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Gold Moves Lower on Profit Taking and a Stronger Dollar

Commentary for Monday, March 30, 2015 ( www.golddealer.com) – Gold closed on the Comex today down $15.00 at $1184.80 - stocks got new traction as new home sales improve.

The PBOC (People's Bank of China) said that there may be room for more easing. China and India have been big buyers of gold for years. Their recent interest is a primary reason for current price support. The Saudi air strikes on Yemen are another reason for safe haven buying – Yemen is one more lost cause in the Middle East so look for continued trouble especially now that the Arab States appear to be talking about collective action.

There were however larger factors pulling at the price of gold today. First, we are seeing mild profit taking – after all gold has moved on the near term from $1150.00 (mid-March) to over $1200.00 – placing the bulls in technical control on the short-term (underline that short-term for now) - so paper traders booked profits and moved to the sidelines. Especially with Janet Yellen’s comments this past Friday regarding interest rates. Second, the dollar is pressing higher – the Dollar Index today moved from a low of 97.42 to a higher of 97.70 and is now trading slightly above 98.00. No doubt this strength is also the result of Yellen’s latest assessment of our improving economy.

This from Alex Rosenberg (CNBC) - This controversial theory has got Janet Yellen worried - In a speech on Friday, Federal Reserve chair Janet Yellen stayed her dovish course, maintaining that an increase in the federal funds rate "may well be warranted later this year." She also emphasized the Fed's data dependence, as well as her general tone of "cautious optimism" in the economy.

Yet it was in her discussion of what she termed "special risks and other considerations" where things got interesting. The first of her three special concerns around hiking rates run along the following lines:

"Some recent studies have raised the prospect that the economies of the United States and other countries will grow more slowly in the future as a result of both demographic factors and a slower pace of productivity gains from technological advances," the Fed chief stated.

"At an extreme, such developments could even amount to a type of 'secular stagnation,' in which monetary policy would need to keep real interest rates persistently quite low relative to historical norms to promote full employment and price stability, absent a highly expansive fiscal policy," she added. To take a step back, "secular stagnation" refers to the rather controversial theory that an economy may become stuck in a long-term period of slow growth and low interest rates, due to certain external factors.

Originally developed in the late 1930s by Alvin Hansen (who earns a footnote in the official transcript of Yellen's speech), it was reanimated by former White House economic adviser Larry Summers, who in 2013 asked whether the U.S. may be mired in secular stagnation.

Interestingly, Hansen's theory was that a lack of technological innovations could be to blame for the stagnation; Summers, however, was more focused on an exogenous shock.

In April 2014, Brown University economists Gauti Eggertsson and Neil Mehrotra published a comprehensive model of secular stagnation, showing how income inequality and a drop in population growth could lead the economy's ideal interest rate to fall.

Essentially, Eggertsson's point is that a surplus of individuals looking to save their money, combined with a surfeit of individuals looking to borrow money, can lead the market-clearing interest rate to fall to unusually low levels.

If the actual interest rate is too high (say, because it is at historically normal levels) then money will not flow from the would-be providers of income to the potential users of income. That would cause an economy to become mired in slow growth for longer than the economic cycle would predict—consequently making the stagnation secular rather than merely cyclical.

That would appear to have implications for Fed policy. For the central bank, the prescription is a familiar one: Keep rates lower for longer, as Yellen noted in her comments on Friday.

While the concept may sound obscure, the prospect is a scary one fraught with pitfalls. The most prominent modern example of a country suffering from secular stagnation is Japan, where a "lost decade" quickly morphed into 20 years of fallow growth.

For her part, Yellen was careful to frame secular stagnation as a risk rather than her base case. Indeed, the theory still remains far outside the mainstream.

Even uber-dove Narayana Kocherlakota, the non-voting Minneapeapolis Fed president (whose economic work was actually cited in the Eggertsson paper) told reporters in January that prolonged stagnation is a risk that "we should be thinking about as policymakers, but it is in no way my modal outlook."

Still, the critical point Yellen is making is that the mere fact that America risks falling into the economic quicksand "has important monetary policy implications for the near-term." On the margins, however, it may be enough to stay the Fed's hand when it comes to raising rates.

It should be noted that like most economic concepts, secular stagnation is politically polarizing.

Last year, some members of Congress proposed legislation that the Fed should endeavor to follow the "Taylor rule," which mandates the Fed base monetary policy on specific economic measures. Yet the proposed legislation assumes (implicitly, given the inputs to John Taylor's equation) that the equilibrium real interest rate is 2; Yellen said Friday that she believes it is lower.

If we are in a world marked by secular stagnation, the neutral rate is even lower than Yellen already thinks it is. In such a world, if the Fed begins to act as if the equilibrium interest rate is higher than it actually is, it could result in "appreciable economic costs." That may create or elongate a secularly stagnant environment, she said.

In other words, the economy is a delicate and temperamental beast. That creature—in the view of Yellen and other Fed officials—is best handled by the professionals.

The concept that the Chinese will use gold to back the Yuan and challenge the dollar has been floating around for years. I think the idea is a pipe dream but it makes for good copy when writers are looking for something to say about gold. Why would the Chinese want a currency to complete with the dollar when they already have so many dollars? Consider the following Reuters information – it will no doubt help the conspiracy theorists.

This from Reuters - Chinese Yuan to Be Added to IMF's Currency Basket? - Chinese Premier Li Keqiang has asked the head of the International Monetary Fund to include China's yuan currency in its special drawing rights (SDR) basket, state news agency Xinhua said.

Li added that "China hoped to, through the SDR, play an active role in the international cooperation to maintain financial stability and promote the further opening of China's capital market and financial area", the report said.

"China will push forward financial reform for the real economy and prevention of risk. China will develop private, small and medium banks to provide better support for small businesses," Li was cited as saying.

China's yuan at some point would be incorporated in the SDR currency basket, Lagarde said on Friday, currently made up of dollars, yen, pounds and euros.

The yuan’s inclusion could be seen as diminishing the dollar's standing internationally.

Silver closed down $0.39 at $16.66. Also lower because of expected profit taking in the paper market.

Platinum was down $26.00 at $1117.00 and palladium was down $11.00 at $729.00. The price of platinum is now $67.00 under the price of gold.

The walk-in cash trade was quiet today and so were the phones. It so happens that the end of March is also our fiscal year end - so here are some interesting numbers. Platinum Platypus sales up 22%, Credit Suisse 1 oz gold bars up 25%, Johnson Matthey 100 oz silver bars up 71% and the big winner - 1 oz P.A.M.P. gold bars up 116%.

The GoldDealer.com Unscientific Activity Scale is a “ 3” for Monday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Tuesday – 4) (last Wednesday – 8) (last Thursday - 5) (last Friday – 6). The scale (1 through 10) is a reliable way to understand our volume numbers. The Activity Scale is weighted and is not necessarily real time – meaning we could be busy and see a low number – or be slow and see a high number. This is true because of the way our computer runs what we call the “book”.

Our “activity” is better understood from a wider point of view. If the numbers are generally increasing – it would indicate things are busier – decreasing numbers over a longer period would indicate volume is moving lower.

When buying or selling you will receive an email confirmation. This includes a PDF File to confirm your invoice or purchase order and includes forms of payment and bank wire instructions. When doing business please check to see if your current email has been entered into the new system and check to see if your computer will accept our email (no spam).

We always appreciate you keeping us up to date when moving or changing your email.

We believe our four flat screens downstairs with live independent pricing (BullionDesk.com) are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.

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. We will even wire funds into your account that same day for a small service fee ($25.00) if you are in a hurry.

In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s).

Like us on Facebook and follow us on Twitter @CNI_golddealer. Sal is now in charge of our Facebook page and he is a self-proclaimed expert on gold conspiracy theory. He would be happy to respond to even the most ridiculous conspiracy assertion on our Facebook page so why not join the fun?

Thanks for reading – we appreciate your business and enjoy your evening!

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 Stalls after Mild Gains on Light Profit Taking

Commentary for Friday, March 27, 2015 ( www.golddealer.com) – Gold closed down $5.30 today on the Comex at $1199.80. So we are up $5.10 this week and $32.00 last week – positive but not earthshaking - the dollar was steady today around 97.50. Still this latest run might be more promising than it appears in the way of base-building in a technically damaged market.

We are seeing some mild profit taking in gold as the week comes to an end. But then the gains we have seen since mid-March ($1150.00) have also been smallish. This latest move by gold to higher ground ($1150.00 to $1200.00) has been prompted by some weakness in the dollar and the promise that the Federal Reserve will not raise interest rates anytime soon. And supported by increased Asian physical demand for gold – but both metrics are still looked at with a suspicious eye by today’s physical buyer. They are glad we are not moving lower but they remain very cautious. After all the interest rate boogie man may be lurking and physical demand while reasonably steady can come and go just as quickly.

Still the information released from the World Gold Council this week is encouraging. India could smuggle 200 tonnes of gold this year – legal imports for March approaching 150 tonnes – yearly imports looking like 945 tonnes (the highest in 4 years). That is substantial against a generally negative news backdrop and the possibility of rising interest rates.

Today’s move to the downside going into the weekend was simply profit taking and is healthy. But consider that with all the hubbub yesterday over air strikes in the Middle East today’s market seems too quiet. From a technical standpoint gold should be happy on the short term – the bulls now have some advantage. But a closer look at the 30 day price chart will show that we face considerable overhead resistance in the $1200.00/$1215.00 range. So while trading news is much more positive these days we may still be stuck in an existing channel between $1160.00 and $1220.00. Even a break to the upside in April is subject to a great deal of heavy lifting for gold because there is plenty of overhead resistance between $1220.00 and $1280.00.

So that’s all the bad news – if the gold market climbs this wall of worry we could be off to the races and keep in mind all the time that Europe is printing and printing and printing.

Silver closed down $0.07 at $17.05. Business here is steady and there are a couple of new products which always get extra publicity by the producing mints. They include the 2015 silver Libertad from Mexico, the 2015 Red Tailed Hawk from Canada and the 2015 Tunnel Webbed Spider from Australia.

Platinum closed down $10.00 at $1143.00 and palladium fell out of bed – down $32.00 at $740.00. Still platinum bullion products remain thin. Our current bid for the American Platinum Eagle 1 oz is $90.00 over spot and we have failed to buy even one coin. The Platypus 1 oz is in stock at spot plus $95.00 delivered.

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 – 9 believe gold will be higher next week – 2 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 customers were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 transactions – unscientific but worth considering because these people took action: 46 people thought the price of gold would increase next week – 37 believe the price of gold will decrease next week and 17 think prices will remain the same.

Precious Metal Closes & Dollar Strength – March 23 – 27

This from FX Empire - “Gold eased on Friday morning as traders booked profits after a seven-day rally and as the dollar rebounded on strong US data, but the metal looked set to post its second straight weekly gain on expectations US interest rates will stay low for longer. Tensions in the Middle East after Saudi Arabia and its allies launched air strikes in Yemen provided some support to gold, seen as a safe-haven asset. Gold tends to be an investor favorite when geopolitical tensions rise and risk-appetite dips. However, gold’s failure to hold on to 3-1/2-week highs reached on Thursday made traders cautious over the price outlook. “Although the metal breached the 100 day moving average – near US$1,208 during the session, it failed to close above the indicator, which may signal that this latest run is nearing an end,” said MKS Group trader James Gardiner.”

This post from DailyPfennig.com is worth remembering. "Yellen's zero interest rate policy constitutes massive theft from savers. Applying a normalized interest rate of about 2% to the entire savings pool in the U.S. banking system compared to the actual rate of zero, reveals a $400 Billion per year wealth transfer from savers to the banks from the zero rates. This has continued for more than 5 years, so the cumulative subsidy to the banking system at the expense of everyday Americans is now over $2 Trillion. This hurts investment, penalizes savers, and forces retirees into inappropriate risk investments such as the stock market. Yellen supports this bank subsidy and theft from the savers." - James Rickards

This from ValueWalk ( Mark Melin) - HSBC: Negative Rates May Be Good For Gold - As central bank stimulus appears not to be impacting real wage growth, HSBC notes the odd market for gold. While gold has a reputation as an inflation hedge, the impeccable image during inflationary periods is thrown shade by HSBC Holdings who observes in a recent research note that in certain inflationary periods gold was not a perfect hedge then contemplates an environment of negative interest rates.

HSBC notes that interest rates can theoretically rise to unlimited levels, but can only fall to zero, or to marginally negative levels. It is this odd netherworld of negative rates where implications for gold become interesting.

HSBC: The longer negative interest rates persist, the more damage done.

HSBC economist James Pomeroy, challenging the economic theory that dictates negative rates cannot exist, notes there is a security and storage cost to holding cash. Pomeroy, musing about Sweden’s negative interest rates in a research note, observes central bank quantitative easing has been used around the world but has had a limited effect on inflation. This means “the instrument has been blunted somewhat, whereas the unknown impact of negative rates carry a much clearer message that the central bank is willing to do whatever it takes to push inflation back to the 2% target.”

Negative interest rates can be an ominous precursor. The longer negative rates persist, and the more negative they go, the more significant the risk of a fundamental shift in the operation of the financial system, HSBC analyst Steven King and Pomeroy observed in a research piece titled “The new surrealism.”

Negative interest rates are like a mind-bending painting from Salvador Dali, the research piece observed, that “can spread confusion, not eliminate it,” the researchers noted, quoting Dali himself on the impact his paintings might have on the viewer of the art. The confusion in the current economic environment is that inflation “could extend far beyond declines in oil and other commodity prices,” and might be structural in nature, citing low wage growth and weak credit growth, indicators of the “real economy” that QE stimulus appears to have missed. Developing countries may have escaped deflation because of plunging currencies, deflationary fears could become entrenched, HSBC’s King cautions.

What does it mean for gold? There are certain points at which bad can become good for gold investors. HSBC suggests that if “a non-cash financial system offer negative nominal interest rates for any length of time, a point may be reached where a cash system begins to encroach on the non-cash system. This could be good for gold demand.”

The HSBC team has a “cautiously optimistic view on gold,” forecasting a trading range of $1,305 to $1,120 to remain intact, supported by a potential end in the rise of the U.S. dollar.

Another look at a portion of the recently published Gold Investor Volume 8 (World Gold Council) - The US dollar may continue to strengthen, but this trend will not last forever. A rising dollar – the current consensus view – is likely for the near future on the back of a number of factors: continued US economic outperformance; the prospect of tighter US monetary policy; economic weakness in Europe and China and some commodity-sensitive countries; and continued loose monetary policy in Japan, Europe and elsewhere. These themes have already driven the dollar up 20.3% between January 2014 and 20 March 2015 – based on the Federal Reserve (Fed) trade-weighted dollar index. Historically, such moves have always been associated with large falls in the gold price, yet the gold price has fallen only by 1.2% over the same period.

Although dollar strength is likely to continue, we see the pace of appreciation at a slower rate than that of the past few months. The dollar has already strengthened the most since the 1970s. Over the past 12 months, the dollar has appreciated the most of any 12-month rolling period since 1973.4 Further, the correlation between a 12-month period when the dollar moved up by more than 7.5% (or one standard deviation) and the subsequent 12-month period is -0.1, suggesting that after a period of strong appreciation the dollar tends to revert back to the mean.

Only during the early 1980s did the dollar appreciate strongly for an extended period of time. And this was a period in history with dynamics very different from todays. A flatter yield curve suggests the pace of economic growth is unsustainable. US short-term rates have been moving up while the long end of the curve has fallen steadily. The current yield curve is flatter than it has been during previous years of strong dollar rallies. This reflects less conviction by the market in both longer-term growth and the possibility of higher inflation down the road – thus a recipe for tame rate rises and a restrained currency – echoed both by authorities and market commentators. The anemic growth in Europe and China, among other regions, is partly a cause of nascent dollar strength and is likely to weigh on US growth prospects in the future.

The Fed will move cautiously, and elevated debt remains a thorny issue. The Fed has been clear about the ‘data dependence’ of its policy. Such a policy by its nature introduces a time lag. A reactive policy is more likely to keep real rates low – which in turn should stem the dollar’s rise.

In addition, the Fed has voiced concerns that external weakness and dollar strength could slow the US economy. Though not confined to the US, high levels of public debt are set to restrain interest rates to prevent hindering the capacity of borrowers to repay as the global economy rights itself. The restraint on interest rates should also slow the appreciation of the dollar.

Further dollar strength may bring adjustments but not upheaval. An ongoing strong dollar environment does not necessarily result in further gold weakness ahead.

There are other factors at play that we expect to support gold in the presence of a stronger dollar. Our analysis shows that, as is frequently the case with gold, factors are complex, and misconceptions are widespread. While a stronger US dollar may continue to put pressure on gold, we consider that there are many factors that would limit its influence.

The walk-in cash trade was average today and so were the phones. But I took the time to look at volume numbers this month – even though it feels like we are running in second gear it turns out that March will be one of the strongest months we have seen in the past 12 months! So there could be some steam building up in the kettle.

The GoldDealer.com Unscientific Activity Scale is a “ 6” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday - 5) (Tuesday – 4) (Wednesday – 8) (Thursday - 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 busy and see a low number – or be slow and see a high number. This is true because of the way our computer runs what we call the “book”.

Our “activity” is better understood from a wider point of view. If the numbers are generally increasing – it would indicate things are busier – decreasing numbers over a longer period would indicate volume is moving lower.

When buying or selling you will receive an email confirmation. This includes a PDF File to confirm your invoice or purchase order and includes forms of payment and bank wire instructions. When doing business please check to see if your current email has been entered into the new system and check to see if your computer will accept our email (no spam).

We always appreciate you keeping us up to date when moving or changing your email.

We believe our four flat screens downstairs with live independent pricing (BullionDesk.com) are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.

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. We will even wire funds into your account that same day for a small service fee ($25.00) if you are in a hurry.

In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s).

Like us on Facebook and follow us on Twitter @CNI_golddealer. Sal is now in charge of our Facebook page and he is a self-proclaimed expert on gold conspiracy theory. He would be happy to respond to even the most ridiculous conspiracy assertion on our Facebook page so why not join the fun?

Thanks for reading – we appreciate your business and enjoy your weekend!

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 Moves higher for the 7th Day as the Saudi's Strike Yemen

Commentary for Thursday, March 26, 2015 ( www.golddealer.com) – Gold closed up $7.80 at $1205.10 as safe haven buying increased over Middle East tensions. Saudi and coalition forces directed airstrikes against Yemen in an attack directed against Iranian backed rebels.

There was some concern early on in trading that this would seriously affect the price of oil but Yemen is a relatively small player – 39th in the world oil market and the attacks are not close to oil reserves. Still more Middle East tension underpins the price of gold which recently has been taken off life support in the technical hospital.

The World Gold Council said that smugglers will likely move 200 tonnes of gold into India this year in an attempt to evade the current 10% tariff. This month has been a barnburner for gold imports and will likely exceed 150 tonnes. The expected 945 tonnes which should legally be brought into India this year would be the biggest number in four years. Also helping the price of gold has been nervousness in equities both here and in Europe.

The overnight market in gold was strong – at one time trading above the $1215.00 mark but dollar strength likely capped all the price activity. The Dollar Index traded in a range between 96.17 and 97.55 and is 97.40 as of this writing.

Silver closed up $0.14 at $17.12 and this reaction to higher silver prices is a bit counterintuitive. The buying pattern in a defensive market usually slows as prices increase. Silver’s most recent low was $15.34 on March 11 th and as the market bounced above $16.00 this is what happened – buyers slowed down – but then this pattern reversed. You would think the buying public would slow down in the $17.00 range – and maybe they will - but not today.

Platinum closed up $7.00 at $1153.00 and palladium was higher by $8.00 at $773.00. Our entire allotment of the platinum Platypus (Australia) has sold out even before it arrived – which is tomorrow. The American Platinum Eagle in any size remains unattainable – the US Mint continues to claim that they stopped production because there was little demand.

Chicago Mercantile Exchange reports for the last 5 trading days – so we are looking at the trading volume numbers for the April Gold contract: Thursday 3/19 (203,231) - Friday 3/20 (192,515) - Monday 3/23 (180,814) - Tuesday 3/24 (155,010) - Wednesday 3/25 (111,698). The trading volume has significantly slowed over this past week.

This from Kati Pohjanpalo (Bloomberg) - ECB’s Bond-Buying Is Already Helping Economy, Liikanen Says - (Bloomberg) -- The impact of asset purchases by the European Central Bank is visible in the euro-area economy, according to Governing Council member Erkki Liikanen.

“Monetary-policy decisions and the measures taken have already had a clear, positive impact on the economic outlook,” Liikanen, who also heads the Helsinki-based Bank of Finland, said in an e-mailed statement Wednesday. “The ECB is committed to delivering on its primary mandate: Price stability.”

Sovereign-bond purchases by the Frankfurt-based central bank started this month as it seeks to jolt the 19-member euro area toward faster price growth. The ECB has pledged to spend 60 billion euros ($66 billion) a month on government debt, covered bonds and asset-backed securities for a total of more than 1.1 trillion euros.

“The large-scale asset purchases will be carried out at least until end-September 2016 and in any case until the Governing Council judges the pace of inflation is returning sustainably to a level in line with the price-stability objective,” Liikanen reiterated. “We are committed to that resolutely and without doubt,” and “we believe this is going to be enough if we hold on to the commitment,” he said.

In the first two weeks of the program, the ECB settled 26.3 billion euros of public-sector bond purchases.

QE Marathon - “If QE was a marathon, we’ve now run 1 kilometer and we have 41 km left to go,” Liikanen said. “That’s why a steady, calm, determined pace is extremely important.”

While inflation won’t reach the ECB’s goal of just below 2 percent until 2017 with consumer prices falling 0.3 percent in February, ECB President Mario Draghi has said that a sustained recovery is taking hold. Euro-area business activity expanded faster than economists forecast this month, and confidence improved in Germany and France.

Economic growth in 22 countries encompassing the euro area, Sweden, Denmark and the U.K. will accelerate to 1.6 percent this year and 1.9 percent in 2016 after expansion of 1.2 percent in 2014, the Finnish central bank forecast. That’s slower than global growth, which it projects accelerating to 3.5 percent by 2016 from 3.1 percent last year.

From the World Gold Council (www.gold.org) - Gold Investor – In this eighth edition of Gold Investor, we take a closer look at gold’s performance and its relevance for investors in the current environment. In particular, we explore: Gold in a rising dollar environment: Generally, there is an inverse correlation between gold and the dollar. However, our analysis shows that the gold price increases more when the dollar weakens than it falls when the dollar strengthens. In our view, the dollar’s relationship with gold has changed dramatically over the past decades and is likely to shift further as demand moves East and the world moves to a multicurrency system.

The market may be wrong about gold and US interest rates: Many investors believe that a rise in real US interest rates will certainly be bad for gold. Our analysis shows that other factors – some positively correlated to the economic growth that often accompanies rising rates – can have more influence on the gold price. We also highlight gold’s benefits in a portfolio at a time when stocks and bonds may deliver lower-than-average returns in coming years.

We have broken down the drivers of gold into key factors: currencies, inflation/deflation, interest rates, consumer spending and income growth, systemic and tail risks, and supply-side factors.

Currencies - While gold is no longer an official anchor of currencies, it has many key currency related features. It is a well-established unit of exchange and it trades in a deep and liquid market. Of particular value to investors is gold’s negative correlation to the US dollar and other developed market currencies, as well as its use as a store of value in countries with volatile foreign exchange rates. In addition, the quantity of available gold stocks can only grow by its annual mine production – in contrast to fiat currencies that can be expanded at will. This scarcity helps investors protect against losses in purchasing power.

Inflation/deflation - Variables such as inflation have a profound impact on how investors and consumers view gold. Inflation and inflation expectations at the local level dictate consumers’ purchasing power, driving the decisions of whether they buy something today or defer until tomorrow. High inflation can be disruptive and expectations of such an environment have a significant influence on gold demand. Yet, because gold demand is global, the effect that inflation has on gold needs to be analysed not on a country by country basis but at the global level. In addition, and perhaps surprisingly to some market participants, gold performs better than other assets (with the exception of cash) during deflationary periods.

Interest rates - Interest rates are a key component in the valuation of financial assets because they measure the opportunity cost of holding cash (and high-quality short term bonds) relative to any other asset. High interest rates can increase the opportunity cost of investing in gold, but the economic environments in which they develop also coincide with strong periods of gold jewellery and technology demand. In addition, global interest rates – not only US rates – ought to be taken into consideration.

Consumer spending and income growth - Jewellery, bars, coins and technological applications make up the majority of demand. Growth in disposable income and consumer spending promote purchases of these goods. As emerging market economies (which account for the largest share of demand) grow, higher levels of wealth can increase demand for gold.

Systemic and tail risks - As systemic shocks and tail risks affect global markets, investors seek high-quality, liquid assets such as gold. These types of events do not occur regularly and are difficult to predict, but they can have a devastating effect on investors’ wealth. Gold has been shown to help investors mitigate these losses. In addition, the occurrence of systemic risks may structurally change investors’ risk tolerance and their portfolio management practices, and favour diversifiers – like gold – as strategic components in their asset allocation.

Momentum (short-term investment flows) - Short-term investment flows, driven by momentum and other technical drivers can exacerbate short-term movements in the gold price – especially in periods when flows are largely driven by leveraged (often derivative) securities. While these flows can be a conduit of ‘price discovery’ and provide liquidity, they are not always correlated with the long-term drivers of demand and supply. As such, short-term flows tend to cause transient departures on the gold market long-term trend.

Supply-side factors - The factors above relate to the motivations for purchasing gold. On the other side of the equation, the supply used to meet the demand for these purchases is also a factor that can influence the gold price. Gold supply can come in the form of mine production or recycled gold. All else being equal, a decline in the supply curve may increase scarcity and result in buyers being willing to pay more for gold.

These seven drivers interact with each other through various channels to affect the gold market and its price. For example, US interest rates and inflation have a large impact on the attractiveness of the US dollar. Interest rates and inflation have an impact on consumer spending and miners’ decisions to expand production. Prolonged periods of low rates may inadvertently result in certain markets overheating and result in subsequent contractions. These relationships are just a few examples that could potentially complicate investors’ attempts to base investment decisions involving gold on individual variables. Further, the changing nature of the gold market means that the importance of each driver and interactions among them must be revisited when structural shifts occur.

The walk-in cash trade was surprising average and so were the phones. Under normal circumstances any airstrikes in the Middle East should be worth $50.00 in the price of gold but the world may just be tiring of constant strife.

The GoldDealer.com Unscientific Activity Scale is a “ 5” for Thursday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Thursday – 4) (last Friday – 7) (Monday - 5) (Tuesday – 4) (Wednesday – 8). The scale (1 through 10) is a reliable way to understand our volume numbers. The Activity Scale is weighted and is not necessarily real time – meaning we could be busy and see a low number – or be slow and see a high number. This is true because of the way our computer runs what we call the “book”.

Our “activity” is better understood from a wider point of view. If the numbers are generally increasing – it would indicate things are busier – decreasing numbers over a longer period would indicate volume is moving lower.

When buying or selling you will receive an email confirmation. This includes a PDF File to confirm your invoice or purchase order and includes forms of payment and bank wire instructions. When doing business please check to see if your current email has been entered into the new system and check to see if your computer will accept our email (no spam).

We always appreciate you keeping us up to date when moving or changing your email.

We believe our four flat screens downstairs with live independent pricing (BullionDesk.com) are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.

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. We will even wire funds into your account that same day for a small service fee ($25.00) if you are in a hurry.

In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s).

Like us on Facebook and follow us on Twitter @CNI_golddealer. Sal is now in charge of our Facebook page and he is a self-proclaimed expert on gold conspiracy theory. He would be happy to respond to even the most ridiculous conspiracy assertion on our Facebook page so why not join the fun?

Thanks for reading – we appreciate your business and enjoy your evening!

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.

Should You Invest in Certified Rare Coins?

Invest in Gold CoinsInvesting in certified rare coins can be a rewarding experience, but it is important to understand what you are getting into. When you are looking for gold coins for sale in California, you should be certain that you are working with a trusted dealer and a legitimate business. Keep reading if you are wondering if you should invest in certified rare coins.

Do Your Research
Before you embark on any type of investment, it is important to conduct some thorough research. There is a wealth of information available on the Internet concerning certified rare coins, and a quick keyword search can return a variety of high-quality resources that can help you understand the field more fully. Learn about fees and commissions that a broker might charge, the melt values of different coins, and how to personally inspect different types of coins.

Beware of Scams
Unfortunately, the appraisal of certified rare coins and other gold and silver coins cannot be fully objective. This leaves room for dishonest individuals to make claims about grading, buy back options, or current market values that they cannot actually back up. This is another reason why it is important to be equipped with some knowledge about the field before investing. Some dealers may simply design prices that substantially exceed the value of the coin.

Know Your Vocabulary
Before investing in certified rare coins, understand the lingo. A melt value describes the return on a coin that is melted and sold for its metal, and a premium refers to the overall price of the coin, which tends to be greater than its actual value. Understanding these terms can help you with your research and lead to a successful investment experience.

If you are interested in investing in certified rare coins, feel free to call California Numismatic Investments at 800-225-7531. We specialize in gold, silver, and platinum coins. Please do not hesitate to visit our website to find out more about our gold and silver coins for sale today.

Gold Firm over a Weaker Dollar and Equities Sell Off

Commentary for Wednesday, March 25, 2015 ( www.golddealer.com) – Gold closed up $5.60 on the Comex today at $1197.30 – sniffing around the big $1200.00 mark as the dollar slumps somewhat and stocks continue to wobble.

This is the sixth straight advance for gold – the dollar having fallen around 3% since Janet Yellen had her heart to heart with Wall Street last Wednesday. Not to sound lighthearted about this affair but discount what the Federal Reserve has to say and watch for real improvement in the number of jobs. Real improvement = an increase in the Federal Funds rate.

Gold continues to be supported by a slightly weaker dollar but I think traders remain very cautious – they are modest buyers for now but could turn on a dime. This semi-interested attitude is caused by some renewed physical demand in Asia and we are also seeing renewed interest across our counter in the ethnic gold bar trade. The Dollar Index yesterday closed at 97.23 and as of this writing the index is trading at 96.89 – the range so far today being 96.54 through 97.30. Weakness this morning being blamed on a weaker durable goods number but there may be more to the story.

We may even be seeing a change in the general dollar sentiment and this would be welcome news for gold. Consider that recent QE in Europe has supported the euro which deters the dollar bulls. Carrying more weight is the notion that traders might feel the dollar is now oversold – it has been a long and wild ride to the upside so traders may want to take some profits. It’s too soon to tell but at least consider that the mighty dollar may move from bullish to perhaps neutral watching the euro trade and then weakening depending on how far out the Federal Reserve pushes the expected rise in interest rates.

The durable goods number was down 1.4% in February. While this is a volatile index it points out nicely what happens when the dollar is so strong. This is why the Fed has yet to move off their emergency near zero interest rate policy.

Gold on the other hand continues to carry a negative bias, the result of a decidedly lower price model since its peak close in 2011 of $1888.70. There are also the more recent buyers which took advantage of lower prices – the common complaint here is that it has not gone “up” as yet.

To counter this bias - if you purchased gold 10 years ago you would have realized a 10.6% annualized yield if you sold today. If you sold at the peak the gain would be 15.6% per year. We know that the US debt is around $18 trillion and we know that the Fed has added about $4 trillion to their balance sheet in the past 7 years. Now consider that all the gold held in private hands and all the gold held by central banks has a value around $7 trillion so this negative drag will not last forever.

Silver closed up $0.02 at $16.98 in very quiet trading. Despite silver’s recent bounce from lows to higher ground our sales of the popular US Silver Monster Box (500 coins) remain solid.

Platinum closed up $5.00 at $1146.00 and palladium closed up $2.00 at $765.00. And platinum’s $51.00 discount from gold keeps a thin supply of platinum bullion products moving right along.

This is our usual ETF Wednesday information - Gold Exchange Traded Funds: Total as of 3-18-15 was 52,475,650. That number this week (3-25-15) was 52,255,983 ounces so over the last week we dropped 219,667 ounces of gold.

The all-time record high for all gold ETF's was 85,112,855 ounces in 2013. The record high for Gold ETF's in 2015 is 54,094,507 and the record low for 2015 is 51,057,082.

All Silver Exchange Traded Funds: Total as of 3-18-15 was 623,446,033. That number this week (3-25-15) was 620,275,105 ounces so over the last week we dropped 3,170,928 ounces of silver.

All Platinum Exchange Traded Funds: Total as of 3-18-15 was 2,587,454 ounces. That number this week (3-25-15) was 2,579,675 ounces so over the last week we dropped 7,779 ounces of platinum.

All Palladium Exchange Traded Funds: Total as of 3-18-15 was 2,915,673 ounces. That number this week (3-25-15) was 2,880,574 ounces so over the last week we dropped 35,099 ounces of palladium.

This from Kitco/CPM Group - Gold to Face Repeating Challenges: CPM Group's Gold Yearbook - New York - The factors which weighed on gold’s decline in 2014 are expected to carry over this year, said research firm, CPM Group on Tuesday.

The New York-based consultancy released its annual gold yearbook at Bloomberg’s headquarters during an event fittingly called, An Evening On Gold which featured a panel of gold experts. The yearbook is considered one of the industry’s staples for forecasting the metal.

In 2014, gold prices faced relatively weaker fabrication demand from China, ongoing selling by shorter term investors, a stronger U.S. dollar, equity markets scaling record highs, and oil prices slipping lower in the final part of the year, CPM said. In turn, gold prices slipped to some significant lows last year.

“The annual average price decline during 2014 was smaller than the 15.6% decline seen in 2013, however, on an intraday basis, gold prices slipped to $1,130.40, their lowest level since 2010,” CPM Group said.

CPM expects these factors to remain in place in 2015.

“Gold prices may weaken based on investors’ likely negative views toward gold and commodities in the face of imminent U.S. interest rate increases. Such speculation could drive gold prices to their lows for the year,” the research firm said in a press release.

However, the firm expects gold prices to rebound from losses relatively quickly. “The downside is limited as much of the impact from these issues already is baked into the price of gold. In fact, any significant weakening of investor enthusiasm for U.S. stocks, or the dollar, could prove supportive of higher gold prices, the reverse of 2014’s trends.”

Buying Interest - Investors purchased 28.1 million ounces of gold in 2014, a 16.3% decline from 33.5 million the previous year.

CPM Group said that although the reduction in purchases weighed on gold prices, it still ranked in the top 15 for highest level of investment demand since 1950.

“This relatively healthy investment demand was one of the primary factors that helped support gold prices at historically elevated levels during 2014. Longer term investors were largely responsible for the net additions,” CPM explained.

CPM anticipates investor purchases to decline in 2015 to 26.9 million ounces. This would still rank investment demand during 2015 in the top 20% of net additions to investor holdings on an annual basis.

Central banks - Central banks remained net buyers in 2014, with 5.5 million ounces of gold purchased, compared with a net reduction of 0.3 million ounces in 2013. CPM said, “[C]entral banks reported adding 9.5 million ounces of gold to their holdings on a gross basis during 2014. This compares with 6.0 million ounces of gross purchases during 2013.” Russia led the pack adding 5.56 million ounces to its reserves. “Increased hostility between Russia and the West, particularly with the United States, over Ukraine and other issues, encouraged the Russian central bank to increase its reserve gold holdings during the year,” CPM noted, adding that Russia is expected to continue to buy in 2015 as a means to diversify away from its U.S. dollar reserves in 2015.

On the flip-side, the largest net disposals of gold came from the Bank of International Settlement (BIS), which reduced its holdings by 5.54 million ounces during the year. This accounted for 95.5% of total reduction of central bank gold holdings, CPM said.

Gold Supply - On the supply side, CPM found that gold supply rose during 2014, reaching 126.7 million ounces during the year, up 1.1% from 2013. Mine supply reached a record 90.5 million ounces in 2014. Despite the big numbers in mine supply, total supply did not hit records since secondary supply, which accounts for around a third of total supply, was declining during the year, CPM said.

Fabrication demand - CPM is forecasting gold fabrication demand to rise to 96.9 million ounces in 2015, up 4.2% from 2014. “This healthy increase in fabrication demand during 2015 is predicated on an expectation of relatively soft gold prices and on gold prices forming a base at this relatively low level. Both of these factors are important to boosting demand,” CPM said.

The firm said that India will also play an important role in boosting global fabrication demand for gold during 2015, “[T]here has been a partial scale back in import restrictions during 2014 and an improvement in the country’s macroeconomic fundamentals,” it said.

CPM is scheduled to release its Silver yearbook on April 29 and its Platinum yearbook on June 23.

On February 20 th the Greek debt problem was extended 4 months to give them additional room for negotiations . They really cannot pay all the money owed and unless there is some kind of miracle financial move Greece will continue to plague the EU. Each time the possibility of debt contagion is raised gold moves higher and each time Greece is given more time the gold market gives up its gains. And to be fair things have improved within the EU but not in Greece. I bring up this point only to point out that Greece is only one of many big problems in Europe.

This from Barry Norman (FXEmpire) – “In a dramatic attempt to stop the downward spiral, the Central Bank of Russia made an astounding move it raised its key interest rate from 10.5 percent all the russian oilway up to 17 percent. The prime reason for the free-fall of the ruble is the fact that the Central Bank of Russia just printed up about 625 billion rubles and gave it to their friends at Rosneft. Rosneft is an absolutely massive oil company that is controlled by the Russian government. For months, Rosneft has been asking for a bailout to refinance loans that can no longer be rolled over with western banks because of economic sanctions. In an attempt to quietly slip this massive injection of new money past everyone, Rosneft issued 625 billion rubles worth of new bonds just before the weekend and the Central Bank of Russia gobbled most of those new bonds up with freshly created money.

Rosneft issued 625 billion rubles, about $10.9 billion at the exchange rate at the time, in new bonds on Friday. The identities of the buyers were not publicly disclosed, but analysts say that large state banks bought the issue. When these banks deposit the bonds with the central bank in exchange for loans, Rosneft will have been financed, in effect, with an emission of rubles from the central bank.

The White House said Tuesday that President Obama would sign a bill allowing additional sanctions against Moscow, as officials warned that Russia’s economy is on the “brink of crisis.” “If I were chairman of President Putin’s council of economic advisers, I would be extremely concerned,” Jason Furman, who holds that position in the Obama administration, told reporters at the White House.

The new sanctions legislation comes as the value of Russia’s currency, the ruble, has collapsed in recent weeks alongside a dramatic fall in the price of oil, Russia’s top export. A year ago, Russia’s economy was growing by about 1.5% and President Vladimir Putin was preparing to host the Sochi Winter Olympics.

Russia is facing the perfect storm, which would have been unpredictable by Vladimir Putin when he began meddling in the Ukraine. Putin had left the Russia economy to dependent on oil and gas production as the world clamored for more production. With oil revenues keeping the government and friends of Putin flowing in cash no one paid much attention. Next along came Western sanctions after Putin pushed his way into the Ukraine. After months of largely symbolic sanctions aimed at Russian officials - including asset freezes and travel bans — first the U.S., then Europe, were stung into serious action by the shooting down of a Malaysian airliner over eastern Ukraine in June, and Moscow’s continued support for rebels blamed for the crash.

They took measures to prevent Russia’s biggest banks and companies raising funds in the West, and targeted the country’s key energy and weapons industries with restrictions. Who could have ever foreseen the global oil markets collapsing as the Saudi’s initiated their own war against US producers.”

The walk-in cash trade was busy today and so were the phones. Silver remains in the spotlight – followed by platinum bullion products and some trading of gold bullion for platinum bullion.

The GoldDealer.com Unscientific Activity Scale is an “ 8” for Wednesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Thursday – 4) (last Friday – 7) (Monday - 5) (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 busy and see a low number – or be slow and see a high number. This is true because of the way our computer runs what we call the “book”.

Our “activity” is better understood from a wider point of view. If the numbers are generally increasing – it would indicate things are busier – decreasing numbers over a longer period would indicate volume is moving lower.

When buying or selling you will receive an email confirmation. This includes a PDF File to confirm your invoice or purchase order and includes forms of payment and bank wire instructions. When doing business please check to see if your current email has been entered into the new system and check to see if your computer will accept our email (no spam).

We always appreciate you keeping us up to date when moving or changing your email.

We believe our four flat screens downstairs with live independent pricing (BullionDesk.com) are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.

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. We will even wire funds into your account that same day for a small service fee ($25.00) if you are in a hurry.

In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s).

Like us on Facebook and follow us on Twitter @CNI_golddealer. Sal is now in charge of our Facebook page and he is a self-proclaimed expert on gold conspiracy theory. He would be happy to respond to even the most ridiculous conspiracy assertion on our Facebook page so why not join the fun?

Thanks for reading – we appreciate your business and enjoy your evening!

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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