Commentary for Friday, Sept 19, 2014 – Gold closed down $10.40 today at $1215.30 so the bulls remain in charge – but there was a whiff of buying attention in the air today – so falling prices are beginning to change the physical dynamic.
And before you consider jumping out the window because this market “does not make sense” (a common note we hear across the counter from customers these days) remember that even with all the negative publicity we have recently seen relative to gold – prices over last year are only down about 11%.
Consider the usual suspects – this soft market continued with the FOMC cutting another $10 billion from its quantitative easing program Wednesday. And the strong prices in US stocks draws speculative money away from the metals.
Also pushing gold lower is dollar strength – in part the result of a stronger US economy and in part due to the notion that Europe is preparing its own answer to the Fed’s bond buying program.
Continued economic worries in the EU will prompt an easy money policy from the European Central Bank – this in turn will push the euro lower and support higher dollar prices.
Also a worry to higher gold prices is the possibility of higher interest rates here in the US as our bond buying program comes to an end in October.
Supporting gold in the medium to longer term is the belief that because our economy is still struggling – and housing is moving in the wrong direction the Federal Reserve will continue to hold interest rates at these ultra-low levels. This in turn will support inflation and gold in the longer term.
We at GoldDealer.com expect a further test of the $1200.00 level – if this holds gold will have put in a bullish triple bottom since March of 2013.
Buying action from the public of gold bullion even at these lower levels has been moderate but is picking up as we bounce lower in prices. The majority of phone action we saw today was silver bullion buyers in small to moderate range. No whales – but a great deal of action nonetheless.
If you are interested in the price of gold short-term consider that the bears have been in charge of the gold trade for about a month. Since mid-August gold has moved from $1300.00 to pushing $1220.00 so the paper trade has $80.00 in short profits to protect.
Today’s latest weakness is simply the momentum trade piling on because real physical demand is still weak – not dead but the lines have not formed at our back door like in the days when everyone expected quantitative easing to produce a large inflation wave.
My point being that the bears can remain in charge while we are testing the $1200.00 level and still see a big bounce back – perhaps $20.00 or $30.00 – which would represent the short covering trade.
Chicago Mercantile Exchange reports for the last 5 trading days – so in fact we are looking at the trading volume numbers for the December Gold contract: Friday 9/12 (149,795) – Monday 9/15 (100,037) – Tuesday 9/16 (128,281) – Wednesday 9/17 (132,084) and Thursday 9/18 (151,109).
These volume numbers are at the higher end of the recent trading range meaning there is plenty of trader action – markets are not thin – and remain orderly – not panicked.
Silver closed down a big $0.67 today at $17.78 – so expect the physical market to pick up considerably – even as lower prices make buyers anxious.
Platinum closed down $13.00 at $1337.00 and palladium was off $19.00 at $812.00.
This might be interesting – I got it from Mike Myer (EverBank World Markets) – For What it’s Worth. Chris threw me a link to an interesting article before he jumped on a plane yesterday morning which he found on The Hill. You can read the entire story at http://thehill.com/blogs/floor-action/house/218047-house-passes-bill-to-audit-the-federal-reserve, but here is a snippet that I wanted to share. “The House on Wednesday passed legislation to audit the Federal Reserve System. Passed 333-92, the bill would require the comptroller general to conduct an audit of the Federal Reserve’s board of governors and banks within one year and submit a report to Congress on the findings. A total of 106 Democrats joined all but one Republican in support of the measure.”
Of course auditing the Federal Reserve has been a mantra from the gold industry for years because they all believe the books are so cooked that if the real story were made available the public would cry foul.
I really don’t want to enter the fray other than to say that the number of committed dollars which are “off books” might stagger the casual reader. At any rate let’s see if (1) there is a real independent audit and (2) if the results are published within one year.
Precious Metal Closes for this week – Sept 15 through Sept 19 – 2014
Gold Silver Platinum Palladium
Mon $1233.60 $18.55 $1365.00 $837.00
Tues $1235.20 $18.65 $1368.00 $844.00
Wed $1234.40 $18.66 $1363.00 $838.00
Thurs $1225.70 $18.45 $1350.00 $831.00
Fri $1215.30 $17.78 $1337.00 $812.00
Our Patented Employee and Customer Survey – Gold’s Direction Next Week?
This is what the GoldDealer.com employees think – 4 believe gold will be higher next week – 8 think gold will be lower and 1 believes 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 – 65 believe the price of gold will decrease next week and 5 think prices will remain the same.
The walk-in cash business was busy today and so were the phones – all day. I can see the volume numbers picking up so the public is now paying attention – whether they will continue to buy this dip remains to be seen. Like I said we expect a pop upward in prices on a short-covering rally and the big physical push from these lower levels still remains on the sidelines – waiting to see if $1200.00 is the ultimate bottom of this long term selloff.
The GoldDealer.com Unscientific Activity Scale is a “4” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 6) (Tuesday – 4) (Wednesday – 3) (Thursday – 3). The scale (1 through 10) is a reliable way to understand our volume numbers.
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 – which seem to grow when things get this quiet. And it does not help that the world famous Randy’s Donuts is just down the street.
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Thanks for reading from your friends at GoldDealer.com 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.