Commentary for Thursday, Sept 11, 2014 (www.golddealer.com) – Gold closed down $6.10 today at $1237.40 so we are approaching almost a week of losses. This most recent trend is all about dollar strength so for now gold is getting no respect. Still we started the year at $1202.00 so it’s not like anyone should be too disappointed considering gold’s publicity agent was fired some time ago and a replacement has not yet been appointed.
Silver was dragged lower by gold finishing off $0.32 at $18.53. There is some renewed bargain buying at this level but I suspect the real physical players might back up the truck the closer we get to the sparkling $18.00 level. Keep in mind that there are real physical dynamics working within the silver bullion market. Investor interest has moved from 15 million ounces 10 years ago to 250 million ounces today. And the world’s mints continue to produce millions of modern silver bullion coins – all of which disappear into the world market.
Platinum closed down $11.00 at $1371.00 and palladium was down $15.00 at $833.00.
This from Paul Gilkes (CoinWorld) – Cumulative sales by the United States Mint of American Eagle platinum bullion coins during 2014 are less than 20 percent of projected levels.
U.S. Mint spokesman Michael White said that through Sept. 9, the Mint had recorded sales to its authorized purchasers of 14,000 of the American Eagle 1-ounce .9995 $100 platinum bullion coins. White said Mint officials had anticipated 2014 sales of 75,000 to 100,000 ounces after not offering platinum American Eagle bullion coins for five and a half years.
The lackluster platinum American Eagle bullion coin sales, according to White, are reflective of a downturn in sales for American Eagle bullion coin sales in all metals. Gold American Eagle bullion coin sales are currently down more than 50 percent from 2013 levels, while silver American Eagle bullion coin sales are off 13 percent.
Platinum sales
Sales of the 2014 platinum coins to authorized purchasers began March 10.
Before the 2014 resumption of American Eagle platinum bullion coins sales, October 2008 was the last month in which 1-ounce platinum American Eagle bullion coins were sold, with 8,600 recorded.
November 2008 was the last time any platinum American Eagle bullion coins were sold before 2014, with 800 of the half-ounce $50 coins sold. On Sept. 8, Mint officials announced that in preparation for year-end transitioning of all bullion coin programs, final orders for the 1-ounce platinum American Eagles to authorized purchasers would be accepted by the Mint on Oct. 1. Oct. 1 is the start of the 2015 federal fiscal year. As a result, costs associated with the production for those final orders will carry into FY2015.
Gold has been bearish for a month now moving generally downward from $1310.00 to the present close of $1237.40. But wider view is now necessary especially because the dysfunction between the European Union and the United States looks like it will be with us for some time – as we wind down quantitative easing while they wind up the same misplaced flooding of their fiat currency. If this continues there will be no race to the bottom in relative currency value – the euro will continue to tank as the dollar becomes the default choice relative to a safe place to hide.
All the other factors which should support gold – the expansion of the ISIS contagion – our own issues with creeping inflation – and unstable Middle East – Russia/Ukraine – the possible implosion within minor EU countries because their massive unresolved debt problems – even the probability that physical demand should soon catch traction because gold is now trading at a significant discount – all of these will dance to the US dollar/euro contango.
Intuitively you would have to believe that the dollar would not hold such sway – especially because our recovery is far from guaranteed especially when it comes to the job renewal. But in the trading business it is best not to get in front of a moving train and the Dollar Index is trading at yearly highs above 84.00!
Believe it or not the stock market has the same problem in reverse. There are plenty of traders which believe that market could be as much as 40% overvalued and so have decided to short their way to happiness and prosperity. A very bad idea – it’s best to stand aside and wait until the actual downward trend begins and then join the party if you have the sand.
This is the position newcomers should take with acquiring gold bullion. Stand aside for now and decide another cup of coffee is a good idea. What difference does it make if you don’t catch the exact bottom? This shakeout continues and time is always on the side of the patient trader.
If you are a long term – well established player adding to these lower levels is a good idea because buying more often in smaller quantities is the only defense you have in a negative market.
To get a better idea of pricing look at the one year gold chart: We have basically moved from $1350.00 down to $1200.00 – then reversed direction moving again to $1350.00 and once again down to the $1250.00 range. We are now testing the lower levels of this $150.00 range – I had hoped we would hold the $1240.00 recent support but this may not be in the cards so we may have to face a test of the $1200.00 (Dec – 2013) level. In the last 2 years gold has tested this support twice – recovered and moved higher so this is solid consolidation.
But let’s not get ahead of ourselves – in today’s market gold dipped below $1240.00 reaching at one time as low as $1236.00 before rebounding and finishing in a decidedly upward channel closing at $1237.40. Tomorrow’s action might provide some confirmation but we will have to wait and see.
This would represent a 37% pullback from the summer of 2011 gold peak of $1880.00 and while no one is claiming gold is approaching the “give up” phase there is no doubt bargain hunters will see long term value. Finally let me also point out an important physical fundamental. We have seen no significant sellers at these lower levels. This is important because we are under gold’s big three moving averages – 50 Day $1295.00 – 100 Day $1291.00 – 200 Day $1286.00. And still no blow-out sellers so the buyers at recent higher levels are going to wait this weakness out.
This from FX Empire – “Gold returned to its down trend on Wednesday falling to 1245.00 and recovered just a few dollars in the Asian session as traders took advantage of the low prices. Gold climbed to 1248.80 but is unable to keep its forward momentum and should return to decline when European markets open. The US dollar continued to gain trading at 84.43 holding near its 16 month high. Wall Street rose on Wednesday, rebounding after the S&P 500′s largest decline in a month, with social-media shares helping lift the technology sector and as investors pondered when the Federal Reserve would start hiking interest rates. Asian indices opened mostly higher on Thursday, taking cues from their Wall Street peers which recouped losses overnight. South Korean shares underperformed upon resuming trade after an extended holiday weekend.
Gold was trading near its lowest level in three months as markets opened on Thursday, hit by fears of an early hike in U.S interest rates, a stronger dollar and an apparent easing of tensions over the Ukraine. Gold’s safe-haven demand was also curbed after Ukraine’s president said on Wednesday that Russia had removed the bulk of its forces from his country, raising hopes for a peace drive now underway after five months of conflict. The recent drop in gold prices attracted some bargain hunters with SPDR Gold Trust, seeing an inflow of 3 tonnes to bring total holdings to 788.72 tonnes. India – the second biggest gold consumer after China -is not considering an immediate cut in gold import duties, Trade Minister Nirmala Sitharaman said, a policy that could continue to keep buying interest subdued in the country.
Market participants closely monitored U.S. President Barack Obama’s speech Wednesday night outlining a strategy against Islamic State, a group in Iraq and Syria whose savage methods have included the beheading of two American captives.
Silver prices declined by 0.7 percent on Wednesday in line with fall in gold prices. Ease of geopolitical tensions has led to the declining bids for the precious metal. Fall in nickel prices also dragged prices further. Silver is trading at 18.96 gaining 34 points to trade at 18.96 after taking a major tumble on Wednesday. As prices fell below the 19 level, traders started to buy up the cheap commodity. Platinum continued to fall along with precious metals to trade at 1381.95.”
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: Thursday 9/04/14 (151,579) – Friday 9/05 (106,165) – Monday 9/08/14 (112,676) – Tuesday 9/09/14 (128,253) and Wednesday 9/10/14 (140,721).
All in all these are pretty steady numbers indicating an orderly market – with little in the way of forced decisions or worried traders.
The walk-in cash business today was busy. Some moderate sellers of gold bullion but nothing really large. Large buyers however are still missing in action – this figures – gold is grinding lower. The phones were moderately busy early on but picked up considerably in the afternoon. Buyers and sellers were evenly matched and no whales played in the volume numbers.
This might be something to consider in that when the volume number reaches a level of 5 that usually means big money has arrived – perhaps signally some insider knowledge. These most recent volume numbers are created by a larger number of smaller players – so perhaps the general public is buying insurance.
The GoldDealer.com Unscientific Activity Scale is a “5” for Thursday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Friday – 3) (Monday – 4) (Tuesday – 4) (Wednesday – 5). The scale (1 through 10) is a reliable way to understand our volume numbers.
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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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