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    Gold Closes Soft - Markets However Remain Edgy

    Last updated 2 days 21 hours ago

    Commentary for Friday, Oct 17, 2014 (www.golddealer.com) – Gold closed down $2.30 today at $1238.10 so this makes for the second day of smaller losses in a market which was a combination of fear driven and oversold coming together.

    And the dollar gained strength today creating some drag on the price of gold. The greenback was stronger because data from the US Commerce Department showed a 6.3% increase in new-home construction starts.

    But gold does look like it is working hard around the $1240.00 mark. Still it did finish up $17.00 on the week and it did well last week moving higher by $29.00.

    So is gold running out of gas on its recent bounce higher? It is still too soon to tell but a stall around $1240.00 is not good. Gold must show some strength above $1240.00 and continue to push higher into the $1280.00 range before the bulls feel more comfortable. Without this confirmation the recent strength we have seen is just a bounce at the lower end of a technically impossible market sell-off which began in early July when gold was moving on both sides of $1320.00.

    Whether the gold market will reinvent itself really centers on the next move from our Federal Reserve and they are meeting next week. They are however in a bit of a bind at this point because they have committed themselves to ending quantitative easing this month.

    Just yesterday the stock market opened up to the downside with lots of red and within hours of the opening James Bullard was on Bloomberg.

    This from CNBC/Rueters - Bullard: Fed may want to keep up bond buying for now

    “The head of the St. Louis Federal Reserve Bank said on Thursday the U.S. central bank may want to keep up its bond buying stimulus for now given a drop in inflation expectations.

    "Inflation expectations are dropping in the U.S., and that is something that a central bank cannot abide," James Bullard told Bloomberg television. "We have to make sure that inflation and inflation expectations remain near our target."

    "For that reason, I think a reasonable response by the Fed in this situation would be to ... pause on the taper (of bond purchases) at this juncture and wait until we see how the data shakes out into December," he said.”

    There is no way this Governor just happened to take a position contrary to his boss right in the middle of a very large stock market rout. He was sent in to quell the markets and the result was exactly what the Federal Reserve wanted – stocks rebounded.

    So what does this have to do with gold? If the Federal Reserve ends quantitative easing and the result helps makes Europe unstable world financial markets will follow our Thursday morning lead. There will be red ink all over the place – and everyone will run to the dollar and eventually gold for safe havens.

    And if they don’t end quantitative easing on time the metals markets will have just what it needs to push into higher territory - the theory that all governments of the world are stuck producing more fiat money to support a system which is now addicted to near zero interest rates.

    No one knows how this mess will play out but it’s easy to see that gold will remain volatile until the Federal Reserve can figure out a way to back away from this tiger.

    Silver closed down $0.10 at $17.28 and remains quiet into the weekend – like gold the big order guys are waiting into this weekend. Silver closed up $0.03 this week after moving higher by $0.47 last week. Still I expected more physical buying at these depressed levels – the World Mints are striking new coins to beat the band and consumers are still buying big but the regular across the counter bullion business seems to have cooled off. The two big buyers of circulated silver dollars are full so premiums on real silver dollars (1878-1935) are moving lower.

    Platinum closed up $10.00 at $1262.00 and palladium also closed up $10.00 at $756.00. Palladium might prove to be the dark horse bet. It peeked recently at $900.00 and is now moving lower over a fear of a slowdown in car sales. The car industry is driven by low interest rates and people always need cars so I might be looking for a counter trend with palladium.

    Precious Metal Closes & Dollar Strength – Oct. 13 through Oct. 17 – 2014

                Gold            Silver        Platinum       Palladium   Rhodium   Dollar Index

    Mon    $1229.30     $17.29       $1260.00        $785.00        $1230.00   85.53

    Tues    $1233.60     $17.35       $1272.00        $794.00       $1230.00   85.83

    Wed    $1244.10     $17.41        $1261.00        $764.00       $1230.00   81.84

    Thurs  $1240.00    $17.38         $1252.00        $746.00       $1230.00   84.87

    Fri       $1238.10     $17.28        $1262.00        $756.00       $1230.00   85.11

    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 – 6 think gold will be lower and 2 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: 52 people thought the price of gold would increase next week – 28 believe the price of gold will decrease next week and 20 think prices will remain the same.

    This commentary from one of my favorite traders – Peter Hug (Kitco): Nowhere to Hide? Not True! “I guess I should qualify the following, because if you are an American this may not be as valid, but it may become more urgent as time moves forward. Today the U.S. equity markets are getting slaughtered, as U.S. economic growth is beginning to wane. The 10-year bond travelled under 2%, as investors were terrified and looking for a safe haven. Europe is on the verge of another economic Armageddon and geo-political risks continue to accelerate in the Middle East.  Where to hide?  Well gold popped some $20, but as an American investor so what, what’s the big deal. I agree:  from the beginning of the year gold is up a paltry 3% in US$ terms.  But what if you’re a Canadian or a European? Canada has seen its stock market evaporate to the tune of 12%, in the last few weeks, as commodity complexes disintegrate, against the back drop of global deflation. Gold in Canadian terms started 2014 at +/- $1,280 and is now at +/- $ $1,405.  For a German, gold in Euro terms has increased 10.3% since the beginning of the year. The fundamental drop in value for the C$/US$ is 6% since the beginning of the year and for the Euro the drop has been 6.5%.  So for the Canucks and the Europeans, gold has provided what it is intended to provide, protection. Our American friends may be next.”

    The above quote from Hug is important and the theme is a favorite of mine lately – gold bullion may not look too bad if your measure of value is not the US dollar.

    Owning gold bullion provides that little insurance edge needed when considering unbacked paper money which is created because of government edict. I know – you have heard that plenty of times and I’m not saying that gold bullion is the answer to all problems in this world.

    But it does provide solace – who knows what will happen in a world which seems crazier than it has ever been - given the progress we have made since the end of the cold war.

    I had been in the gold bullion business 17 years when Reagan challenged the Russians to “tear down that wall” and it looked like peace was breaking out all over the world. President Reagan made that speech at the Brandenburg Gate, West Berlin, Germany in 1987.

    You might believe that collective world thinking has made giant strides since that time but in fact the world is more dangerous.

    This threat however is not from an arms race but from a currency race.  

    Just holding gold bullion in your hand – under your own control and outside the normal financial channels means something to real hard asset people.

    The fact that holding real gold in your own hand also adds a certain sensibility to your life and that part is thrown in for free.

    The walk-in cash trade picked up nicely today but the phones were just average for a Friday. Interestingly the talk about rhodium bullion seems to be picking up but we have seen no big pop in sales volume.    

    The GoldDealer.com Unscientific Activity Scale is a “5” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 4) (Tuesday – 4) (Wednesday – 3) (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 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 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 Push Softens Around $1240.00 - Technical or Tired?

    Last updated 3 days ago

    Commentary for Thursday, Oct 16, 2014 (www.golddealer.com) – Gold closed down $3.60 at $1240.50 today. So the recent push to higher ground may be in need of a rest – or the push may be running out of gas.

    I’m not saying gold is finished with this recent run – there are too many things going on like perhaps the Federal Reserve is having second thoughts about its bond buying program now that Europe is having more problems.

    But this most recent close does not look like much in the way of profit taking – it may be just book squaring getting ready for the weekend. But in any case the real buzz in the physical market has left for an early weekend.

    The stock market was a big flop on the morning bell but recovered – even when we were looking at a great deal of red ink across the DOW gold showed little reaction – down a few bucks. I would have expected more considering the mess in Europe but today’s action closed on a whisper and the stock market seemed to get legs and closed with some respect.

    The really big question now is whether the Federal Reserve will use the “global slowdown” as a reason to delay interest rate hikes.

    Chuck Butler thinks the Fed will finish quantitative easing on schedule and then be forced to bring it back creating an economic implosion – interesting thought which would push gold prices higher.

    But these markets remain conflicted – the US economy still looks fairly good with higher industrial production announced today and platinum traded lower. By the way platinum is now $12.00 over the price of gold so consider trading gold bullion for platinum bullion.

    Silver closed down $0.03 today at $7.46 – this market too looks like it is losing physical momentum. The $1000 face 90% silver bag is looking cheap premium wise.

    Platinum closed down $9.00 at $1252.00 and palladium closed down $18.00 at $746.00.

    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 10/09 (165,358) - Friday 10/10 (121,360) - Monday 10/13 (119,916) - Tuesday 10/14 (113,551) and Wednesday 10/15 (258,099). Look at the volume number for yesterday – almost double the average.

    There is no way gold is going anywhere facing a strong dollar. And if you have been following the Dollar Index the yearly high is 85.75 and the yearly low is 78.91. As of this writing its trading at 84.87 with a negative daily bias but it’s easy to see we are at the higher end of its yearly trading range which creates trouble for gold. And there are some who believe the dollar is on a tear and will go higher. 

    But here are a few comments from someone who understands the currency markets. This from Chuck Butler (EverBank World Markets) – “The bond guys (& girls) have their fingers on the pulse of the U.S. economy. They always have, and didn't like having the conn in bonds taken away from them by the Fed, during their 5 years of Quantitative Easing / QE. For instance, for more years than I care to mention, it was a given that an inverted yield curve for Treasuries, indicated that a recession in the U.S. was on the way. And when Bond traders rally bongs, which mean bond prices go up, and yields go down, it simply means they don't see good things for the economy. So, what are the bond traders telling us now? Well, unless there's outside interference from the Fed, which I don't believe there is, except for their remaining tid-bits of QE that will be wiped clean at the end of this month, according to the Fed, what we have here in the U.S. is an economy that's going nowhere, despite what the Fed members, the economists, and flag wavers for the Gov't, tell us, the bond traders are not buying it. Of course I never did buy it. The bond guys could have just checked with me and I could have saved them the losses they incurred when Treasury yields rose from 1.80% to 3%. Because look at them now? They're back below 2%.

    And that all plays nicely in the sandbox with my call last year that the Fed will not be away from the QE table very long, before they come back to administer more QE to this going nowhere economy. And when they do that, I feel that the markets will come unglued. They will feel as though the Fed mislead them, and will take away credibility the Fed had built up. That won't be a good thing for the dollar in my eye.

    But for now, we deal with the Clingons. You know those clinging on to the idea that this is going to be a multi-year rally for the dollar. That's OK, we've had to deal with these Clingons in 2005, 2008, 2011, and again now. And they pack a powerful punch when they have the conn, like they do now. And will continue to have until the rest of the markets catch up with what the bond guys are telling us. And what Chuck has told you for some time now.”

    If Chuck is right the longer term implications for gold are big. The currency markets are always volatile but longer term economic thinking has predicted a lower dollar and lower euro because of loose economic policy. The thought being that while inflation hurts the saver (if there are any left in today’s world) but helps the borrower by paying back debt with inflated dollars. This scenario is traditional gold rhetoric but outside of immediate safe-haven buying is the only real solution which will support longer term gold prices.

    This from Ambrose Evans-Pritchard (The Telegraph) – BIS warns of “violent” reversal of global markets – “The global financial markets are dangerously stretched and may unwind with shock force as liquidity dries up, the Bank of International Settlements has warned.

    Guy Debelle, head of the BIS’s market committee, said investors have become far too complacent, wrongly believing that central banks can protect them, many staking bets that are bound to “blow up” as the first sign of stress.

    In a speech in Sydney, Mr Debelle said: “The sell-off, particularly in fixed income, could be relatively violent when it comes. There are a number of investors buying assets on the presumption of a level of liquidity which is not there. This is not evident when positions are being put on, but will become readily apparent when investors attempt to exit their positions.

    “The exits tend to get jammed unexpectedly and rapidly.”

    Mr Debelle, who is also chief of financial markets at Australia’s Reserve Bank, said any sell-off could be amplified because nominal interest rates are already zero across most of the industrial world. “That is a point we haven’t started from before. There are undoubtedly positions out there which are dependent on (close to) zero funding costs. When funding costs are no longer close to zero, these positions will blow up,” he said.

    The BIS warned earlier this summer that the world economy is in many respects more vulnerable to a financial crisis than it was in 2007. Debt ratios are now far higher, and emerging markets have also been drawn into the fire over the last five years. The world as whole has never been more leveraged.

    Debt ratios in the developed economies have risen by 20 percentage points to 275pc of GDP since the Lehman Brothers crash.

    The new twist is that emerging markets have also been on a debt spree, partly as a spill-over from quantitative easing in the West. This has caused a flood of dollar liquidity into these countries that they have struggled to control. It has pushed up their debt ratios by 20 percentage points to 175pc, and much of the borrowing has been at an average real rate of 1pc that is unlikely to last.

    China was able to act as a stabilizing force during the global downturn of 2009, letting rip with an immense burst of credit. These buffers are now largely exhausted. All of the BRICS (Brazil, Russia, India, China, South Africa) countries have hit structural limits, and face difficulties of one form or another.

    Mr Debelle said the markets may at any time start to question whether the global authorities have matters under control, or whether their pledge to hold down rates through forward guidance can be believed. “I find it somewhat surprising that the market is willing to accept the central banks at their word, and not think so much for themselves,” he said

    The biggest worry is a precipitous sell-off in the bond markets once the US Federal Reserve and the other major central banks begin to tighten in earnest. Mr Debelle cited the US bond crash in 1994, but warned that it could be even more violent this time with a “fair chance that volatility will feed on itself”.

    The picture is further complicated by a fall in the depth and inventory of market makers, the side-effect of new regulations that have raised costs and caused firms to exit this specialist business. “Market liquidity is structurally lower now than it was in the past. The question today is whether there is too little capacity. When volatility returns, it may well rise quite rapidly,” he said.

    Mr Debelle may be especially sensitive to the risks, given his ring-side seat in Australia where authorities are grappling with a housing bubble and a commodity shock from China. Yet his warning is global: investors have taken on too much risk, and the illusion of liquidity can vanish almost overnight. “That strikes me as a dangerous combination and unlikely to be resolved smoothly,” he said.”

    The above is typical of commentary coming out today regarding Europe. Too much debt, no real changes in the old guard, dependence on quantitative easing – all of which begs the question: have we learned anything from the big financial meltdown of 2008?

    But if there is a blow up in Europe it does not mean gold will necessarily benefit immediately. Any real financial blowup will eventually attract the physical gold buyer but the real winner if someone pushes the panic button is usually the US dollar. Yep, you can’t lose on the short term if you choose the good old American buck.

    That’s why it’s so popular and as a consequence interest rates remain low.

    And gold could also be hurt in the big blow up scenario because it is the best form of instant cash – that being needed to cover all the leverage and derivative junk floating around and passing as “good investments” these days.

    But after the fires die down gold will benefit – especially when the world wakes up to the financial inconsistencies and bubbles created when governments simply print money which is not connected in some way to their gross domestic product.

    So a word to the wise – establishing the gold “fire wall” is way better and less costly before the dam cracks – afterwards is much more expensive.

    The walk-in cash trade was surprisingly quiet today and so were the phones.   

    The GoldDealer.com Unscientific Activity Scale is a “4” for Thursday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Friday – 4) (Monday – 4) (Tuesday – 4) (Wednesday – 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.

    Famous Canadian Pennies Sell at Auction

    Last updated 4 days ago

    Much like American pennies, Canadian cents were considered by most Canadians to be impractical pocket weights. In fact, the Canadian penny was withdrawn from circulation in 2012. While modern small-denomination coins may be worth less than their weight in metal, there are a handful of pennies out there valued at a quarter of a million dollars or more. Continue reading to learn about Canada’s most valuable pennies, one of which sold for $253,000 at a 2013 Heritage Auction.

    A Three-Penny Show
    Called “dot cents” because of the dot stamped into their design to distinguish them from pennies that were minted under the reign of George V without a dot, only three of these famous 1936 Canadian pennies produced under the brief reign of Edward VIII are known to exist. While some experts suspect many more were minted and simply melted down after George VI took the throne, there is no evidence of this.

    Why So Valuable?
    Like most valuable coins, the rarity of the dot cents certainly boosts their value. The mystique behind what happened and why only three of these copper pennies exist certainly does not hurt. The mystique surrounding the pennies extends beyond their initial stamping to the hands that have possessed them over the years.

    Stolen and Returned
    Avid American coin collector John Jay Pittman held possession of all three dot cents for quite some time. In 1964, however, one of the pennies was stolen alongside other rare coins by thieves who broke into his home. It was returned years later, anonymously, alongside other rare coins that were stolen from the collector.

    California Numismatic Investments may not be in possession of any of the three Canadian “dot cents” discussed in this article, but we do have some of the rarest and most valuable coins and precious metals in existence. To speak with a coin dealer about our inventory or the processes of buying and selling rare coins with us, call us toll-free at (888) 612-2679.

    Gold Rebounds on Soft US Economic Data and Safe Have Buying

    Last updated 4 days ago

    Commentary for Wednesday, Oct 15, 2014 (www.golddealer.com) – Gold closed up $10.50 today at $1244.10 reacting to softer US economic data – Retail Sales down 0.3% and September Producer Price Index down 0.1%. A weaker dollar also helped the gold bulls today.

    Continue to watch the dollar relative to the price of gold. The possibility of a delayed interest rate hike has muted the Dollar Index and helped support gold. The Dollar Index has seen a 52 week low of 78.91 and a 52 week high of 86.75. On Monday the Dollar Index was 85.53 – on Tuesday 85.83 – on Wednesday 81.84 so considerable weakness short-term has resumed and supported higher gold prices.

    Stock volatility also supported safe haven buying in gold today. The DOW was down 460 points today before recovering – this may be a red flag. We have touched on this interplay before but there is now more press talking about a stock market which might be in trouble. This remains a backstory really because I think the press still likes the stock market but if it were to show serious decline gold would benefit.

    Silver closed up $0.06 at $17.41 in another round of lackluster trading – the physical market remains quiet.

    Platinum closed down $11.00 at $1261 and palladium closed down $30.00 at $764.00. Rhodium closed unchanged at $1230.00. This weakness in the PGM’s is indicative of worries over a stumbling European economy. I think the idea of a failing Europe is overplayed but it does provide a great talking point relative to safe haven buying. It’s more likely the European Union will figure out a way to create more money out of thin air – and inflate their way to the poor house.

    What is interesting however is the price of gold ($1244.10) to the price of platinum ($1261.00). There is now only a $17.00 difference between the two – so if you are considering gold bullion a diversification into platinum bullion makes sense. From 2000 through 2010 platinum averaged a 95% premium over gold or in other words the price of platinum was almost twice that of gold.

    This worldwide slowdown is not going to last forever – platinum is significantly rarer than gold and is used in countless industrial and medical applications.

    This from Allen Sykora (Kitco) - Soft U.S. Data Sends Gold To 5-Week High As Stocks, Dollar, Treasury Yields Fall – “Three major U.S. economic reports Wednesday morning were all softer than forecast, sending gold to a nearly five-week high as equities, the U.S. dollar and Treasury yields sagged, traders said.

    As 9:46 a.m. EDT, gold for December delivery was $11.30 higher at $1,245.60 an ounce on the Comex division of the New York Mercantile Exchange.

    The government said U.S. retail sales fell 0.3% last month, which implies some caution on the part of consumers. Also, the producer price index was down 0.1%, the first decline in more than a year. Additionally, the headline number in the New York Federal Reserve’s Empire State manufacturing survey tumbled to a reading of 6.2 in October from 27.5 in September.

    December gold was at $1,229.30 an ounce one minute ahead of the 8:30 a.m. EDT release of the three reports. Seventy-one minutes later, the market hit a high for the day of $1,250.30 that was its most muscular level since Sept. 11.

    “Gold is being driven by lower interest rates kept weak by economic figures such as weak sales,” said George Gero, precious metals strategist with RBC Capital Markets Global Futures, adding that he sees potential for $1,300 gold by year-end. “In general, lower interest rates are friendly to gold.”

    The yield on 10-year U.S. Treasury notes, which moves inversely to the price, has fallen to a low of 1.868%. By contrast, it had been as high as 2.642% on Sept. 18, the day after the last meeting of the U.S. Federal Open Market Committee.

    A New York trader said gold has trended higher since an “exhaustion sell-off” back on Oct. 6, when the December contract hit its 2014 low of $1,183.30. This meant it held a double-bottom of around $1,180 on futures continuation chart, dating back to June 2013.

    The early-Wednesday bounce is the result of more asset reallocation, he continued, citing not only a rise in bond prices – which pushes down yields – but lower stocks and a weaker U.S. dollar as well.

    The euro has been as high as $1.28866, its strongest level against the U.S. dollar since Sept. 23. The Dow Jones Industrial Average was roughly 300 points lower shortly after the open on Wall Street, although it has since pared its loss to around 200 points.

    “They’re just knee-jerk reactions,” a trader said, describing the move as investors suddenly “moving from one side of the boat to the other.”

    While time will tell whether Wednesday’s moves continue, for now some of the economic data are “scaring people,” he continued, also pointing to softer numbers lately in Europe and China.”

    The price of gold held steady in overnight trading in the $1234.00 range but began to fall in the Sydney and Hong Kong market eventually touching $1225.00 before flattening out. This is what Reuters had to say but note the comments on the German government lowering growth forecasts and India’s jump in September gold imports. This is why gold’s strong performance in the domestic market is worth noting. Read last night’s commentary and you come away with a neutral bias – but look at today’s domestic pop to higher gold prices over weak US data and it’s easy to see that the market remains highly divided

    SINGAPORE, Oct 15 (Reuters) – “Gold eased for a second session on Wednesday as the dollar rebounded modestly from sharp losses but the safe-haven metal still held close to four-week highs on lingering worries over the global economy.

    * Spot gold slipped 0.3 percent to $1,229.10 an ounce by 0037 GMT. The metal hit a four-week peak of $1,237.90 on Tuesday, before paring gains to close 0.4 percent lower.

     * Gold has been well-bid since last week on increasing concerns over the health of the global economy. Global equities tumbled, while the economic uncertainty and its potential impact on U.S. monetary policy sent the dollar lower, boosting gold's appeal as a hedge.

     * On Tuesday, however, the dollar recovered slightly as the euro and sterling nursed losses.

     * Economic data from Europe continued to be weak, a factor that could keep gold prices supported.

     * The German government sharply lowered its growth forecasts for this year and next, euro zone industrial production tumbled in August, and a closely watched German economic sentiment index registered its first negative reading since November 2012, at the height of the euro zone crisis.

    * More Chinese and U.S. economic data later in the day could provide cues for gold prices.

    * Meanwhile, litigation alleging that Deutsche Bank AG, Bank of Nova Scotia and HSBC Plc illegally fixed the price of silver has been centralized in Manhattan federal court.

     * India's September gold imports jumped sharply to $3.75 billion ahead of the wedding and festival season, data from the trade ministry showed.”

    I have highlighted two of the Reuters fundamental points because these two factors play big in the shorter term price picture relative to gold.

    But the shorts have covered and worries out of Europe will bring more safe-haven buying.

    The return of the Indian gold wedding season and the admission by Indian gold jewelers that prices are cheap is promising.

    But it only took another round of poor US economic data to focus paper traders. Now granted gold has been on a short term run to the upside since early October – bouncing from $1192.00 (October 3) into its current range and closing today at $1244.10.  

    This significant move was seen as a combination of short-covering and bargain hunting but traders had not turned bullish long term. Most thought this was something of a dead-cat bounce but some belived the gold market was oversold.

    So what has changed? I think the honest anwer is not much…traders still remain cautious and even though the paper market is looking more technically positive I don’t see much in the way of large bullion buyers returning across our counter.

    If you look at the 1 year gold price chart there is significant overhead resistance seen at the $1300.00 so let’s not count our chickens before they hatch – let’s hope gold remains strong and continues to confound the skeptics.

    This is our usual Wednesday look at the precious metal Exchange Traded Funds – a handy way of judging sentiment.  

    Gold Exchange Traded Funds: Total as of 10-08-14 was 53,459,778. That number this week (10-15-14) was 53,303,728 ounces so over the last week we dropped 156,050 ounces of gold.

    It might also be interesting to note that in 2013 the record high for all gold ETF’s was 85,112,855 ounces. In 2014 the record high was 56,456,599 and a new low was set today - 53,198,491 ounces.

    All Silver Exchange Traded Funds: Total as of 10-08-14 was 640,249,005. That number this week (10-15-14) was 634,737,852 ounces so over the last week we dropped 5,511,153 ounces of silver.

    All Platinum Exchange Traded Funds: Total as of 10-08-14 was 2,710,091 ounces. That number this week (10-15-14) was 2,723,381 ounces so over the last week we gained 13,290 ounces of platinum.

    All Palladium Exchange Traded Funds: Total as of 10-08-14 was 2,980,608 ounces. That number this week (10-15-14) was 2,954,221 ounces so over the last week we dropped 26,387 ounces of palladium.

    This excerpt from Ambrose Evans-Pritchard (The Telegraph) Dam Breaks in Europe as deflation fears wash over ECB rhetoric – “Bank of America said the ECB may have to take far more radical steps, pledging to violate its own 2pc inflation limit deliberately in order to break out of the vicious circle. “A commitment to keep nominal rates low for a long period does not necessarily work, and alone does not guarantee a recovery. The situation in the euro area might require more forceful action, a nominal anchor that implies the central bank committing to overshoot its inflation target,” it said.

    This is almost impossible to imagine, given the political character of the eurozone. Any such move would breach EU treaty law.

    It remains far from clear what the ECB intends to do. On Thursday, Mr Draghi vowed “new measures” to head off deflation if necessary, but traders are looking past the rhetoric for hard facts. The ECB’s balance sheet contracted by €10bn last week, falling back to levels of early July. Mr Draghi has yet to flesh out his vague plan to boost it by €1 trillion.

    The US Federal Reserve, the Bank of Japan and the Bank of England all set clear timetables, spelling out exactly how many bonds they would buy, and the scale has been much larger in proportion to GDP. The ECB has merely given pledges, and these have since been qualified by the Bank of France, and have been openly attacked by the Bundesbank.

    Germany’s five economic institutes - or Wise Men - said the ECB’s asset purchases will add “hardly any” extra stimulus to the real economy and may be unworkable in any case. They said there are not enough private securities that can plausibly be bought, and noted that a previous scheme to buy €40bn of covered bonds had run into the ground.

    Analysts are watching German politics just as closely as ECB language. The rise of Germany’s AfD anti-euro party raises the political bar even further for full-fledged QE, and eurosceptics have announced their intention to file cases at the German constitutional court to block asset purchases once they begin.

    The court has already ruled that the ECB’s backstop measures for Italian and Spanish debt (OMT) “manifestly violate” the EU Treaties and are probably “Ultra Vires”, which prohibits the Bundesbank from taking part. Pending cases on QE would raise questions over whether the Bundesbank might have to step aside on asset purchases.

    The current circumstances are very different from July 2012, when Mr Draghi had the full political backing of the German finance ministry for his OMT rescue plans. This time he must battle critics across the whole political spectrum in Germany.

    Giulio Mazzolini and Ashoka Mody, from the Bruegel think tank in Brussels, said the eurozone seems to be tipping into a “debt-deflation cycle” as rising debt and deflation feed off each other, yet the authorities remain paralyzed and still refuse to face up the gravity of the threat. “Even now, ECB officials regard deflation to be unlikely,” they said.”

    The above is the crux of gold market nervousness at the present. The US has inflated to the moon but has contained the money within the banking system – so little civilian circulation – no inflation for now. But QE is coming to an end and interest rates will rise.

    But where does that leave Europe? If deflation is the name of the game over there – perhaps something like the Japanese experiment – how is the US going to proceed? Well of course, they cannot without sending the European community further down the drain. That’s why even the suggestion that interest rates will not rise accordingly in the US sends gold higher.

    The walk-in cash trade was just about average today – busy at times and then slower – the phones were average to slower so I still think the public is not that impressed with recent gains.  

    The GoldDealer.com Unscientific Activity Scale is a “3” for Wednesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Thursday – 6) (last Friday – 4) (Monday – 4) (Tuesday – 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.

    Gold Remains Flat as Technicals Improve

    Last updated 5 days ago

    Commentary for Tuesday, Oct 14, 2014 (www.golddealer.com) – Gold closed up $4.30 at $1233.60 after trading as high as $1238.00 in the overnight London market on poor economic data out of Germany.

    So gold’s continued modest rise is weighed down by dollar strength and lower oil, but continues to be pushed by what looks like some resumed safe-haven buying coupled with a classic oversold bounce to higher ground.

    The global slow down talk of late has also posed a problem to traders. The technical picture for gold has been poor for the last 60 days – everyone and their brother were looking at the short trade.

    But like all trends related to gold - cross currents are disruptive. The higher dollar is capped – ISIS becomes very scary – the EU suddenly promises something which sounds like quantitative easing to me – the Russians and Chinese begin to talk new currencies and China/India demand wakes up just as the world reconsiders gold’s safe haven status.

    The Federal Reserve is looking for a reason to delay an interest rate hike because of the problems in Europe and the notion that the economic picture in the US – while improving still looks sluggish. This continued near zero interest rate environment makes the bulls smile but is no substitute for strong demand.  

    Bloomberg – “Treasuries climbed, with two-year note yields dropping the most in more than a year, as signs of economic weakness in Germany fueled speculation that slowing global growth will delay Federal Reserve interest-rate increases.

    Thirty-year bond yields dropped below 3 percent for the first time since May 2013 as reports showed U.K. inflation dropped to a five-year low in September and German investor confidence eroded. A gauge of inflation expectations measured by the difference between yields on 10-year notes and similar-maturity inflation-index debt traded close to the lowest in more than a year. Volatility reached the highest level since January.”

    Silver closed up a modest $0.06 at $17.35 and the physical excitement of silver below $18.00 has pretty much played itself out. Still this market carries a certain tension at these levels for two reasons – (1) there really is a shortage of real silver bullion and (2) there has been a 65% pullback in silver prices since the peak in 2011.

    Platinum closed up $12.00 at $1272.00 and palladium closed up $9.00 at $794.00.

    Continue to watch the dollar relative to the price of gold. The possibility of a delayed interest rate hike has muted the Dollar Index and helped support gold. The Dollar Index has seen a 52 week low of 78.91 and a 52 week high of 86.75. As of this writing on Tuesday we are looking at 85.83. The dollar is not getting considerably weaker in the bigger picture but the possibility of continued near zero interest rates seems to have capped its rise on the short term. Still we are 30 basis points higher than yesterday’s reading (85.53) so the drag on gold continues. 

    This from Chuck Butler (EverBank World Markets) – “The IMF warned countries at the International Money Fund's semiannual meeting that easy money policies adopted by central banks to stimulate growth are bringing the world closer to another financial crisis, saying that, "A major lesson of the last crisis is that accommodative monetary policy contributed to financial excesses.” Then we had an article in The NY Times that was written by Paul Krugman, where he expresses his fear that the world will crumble under the weight of austerity measures taken by consumers and countries.  So, how far apart are those thoughts?  And longtime readers know where I stand on all of this, so I don't need to pick this stuff all apart, and say why I did so, I've been doing that already for years now! But I will take one shot here before I go on to other things this morning. Who said that taking austerity measures would be easy? There was all that pleasure in the years leading up to the financial meltdown, now there is pain to be paid, to clean out the excesses and form a new base to move forward.” 

    This from FXEmpire (Barry Norman) – Oil Prices Continue to Slide as Price War Begins – “Oil prices continued to fall on Monday morning surprising most traders who expected a rebound after last week’s steady declines. Crude oil is trading at 84.65 down by $1.18 while Brent oil took a larger fall to trade at 89.36 giving up $1.22 as traders continue to turn their backs on energy products.  Energy stocks have taken a beating so far in October as commodity prices continue to deteriorate. A wave of bad news has hit the commodities sector. A weakening global economy, a surplus in oil supplies and a strengthening U.S. dollar have combined to send oil prices lower in recent weeks.

    Last week, the slide continued when Brent crude dropped below $90 per barrel for the first time in more than two years. Poor economic data from Germany raised fears that a renewed European recession could be on the horizon. The S&P 500 lost 2 percent on Oct. 9, and the markets have experienced some of the worst volatility so far this year. The International Monetary Fund (IMF) also revised downwards its projection for global economic growth in 2014 and 2015, warning that “global growth is still mediocre.”

    China’s oil demand remains weaker than it has been in years. To a certain extent, China’s oil imports have been artificially elevated as it has diverted oil into its strategic stockpile. Oil imports could soften as stockpiles fill up. China even posted a decline in oil imports for the month of July. The current decline in oil prices is not strange. Supply has been rising steadily since the 2008 crisis. According to EIA, total production of crude oil and liquid fuels rose by 10 percent in the last five years, from 83.3 million barrels per day (bpd) in early 2009 to 91 million bpd in mid-2014.  Additionally, in recent years, demand has been losing strength.  The US, Europe and Japan have reduced their consumption of oil since 2008 by around 10 percent or four million bpd, due to improvements in energy efficiency and low GDP growth. Demand from emerging economies keeps rising, but growth is weaker than in previous years.”

    Lower prices in oil is another serious drag on the price of gold – and lower oil portends lower inflation in my mind. The above is another one of those sideline factors that don’t make sense in the longer run but on the short term should be second in line relative to why gold struggles. Of course the dollar strength remains in the first position but this continued downward pressure on the price of oil should be troubling for the gold bullion community - especially as gold struggles for traction at the lower end of its current trading range.

    Neils Christensen from Kitco does a nice job summarizing what the Normura report expects on the upcoming Swiss gold referendum - Nomura Currency Analysts Think Swiss Gold Vote Unlikely To Pass – “Although more attention is being focused on Switzerland’s gold referendum on Nov. 30, currency analysts at Nomura said a “yes” vote could be difficult to achieve, according to the country’s voting statistics.

    According to a research report published Tuesday by Nomura, referendums in Switzerland are fairly popular; however, very few are actually able to pass. Since 2000, the country has voted on 66 different initiatives, about 4.7 referendums per year, and only 15% have passed.

    In the Nov. 30 referendum, Swiss citizens will be voting on three initiatives: whether or not the Swiss National Bank should increase its gold reserves to 20%, that the central bank should stop selling its precious metals and that all its gold should be held within the country.

    The analysts said that their base case is for the “no” side to win, but they still looked at the implications in the off-chance that the “yes” vote won.

    The analysts noted that a yes vote would force the SNB to purchase between $67 and $83 billion worth of gold and trip its current gold holdings at 1044.9 metric tons.

    The analysts added that the immediate aftermath of a “yes” vote be “business as usually,” as the central bank would have two years to repatriate its gold reserves – currently 20% of its reserves are held at the Bank of England and 10% of its reserves are held at the Bank of Canada; the SNB would also have five years to boost its gold holdings to 20% of its total reserves.

    However, in the long-term a yes vote would lead to the central bank increasing its balance sheet and depending on three scenarios, could lead to an appreciation of the Swiss franc.

    In the mostly likely scenario, analysts said that the central bank will probably just buy more gold as this would have the least impact on the country’s currency. They added that the SNB would have to, on average, buy about 9.62% of the world’s gold production each year for the next five years.

    The second scenario would be for the central bank to reduce its foreign exchange reserves and purchase a smaller amount of gold; however, this would lead to a stronger franc, which in turn could hurt the country’s economic growth.

    The third scenario Nomura sees is for the SNB to reduce its foreign exchange reserves by 69% and not actually buy any gold; however, this is unlikely because it would lead to an extremely strong currency. “What may seem like a simple decision to the Swiss electorate has in fact complicated consequences for policy makers at the SNB in respect to its holdings of gold and foreign exchange reserves,” they said.

    Earlier in the week, Swiss Finance Minister Eveline Widmer-Schlumpf continued to urge voters to reject the referendum as it would impede the central bank’s monetary policy.

    It is still too early to determine the sentiment within the country. Exit polls are expected to be released within the next few weeks, leading up to the vote.”

    I talked about this Swiss initiative a few weeks ago and agree that the possibility of passage is slim. But the interesting part of the commentary comes when you think about repatriation of gold held in other countries.

    Other countries including Germany have a similar problem in that all the gold owned is not within its borders. So why would a country choose to store gold reserves out of the country? It’s probably a safety measure left over from the big World Wars – and when everything settled down the respective country thought such a strategy added stability.

    But as currencies around the world moved toward the fiat side some legitimate commentators began to wonder if there was enough gold to go around - some even claimed the reserves were hypothecated in some sort of secret deal.

    This sounds too contrived to me but I do wonder why when the country decides to move its gold home the time involved is a matter of years. So something in this accounting scheme is not kosher.

    Still when countries begin to think about buying gold and moving their reserves home it leads one to consider this a big defense move.

    I’m not saying central banks of the world are worried about the mountain of fiat currency they have created. But if they were, this type of international gold bullion movement is exactly what I would expect. And they would proceed exactly as they are doing – claiming in the process that this is no big deal.

    The walk-cash trade was on the quiet side today and so were the phones. This lack of public follow through in the physical markets even though the technical picture for gold is getting better and the physical demand from India is off the back burner reminds me how cautious gold bullion investors have become. There has been a solid bounce from $1180.00 lows and some are even saying we have seen a conclusive bottom but I have my doubts. We need to see further follow through in gold – something in plus $40.00 range ($1280.00) before the across the counter market wakes up and decides to test the waters.

    The GoldDealer.com Unscientific Activity Scale is a “4” for Tuesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Wednesday – 6) (last Thursday – 6) (last Frdiay – 4) (Monday – 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.

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