Commentary for Monday, Nov 24, 2014 – Gold closed down $2.00 at $1195.50 and trading remained quiet overnight in London and Hong Kong. This being the Thanksgiving week here in the US I would not expect much in the way of pricing.
Gold is still trying to get traction near term so the bulls are not totally sad but in the longer term the bears still have all the cards. And the roaring stock market is difficult to fade.
The bigger picture is still in place as China, Japan and the European Union move forward on the quantitative easing front – hoping to help with more fiat money. But gold seems to be ignoring this and the problems posed by the Russian/Ukraine conflict.
Gold is also not worried about any Russian/China deal which would preclude trading in dollars and also does not seem happy that the Russians continue to add to their gold reserves.
Gold is however very attentive to dollar movement and is carefully watching the price of oil. As of this writing the Dollar Index is trading at 88.15 – that makes for a weekly high and also creates tough going for the gold market. WTI Crude seems steady around $76.00 a barrel which while relatively cheap and not good for gold – at least the price has stabilized.
Again I would suspect a quiet Thanksgiving market – not much happening but ignore sudden moves either higher or lower as trading is thin and subject to “pushing”.
The upcoming Swiss Gold Referendum in now a non-event – it sounds like good news for the bulls but the nonsense handed the Swiss voters about stability problems will win the day.
Silver closed down and equally unimpressive $0.02 at $16.37 – also in quiet trading.
Platinum was down $20.00 at $1207.00 and palladium was down $5.00 at $789.00. The JM forecast indicates a 2014 platinum deficit of 1.3 million ounces. The South African mining strike which ended in June was the main cause cited coupled with increased use of platinum in Europe. Platinum today is only about $12.00 more than gold which makes for an excellent diversification play either by directly buying or trading gold bullion for platinum bullion.
My previous comments on $1000 face 90% silver bags brought a few questions. As most readers know the premium or amount of money you pay over melt for a particular bullion product is a combination of public demand and the percentage world mints charge distributors for making their bullion products.
Because 90% silver coins for circulation have not been made since 1964 the only thing that drives 90% bags is public demand. Premiums on this usually common silver bullion product can vary from minus 10% – meaning they are selling for less than melt to more than 30% over melt if they are being promoted by telemarketers to “end of the world” buyers.
I also mentioned that today the premium on 90% bags was rather high rivaling that of US American Silver Eagle Monster Boxes.
This is neither good nor bad – in this business the phrase “it is what it is” is common. But I did mention that the supply of 90% bags was getting “thin”. This is akin to throwing the cat among pigeons for the conspiracy group.
My definition of “thin” means no large dealer is sitting on a large position of 90% bags. Any dealer of national size would take your order for say 5 or even 10 bags of 90% but after that number most honest players would pass. This does not mean you could not buy say 50 bags of 90% – you could but you would most certainly pay more the last 25 bags (premium wise) than you did for the first group.
This is what I mean by using the terminology “thin”. And keep in mind that 20 or 30 years ago an order of 25 or even 50 bags of 90% was no big deal.
So is the amount of 90% silver coins shrinking? Probably not – but there are not as many 90% silver bags as people believe – and certainly not enough to go around if there was a surge in demand.
Why? First of all a great deal of 90% silver coins were melted in the 1980 Bunker Hunt silver debacle. These bags were melted because the only way you could get “spot” was by selling 1000 ounce bars into the Comex. The second reason supply is not nearly as handy is because the hardcore silver movement has developed and matured.
Remember that before the advent of modern bullion legal tender if you wanted a real silver coin which was also legal tender – 90% was the only choice. And silver coins minted in 1964 or earlier are still the number one choice of “preppers” who believe that all fiat paper money will be replaced by the biblical gold and silver. Real US 90% silver coins have no equal worldwide when it comes to actual everyday barter – not that this is a likely outcome – but it is a radical outcome adopted by a small minority.
I don’t want to argue that point one way or the other but simply want to point out that there are real supply dynamics working on 90% silver bags which will continue to move premiums up and down. And in the process make the reader aware that an order of say 50 or 100 bags of 90% silver coins would send a “red flag” alert to all large bullion traders in the United States.
The walk-in cash trade was slow today and the phones were average to slow – everyone may be getting ready for Thanksgiving.
The GoldDealer.com Unscientific Activity Scale is a “4” for Monday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Tuesday – 4) (last Wednesday – 5) (last Thursday – 4) (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.
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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We will be closed Thursday and Friday (Nov 27th and 28th) for Thanksgiving.
Thanks for reading – your friends at GoldDealer.com. Enjoy your evening and we appreciate your business.
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