Commentary for Friday, Oct 3, 2014 (www.golddealer.com) – Gold closed down $22.00 at $1192.20 so we have breached the important $1200.00 mark and got everyone’s attention.
The big push to lower gold prices continues to be caused by the strong dollar – the Dollar Index showing at 86.68 at of this writing. The dollar which most think is overbought at this point continues to redefine by sending the unemployment rate to 5.9% today. Now there are rumors that the Fed might move interest rates higher before the expected summer of next year.
Today’s close of $1192.20 is a new yearly low and the first time this year that gold traded below its important support of $1200.00. Technical traders are now looking closely at $1180.00 which is the low of last year and further represents the lowest price for gold since its 2011 high water mark ($1888.00). So with this break to the downside it appears gold was not oversold but continues to unwind in a typical consolidation fashion.
Will gold fall off the cliff? Ah, the magic question – perhaps but like all bear markets the bulls are not dead just sleeping. Also keep in mind that the physical gold bullion picture can change quickly – the Chinese for example are coming back from vacation and so physical demand will pick up because prices are cheap and they are back in play.
Silver was also technically weak closing down $0.22 at $16.78 and the same thinking applies – we are looking for, but not seeing as yet any positive traction in these numbers. Paradoxically look for silver bullion shortages to grow as this market tries to find longer term footing. And remember that silver ETF growth is at all-time highs.
If you watch the gold to silver ratio numbers we are now at a whopping 71 which will favor trading gold bullion for silver bullion. We are already seeing this type of trade across the counter.
Platinum was whacked today down $44.00 at $1226.00 and palladium was off $15.00 at $754.00. Rhodium closed unchanged at $1215.00 – I can’t figure out why the public is not all over the trade of gold bullion for rhodium bullion.
Precious Metal Closes for this week – Sept 26 through Oct. 3 – 2014
Gold Silver Platinum Palladium
Mon $1217.50 $17.51 $1309.00 $789.00
Tues $1210.50 $17.00 $1300.00 $775.00
Wed $1214.00 $17.21 $1290.00 $784.00
Thurs $1214.20 $17.01 $1270.00 $769.00
Fri $1192.20 $16.78 $1226.00 $754.00
Our Patented Employee and Customer Survey – Gold’s Direction Next Week?
This is what the GoldDealer.com employees think – 3 believe gold will be higher next week – 6 think gold will be lower and 1 believe it will be unchanged.
Also consider a survey on what our customers think about the gold market next week.
Like the employees they were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 customers – unscientific yes but worth considering because these people actually took action: 30 people thought the price of gold would increase next week – 60 believe the price of gold will decrease next week and 10 think prices will remain the same.
This from Paul Davidson (USA Today) Economy gains 248,000 jobs as hiring rebounds – “The labor market rebounded sharply in September as employers added 248,000 jobs, but wage growth remained weak despite a tightening supply of workers.
The unemployment rate fell to 5.9% from 6.1%, lowest since July 2008, the Labor Department said Friday. Both numbers were better than forecasts. Economists surveyed by Action Economics had estimated that 215,000 jobs were added last month and that the unemployment rate was unchanged.
August’s initially disappointing job gains were revised to 180,000 from 142,000. July’s count was revised to 243,000 from 212,000, boosting gains for the two summer months by 69,000.
That brings total payroll gains for the year above 2 million.
Last month, businesses added 236,000 jobs, fueled by strong gains in professional and business services, retail and healthcare. Federal, state and local governments added 12,000. Monthly employment gains have averaged for 227,000 so far this year, up from 194,000 for all of 2013.
Hourly earnings rose, however, dipped one cent to $24.53 and are up just 2% over the past year, in line with the modest increases so far in the five-year-old recovery.
“The labor market is clearly tightening but there’s still no wage pressures,” says economist Joel Naroff of Naroff Economic Advisors. “When do businesses start dealing with labor shortages by raising wages?”
He added: “The only way we’re going to get stronger economic growth is if people have money to spend.” Like many economists, Naroff still expects wage growth to pick up later this year. Some other labor market indicators in September were encouraging.
The average work week rose to 34.6 hours after being unchanged at 34.5 hours for six straight months. Increased hours could signal that continued strong hiring lies ahead.
And the so-called underemployment rate — which includes discouraged workers who’ve stopped looking for jobs and part-time employees who prefer full-time work as well as the unemployed – fell to 11.8% from 12%.
Professional and business services led the job gains with 81,000. Retail added 35,000; leisure and hospital, 33,000; and health care, 23,000. Construction, meanwhile, added 16,000 jobs and manufacturing, just 4,000.
Even with the latest revision, monthly job growth slowed in August after averaging well over 200,000 for six months. But some economists considered the disappointing tally an anomaly, noting that other labor market indicators have been positive.
The Labor Department said Thursday that initial jobless claims continue at prerecession levels, and private payroll processor ADP this week estimated that businesses added 213,000 jobs in September. Economists also expected Labor’s survey to be bolstered by the return of about 20,000 striking workers.”
The above further encourages the notion that the Fed will soon bring QE to a halt and the dollar will remain strong.
Some commentators claim these reports are “neither hot nor cold” and so doubt that the Fed will stay the course and take away the punch bowl.
I don’t – they said QE will soon be history – given certain parameters are maintained. And judging by Joel’s statement – “The labor market is clearly tightening but there’s still no wage pressures,” says economist Joel Naroff of Naroff Economic Advisors – inflation will remain subdued. So expect the end of quantitative easing on schedule which should further depress the price of gold.
The walk-in cash business was a zoo today and so were the phones so we thank you for your patience. There were some large sellers in both gold and silver but there was also a big jump in sales so the public picture remains mixed even though sentiment remains negative.
The GoldDealer.com Unscientific Activity Scale is a “7” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 5) (Tuesday – 6) (Wednesday – 6) (Thursday – 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 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.
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Thanks for reading – your friends at GoldDealer.com. Enjoy your weekend and we appreciate your business. Next week might be another wild ride!
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