Commentary for Friday, June 26, 2015 ( www.golddealer.com) – Gold closed up $1.40 on the Comex today at $1172.90 – so gold continues to trade very quietly. Yesterday we closed at $1171.50 so in two consecutive days of trading the spread is $2.50!
Gold was initially pressured lower by a stronger dollar and touched $1167.00 before reversing to close just slightly higher. Actually the Dollar Index is relatively flat on the week settling in around 95.00. Exciting isn’t it? Greece is about to blow up, the EU is cranking up the printing presses, everyone seems to be worried about China and gold goes to sleep.
As far as Greece is concerned there will be another “special” meeting this Saturday with parties involved (translate – creditors) and all parties at this point are frustrated. This is the first time since this mess began that there is a possibility Greece might exit stage right from the European Union. I thought this impossible – but if it does happen it will support gold to some degree but at this point it will not be the big kick-start traders are expecting. Again the 1.6 billion euros is due June 30 th but as usual some are now suggesting this date might be negotiable – see what I mean?
For my money gold is now entering the “over-sold” zone – look for a bounce to higher ground if we continue to drift much lower. There is anecdotal evidence to back this up as our sales of PAMP gold bars continue to move higher.
Silver closed down $0.07 at $15.73 and our physical silver bullion business continues to deliver product – not much fanfare but steady.
Platinum closed down $3.00 at $1081.00 and palladium was off $1.00 at $678.00. Car news was solid today so I expect prices in all the PGM’s will firm.
Everyone is making a big deal over the 17% sell-off in Shanghai Index – China stocks have hit a rough patch. But is this the end of the world – the scenario here is that too much of the Chinese financial model is hidden and too much is promoted with either borrowed money or money created through the Bank of China. All of that is true but the Chinese growth rate is the world standard bearer – 7% or 8% is no problem. And they have been calling for a crash in the manufacturing giant for years but it still continues strong.
Also consider that they are sitting on a ton of cash – the result of selling everything to everyone. At any rate the “crash” idea because of the sudden weakness in the Shanghai Index does not make sense – but if it did lead to further problems this could create demand for gold bullion.
The other side of the coin is that because the Shanghai Index has recently moved lower the gold bullion demand from this sector has been weaker.
This from CNN Money – China's benchmark Shanghai Composite index dropped by 7.4% on Friday, as hundreds of individual stocks lost 10%, the index's daily downward limit. The Shenzhen Composite, which is heavy on tech stocks, closed down 7.9%.
The dramatic moves could further unnerve investors, who are already reeling from last week's dismal performance by China stocks. The Shanghai Composite is now solidly in correction territory, having fallen 12% over the past five trading sessions as investors grow increasingly wary of a possible stocks bubble.
Even with recent losses, the Shanghai Composite has surged 30% this year, and the Shenzhen Composite is up 77%, easily making it the world's top-performing index.
This is interesting from Chuck Butler (EverBank) – “I was reading an article on www.bullionstar.com last night that was submitted by Koos Jansen, regarding his reasons why he believes the withdrawals from the Shanghai Gold Exchange (SGE) represent Gold that China is accumulating. I did like something he said about the reasons why China would also be buying Gold on the International Markets. Let's let Koos Jansen tell you. "Gold sold on the SGE is priced in renminbi and the PBOC with large multi-currency reserves may rather use U.S. dollars than purchasing domestically priced Gold. The International Market would have a lot more liquidity too." I've told you for a few years that I thought China was using their Treasure Chest of U.S. dollars to buy Gold. So, this news comes as no surprise to me, or should you, but it does confirm what I've said.”
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 – 7 believe gold will be higher next week – 4 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: 42 people thought the price of gold would increase next week – 41 believe the price of gold will decrease next week and 17 think prices will remain the same.
Precious Metal Closes & Dollar Strength – June 22 – Jun 26
The walk in cash trade exploded around Noon but the phones were average most of the day. An interesting mix going on – the Monster Boxes went flying out of here to the cash trade, there was a decent amount of small selling by the public but no large sellers.
This week’s price spread and interest was very dull. Next week might produce trading fireworks however as these quiet days and tight trading ranges should not be ignored – one way or the other the market is always saying something.
Keep in mind that 4 th of July falls on a Saturday – so the CNI Building will be closed Friday July 3 rd for our Independence Day.
Also note that the trading markets, banks and post office will also be closed Friday – July 3 rd . Wishing you all a happy and safe 4 th of July.
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 – 6) (Wednesday – 4) (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 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.
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