Week High on U.S. Rate Outlook - Gold futures rose to a five-week high as traders pushed back estimates for an increase in U.S. interest rates by the Federal Reserve. 

    Rate futures indicated the odds of a U.S. increase at about 47 percent by October 2015, down from 55 percent a week earlier. In September, Switzerland exporter 172.6 metric tons of gold, the most in seven months, customs data showed. That “ties in well with the pick-up in physical demand,” UBS AG said in a report. 

    Gold advanced in the past two weeks after U.S. policy makers cited slowing foreign economies as a risk to American prospects. St. Louis Fed President James Bullard said last week the Fed should consider delaying plans to end bond purchases. Officials are scheduled to meet on Oct. 28-29.

    “There is a growing consensus among investors that the Fed will continue with the low-interest rate policy,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Also, physical demand is expected to support prices.”

    Gold futures for December delivery rose 0.6 percent to $1,251.90 an ounce at 11:31 a.m. on the Comex in New York. Earlier, the price reached $1,255.60, the highest for a most-active contract since Sept. 10. Trading was 10 percent above the average for the past 100 days for this time, according to data compiled by Bloomberg.

    “A more dovish Fed view would be interpreted as gold friendly,” James Steel, an analyst at HSBC Securities (USA) Inc., said in a report. “The prospect for a weaker dollar near term may provide support for bullion.”

    This question from a reader - you might find interesting: Do bullion premiums tend to behave more like a "fixed cost," or do they usually vary in sync with the spot price?  

    For example, assume a bullion coin has a spot price of $10 and can be purchased for $1 over spot.  If the spot price triples to $30, is the premium more likely to remain close to $1, or will it also triple? 

    Does the same hold true for the reverse transaction when a dealer is buying bullion from a client?

    The answer to this may appear simple but can be tricky because premiums are controlled by the manufacturer but change frequently according to a dealer’s hedge position. Any given mint charges a percentage over spot – sometimes a few points but this percentage changes with the wind. Still as the value of gold moves higher the dollar value charged over spot will increase unless the mint decides to lower it premiums. 

    Now consider that if the public wants a particular bullion product and will not settle for a substitute – even though it’s the same ounce of gold – the higher demand will push premiums higher – not because the dealer is taking advantage but because he has to pay a larger premium to attract real physical material.

    And as if the above is a bit incomprehensible also consider the notion of a premium collapse because large dealer often have price wars to attract larger market share or they have too much inventory and want to raise their buyback capital ratios.

    So if markets are defensive – meaning more people are selling than buying it is possible premiums will move lower. And if markets are dear meaning the bulls are raging premiums might move higher simply because we are talking about the capital system.

    None of this is set in stone but there are a few rules which might save you a few bucks. First, premiums are never fixed – they vary considerably and are always subject to change. This is important because you might figure a higher premium is worth the money only to find that when you are selling the premium has moved lower. So rule number one - compare bullion products before making a purchase – buying the generic or cheaper brand sometimes makes sense. Second, consider premiums more an indicator of what the public prefers at that moment - and not some kind of financial insight designed to make you a better trader. Third, the premium on any given bullion coin is always less important than the dealer’s buy and sell spread if you are looking for value.

    Also from Bloomberg (Swansy Afonso and Pratik Parija) Gold Buying Rebounds in India on Diwali Jewelry Sales - Shweta Anand took half a day off work to get a jump on India’s jewelry shopping spree before the Hindu festival of Diwali, and she was looking for bargains.

    “The best time to buy is before the shops get crowded,” said Anand, 27, as she eyed trinkets on velvet shelves at a store in Mumbai’s Zaveri Bazaar, India’s biggest jewelry market. “I buy some gold jewelry every Diwali. Last year, I bought earrings. This time, I am getting a chain as prices are lower.” She spent 30,000 rupees ($490) on a necklace.

    Even after a two-week rally in bullion, domestic prices remain 7.4 percent lower than a year ago just as sales are set to climb for the festival and wedding season. India is the largest gold buyer after China. The All India Gems & Jewellery Trade Federation said fourth-quarter imports of the metal may jump 75 percent, which Barclays Plc said may support prices.

    “The appetite for gold among physical buyers in India seems to have increased,” said Howie Lee, an investment analyst in Singapore for Phillip Futures Pte. “India’s attachment to gold is unlikely to break. This tradition has lasted for centuries. It’s a symbol of wealth or a form of investment, and the precious metal is deeply rooted in worship and culture.”

    After import restrictions and a weak rupee led to a 34 percent drop in demand in the first half of 2014, purchases are set to improve in India, the world’s largest buyer as recently as 2012. Retail sales of everything from rings to pendants to necklaces may rise 30 percent to 40 percent during Dhanteras, the biggest gold-buying festival, said Rajesh Exports Ltd. (RJEX), a jewelry retailer and exporter. Dhanteras is celebrated today.

    Demand Recovery - Diwali, the festival of lights celebrated by the country’s more than 800 million Hindus on Oct. 23, is considered an auspicious time for buying gold. Researcher CPM Group estimates the holiday generates about a fifth of annual purchases in India, more than any other time of year in a country with a long history of hoarding the metal. About 20,000 metric tons of gold are stashed in homes and temples, and Indians often inherit bullion in the form of ornaments or family treasure.

    Jewelers in India, which represented 25 percent of global bullion purchases last year, are betting demand will be rekindled by four straight quarterly declines in domestic prices, the longest slump since 2004. The premium jewelers pay to suppliers over London prices has plunged to about $17 an ounce from $120 a year earlier, cutting costs for consumers.

    Buying Surge - “Prices have fallen at the right time,” said Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation, which represents more than 300,000 retailers and bullion dealers. Domestic demand will rise 15 percent to 20 percent over the three months through December, with imports reaching 175 tons to 200 tons, compared with 114 tons a year earlier, Bamalwa said on Oct. 15.

    Gold traded in London touched $1,183.24 an ounce on Oct. 6, the lowest this year. Prices have tumbled 28 percent in the past two years as the Federal Reserve signaled an end to stimulus measures intended to revive the U.S. economy, while inflation remained in check. Even as low prices fueled a surge in physical demand in China, the appeal of the metal as a hedge has waned for investors. Holdings in exchange-traded products backed by gold have dropped 12 percent in the past year, helping to erase about $13 billion of value.

    Bullion for immediate delivery traded at $1,250.86 today, while futures on the Multi Commodity Exchange of India Ltd. were at 27,551 rupees per 10 grams ($1,397 an ounce).

    More Imports - In India, signs of a rebound in festival demand emerged in September. Bullion imports were valued at $3.75 billion last month, 450 percent more than a year earlier, the Commerce Ministry estimates. Shipments jumped as jewelers replenished reserves to meet demand, said Bamalwa, the federation director.

    Indians purchase gold at festivals and for marriages as part of the bridal trousseau and as gifts in the form of jewelry. Demand will be 850 to 950 tons this year, compared with 974.8 tons in 2013, the World Gold Council estimates. An average of about 5 million weddings every year fuels demand for gold, regardless of prices, according to Prithviraj Kothari, managing director of Riddhisiddhi Bullions Ltd. in Mumbai. He estimates average purchases for a wedding at about 200 grams. The increase in demand from festivals and the wedding season “alongside the potential for a short-covering rally could see gold extend its gains,” Barclays said Oct. 13. “We believe the bounce is likely to be short-lived and remain cautious given the headwinds the macro-environment presents and would look for opportunities to sell into the rally,” it said.

    Insatiable Appetite - The public’s insatiable appetite for gold raised concern for the government because almost all of the metal is imported, widening the current-account deficit and weakening the rupee. India last year raised import taxes three times to 10 percent and introduced a rule obliging shippers to supply 20 percent of their cargo to jewelers for re-export.

    The import curbs sent gold demand for jewelry and investment down 34 percent to 394.4 tons in the first six months, World Gold Council data show.

    After the curbs throttled imports and cut the deficit to about $32.4 billion in 2013-2014, compared with a record $87.8 billion a year earlier, the government in May eased controls to allow more trading houses to bring in gold. The government may consider re-imposing some curbs after Diwali as imports surged in the past couple of months, Finance Minister Arun Jaitley told ET NOW television yesterday, the Press Trust of India reported.

    Asian Buyers - Cheaper bullion may spur buyers in Asia, according to UBS AG. Prices at or below $1,200 will attract physical buyers and be seen as favorable by investors, UBS analysts Edel Tully and Joni Teves said in a report on Sept. 30. A rush to buy will not materialize unless prices fall closer to $1,100, they said.

    Demand in Asia has declined this year after jumping in 2013, when global prices plunged 28 percent, the most in three decades. Consumption fell 16 percent in the second quarter to 963.8 tons, the World Gold Council estimates. While China was the top buyer in 2013, demand in the three months through the end of June fell 52 percent to 192.5 tons, less than the 204.1 tons purchased in India, council data said.

    The metal will extend losses into 2015 as the dollar rallies, Morgan Stanley said on Oct. 8, listing the commodity among its least-preferred metals. Average prices will decline each quarter, reaching $1,165 in the three months through September, the bank said.

    Jewelers are also hoping that steps taken by Prime Minister Narendra Modi, who was elected in May, will help revive growth in Asia’s third-largest economy and provide a boost to sales.

    Harvesting Gold - “There’s a positive feeling in the economy after the Modi government came to power,” said Rajesh Mehta, chairman of Bengaluru-based Rajesh Exports. “For a reasonably long time, demand was subdued, and that pent-up demand will come in now at these price levels.”

    A good crop will also help gold demand in India, where 833 million of the 1.2 billion population depend on agriculture for their livelihood. Rural India represents 60 percent of the nation’s gold consumption. After a weak start to the monsoon season, which limited planting, food-grain output will be 120.3 million tons compared with 129.2 million tons a year earlier, the Agriculture Ministry estimates. Cotton production will jump to a record 40 million bales of 170 kilograms each.

    For Lynette D’Souza, a 30-year-old dentist in the western Indian state of Goa, the lower gold price means she can buy more with the 100,000 rupees she’s budgeted on a gift for her brother, whose wedding is scheduled next month.

    “I was initially planning to gift my brother a honeymoon package to Southeast Asia, but I realized that people don’t value other gifts as much as they value gold,” D’Souza said in an interview on Oct. 14. “Years from now, they will still have the gold. It is also an investment.”

    The walk-in cash trade was just average today – not busy but steady. The phones were on the quiet side until about 11:00 AM and then all the incoming lines lit up like a Christmas tree! It’s funny about how the public reacts in the gold business. The market has been steadily upward since we bottomed in the $1180.00 range – then we stalled around $1240.00 – I was suspicious because there are plenty of reasons to believe gold was oversold and the rebound would be strong - so why the stall at $1240.00? Then interest rate speculation pushed the market to 5 week highs – but the market was only up $7.00 ($1251.00) and technically gold must show strength at $1280.00 and higher to gain any respect - but all of a sudden the public decides its time to test the waters and the phone lines were jammed.   

    The GoldDealer.com Unscientific Activity Scale is a “3” for Tuesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Wednesday – 3) (last Thursday – 4) (last Friday – 5) (Monday – 5). 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 very busy and see a low number – or be very 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 – perhaps a week or two. 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.

    Thanks for reading - your friends at GoldDealer.com. Enjoy your evening 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.

Follow Me on Pinterest
Do you like Gold and Silver Bullion Dealers - CNI?


  • Hours:

  • Closed Sunday
  • 9:00 AM to 5:00 PM Monday
  • 9:00 AM to 5:00 PM Tuesday
  • 9:00 AM to 5:00 PM Wednesday
  • 9:00 AM to 5:00 PM Thursday
  • 9:00 AM to 5:00 PM Friday
  • Closed Saturday


Links

  • Recent Posts
    • Loading posts... Spinner
  • View All
  • Recent Comments
    • Loading comments... Spinner
  • Popular Tags
    • Loading tags... Spinner