Commentary for Tuesday, March 25, 2014 – Gold closed up $0.20 at $1311.40 so we continue above the $1300.00 mark as gold traded from $1305.00 through $1317.00 trying to find comfortable footing. I would take that as a modified good show considering we were in the drink yesterday for $24.00 and today’s mood has not changed much. Gold has now pulled back 34% from recent highs and the technical picture while not shouting success is still hanging in there showing support and we are seeing some bargain hunting. This is good because it requires the short paper players to show some respect.
Consumers are happy as confidence levels reported today are the highest since 2008. Some might consider this a negative for gold but when consumers are happy they spend and sometimes that spending is on gold, better still that spending stimulates the economy and inflation.
Bloomberg announces that Iraq purchased 36 tons of gold this month and under normal conditions such a purchase would have pushed gold much higher but the mood of both traders and commentators is poor enough that even good news is pushed aside. This would indicate that more time needs to pass before gold forgets about recent gains created by Russian intervention and the failed attempt to push above $1400.00 even when the technical advantage was in the bull’s court.
Eventually this latest price failure will fade and gold can once again attempt a better self-picture but for now don’t expect big things. In the wider view I see this morning that real estate is fading somewhat and I don’t think this is due to marginally higher interest rates.
Watch the real estate market for additional insight into what is happening with the economy. European stocks looked stronger this morning and the US market is so frothy at this point it will move higher on bubble gum: this for now augers against a rise in gold prices. But consider that when the Fed injects huge money into a financial system fair valuation of anything (including gold) is difficult. This is an important point brought out by Santelli this morning which might be overlooked because quantitative easing has been in place for years.
While talking about gold let me say once again that buying certified gold bullion coins (Proof or Mint State) is like washing your investment money down the drain. The premiums charged by so-called “gold bullion experts” are outrageous and the latest in this modern robbery in progress is to mix these certified gold bullion coins in with regular bullion claiming “diversification”. Don’t waste your money – buy weight only and avoid certified bullion products.
I guarantee this ridiculous approach will end up badly – probably by criminal investigation which is already happening with two well-known bullion dealers so let’s be careful. There are several no-nonsense national bullion dealers you can trust and if you don’t know who they are email me and I will keep you out of trouble.
Silver moved down $0.09 at $19.95 so we are once again below the important $20.00 which does not instill confidence unless you are already a bull.
Platinum closed down $10.00 at $1421.00 and palladium was off $4.00 on the day at $789.00. Palladium has been helped lately from increased demand, a mining strike in South Africa, Russian sanctions, and a new palladium ETF launched this week.
The short term picture for gold prices now remains mixed. Reuters takes the middle road as usual – SINGAPORE, March 25 (Reuters) – “Gold rebounded on Tuesday from a one-month low hit in the prior session, helped by short covering and a rise in bullion-backed exchange traded fund holdings, but expectations of higher U.S. interest rates and a lack of physical buying capped gains.”
Kira Brecht (Kitco) is still surprisingly positive – Gold: The Trend Is Your Friend, Until Proven Otherwise – “The U.S. dollar has been held back in part by disappointing U.S. economic data throughout first quarter 2014. Overall U.S. gross domestic product forecasts for 2014 are in the 2.5% region, maybe 3.0% region —if everything goes right. That still isn’t much to write home about from a historical standpoint. Here’s one more chart to look at. While the supply side of the U.S. energy market has been reshaped dramatically in recent years, WTI crude oil prices remain at a relatively elevated price level from a historical level. Throughout the 1990’s, “extreme” or spike high readings in crude oil prices were toward the $40 barrel level. That seems cheap now, huh? But in the 1990s that was high. Now, the extreme spike level is the $147 per barrel level hit back in 2008 and the larger range is $115-$75. The price of crude oil, which is an inflationary input, is not “cheap” by historical standard hovering around the current $100 per barrel level. Charts don’t lie, and right now the U.S. dollar chart is limp and trendless. Gold has been riding a nice bull trend since the start of 2014 and crude oil is not cheap. Bottom line? A trend will continue until an outside force exerts influence to change that trend. The crude oil chart is actually supportive to the gold outlook, while the dollar is not a bearish influence. Shrug off this week’s sell-off in gold. The trend is your friend, until proven otherwise.” She also thinks that even with the recent weakness in gold, the metal has held at the multi-month bull trendline support.
A portion of some trader’s commentaries are surprisingly bullish. Frank Homes (U.S. Global Investors) “On Thursday, gold recorded a golden cross when the 50-day moving average crossed above the 200-day moving average. A golden cross is traditionally associated with the breaking of a bear market trend and the beginning of a bull market, where the 200-day moving average becomes a support level in the rising market. Our analysis shows that, going back to 2000, a golden cross in gold has been followed on average by a 50 percent rally lasting on average 15 months.”
A few Singapore physical traders are disappointed in the recent physical take off given the better pricing picture. Given gold has seen a run of bad news and the markets are relatively cheap I too would like to see purchases across the counter pick up and the return of a few whales. One thing that augers well for gold in this round of uncertainty is that we have not seen much in the way of significant bullion selling.
That works psychologically for me but a few recent calls to other large dealers tell the same story – slow physical business.
If you are looking for other metrics the number of people visiting our site is the highest in our history with a big jump in new viewers so this might indicate the public is watching carefully but not acting.
Can gold move above the tough $1400.00 level with such cross-currents? Sure it can for there are trillions of dollars floating around out there and looking for a place to land. But whether the money chooses physical gold on the short to medium term remains to be seen. And like Brecht points out the trend is your friend so keep your powder dry for now but your finger on the trigger.
The physical cash walk-in business was steady today and the phones were just average. Still no large sellers and no whales on the buying side.
The GoldDealer.com Activity Scale is a “5” for Tuesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Wednesday – 2) (last Thursday – 3) (last Friday – 3) (Monday – 4). The scale (1 through 10) is a reliable way to understand our volume numbers.
On the new GoldDealer.com site: Comex closing prices are posted on the home page and individual product landing pages. Live pricing on the site moves all bullion products up or down during the day. We reworked the All Bullion Products link on the home page. It now includes our Bid (blue) and Ask (green) prices. Premium quotes vary with product and look like this – “spot plus $15.00” or “spot plus $50.00” and bullion products list them under the live prices on their respective landing pages.
This makes product comparison simple and GoldDealer.com is the only precious metal site on the net with this transparency. Live Chat is doing well and new customers like setting up their own encrypted accounts. We recommend upgrading old browsers to Google Chrome (free/secure) especially as our site becomes more advanced.
Sign up for our daily Gold Newsletter on the Gold Newsletter page if you are so inclined.
Email confirmation using a PDF File when buying or selling is functional and includes payment instructions. You can now see the 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).
Our four flat screens downstairs with live independent pricing (BullionDesk.com) are a big hit with the cash trade. This live stream moves all buy/sell prices so the cash buying or selling public can see the markets move on a real time basis. Our site uses the same pricing model so no more guessing.
Our best price guarantee (buying or selling) remains famous so call Kenny (1-800-225-7531) and get more money in your pocket with guaranteed satisfaction. And we include our No-Nonsense Policy (NNP) as a welcomed extra. Steering is not allowed. Steering is the trade term used to talk you out of what you want (low cost bullion) and into stuff with big telemarketing commissions. Like us on Facebook and follow us on Twitter @CNI_golddealer. Thanks for reading and enjoy your evening.