Gold Quiet & Undecided – Watch the 50 Day Moving Average

Gold Quiet & Undecided – Watch the 50 Day Moving Average

Commentary for Wednesday, May 6, 2015 ( www.golddealer.com) – Gold closed down $2.90 today on the Comex at $1190.30.

Gold remains undecided and boring – but today’s lack of interest is surprising. The miss on the jobs support should have supplied a bit of fuel to the upside – it didn’t happen.

And consider the dollar is moving lower. The Dollar Index today was trading at 94.16 at the time of this writing and Tuesday’s close was 95.14. The range today was 93.88 through 95.22 so it was volatile but still losing steam relative to yesterday. Such a big drop should have pushed gold higher – perhaps by $20.00. But again this possible fuel to the upside got little attention and virtually no play with gold traders.

And Janet Yellen has the stock market on edge adding to the tension talk about a possible correction. Still not a hint of safe-haven buying.

Greece made a 200 million euro interest payment to the IMF and another 700 million is due on May 12th. Some feel that default is less likely if the Greeks are making these payments. The euro is back to $1.13 after recent lows in the $1.04 area.

The gold close today ($1190.30) is holding around the 50 Day Moving Average ($1191.00) – but just barely. Like I have been saying of all the metrics this is one to watch on the short term and then relate it to dollar strength. If this average holds up and the dollar continues to weaken gold should survive any further testing to the downside.

The following employment data is a miss no matter how you want to frame the picture and under ordinary circumstances would have pushed gold higher. I would not place too much emphasis on this but it might again hint that the Federal Reserve plan to raise interest rates in September may be postponed. Gold did not budge.

This from CNBC – “Private sector job creation kept up its recent pace in November, though the 208,000 new jobs was a shade below expectations, according to ADP.

Economists were looking for the report to show 220,000 new jobs. It was, though, the sixth consecutive month of 200,000-plus job creation as the labor market continues to mend.

Services dominated the picture, with 176,000 new jobs, compared to 32,000 in goods-producing, though the number was off from the 187,000 the previous month. Trade, transportation and utilities led the sectors with 49,000, while professional and business services was the next best with 37,000 new positions.

"Steady as she goes in the job market. Monthly job gains remain consistently over 200,000," Moody's Analytics chief economist Mark Zandi said in a statement. Moody's works with ADP to put together the monthly private jobs total.

Small business—with less than 50 employees—also continued its lead role, adding 101,000 jobs. Medium-sized firms, or those with between 50 and 499 employees, saw a steep dropoff, from 122,000 in October to 65,000 in November.

October's total number saw a slight upward revision, from 230,000 to 233,000.

The ADP report serves as a precursor to Friday's monthly nonfarm payrolls report, a data set Wall Street watches closely to gauge the progress of the labor market and the impact it will have on Federal Reserve monetary policy.”

Silver closed down $0.07 at $16.48.

Platinum closed down $6.00 at $1142.00 and palladium was unchanged at $795.00.

This is our usual ETF Wednesday information – these metrics are important to individual physical investors because they provide clues as to whether the physical market is enthusiastic and adding metals or is disappointed and selling metals.

Gold Exchange Traded Funds: Total as of 4-29-15 was 52,167,288. That number this week (5-06-15) was 52,253,136 ounces so over the last week we gained 85,848 ounces of gold.

The all-time record high for all gold ETF's was 85,112,855 ounces in 2013. The record high for Gold ETF's in 2015 is 53,901,867 and the record low for 2015 is 51,057,082.

All Silver Exchange Traded Funds: Total as of 4-29-15 was 621,755,405. That number this week (5-06-15) was 622,120,757 ounces so over the last week we gained 365,352 ounces of silver.

All Platinum Exchange Traded Funds: Total as of 4-29-15 was 2,576,136 ounces. That number this week (5-06-15) was 2,564,601 ounces so over the last week we dropped 11,535 ounces of platinum.

All Palladium Exchange Traded Funds: Total as of 4-29-15 was 2,932,240 ounces. That number this week (5-06-15) was 2,950,501 ounces so over the last week we gained 18,261 ounces of palladium.

This from Lawrence Williams / MineWeb/Ed Steer’s Gold & Silver Daily – China’s SGE gold flows still at high level – 51t last week Net Chinese gold imports from Hong Kong have slipped, but SGE withdrawals continue very strong. – "For the second week in a row, gold withdrawals from China’s Shanghai Gold Exchange (SGE) have been at around 50 tonnes – a high level for the post Chinese New Year period. Withdrawals from the exchange for the first 16 weeks of the year have already reached around 780 tonnes suggesting that if flows out of the SGE are maintained we could be in for a new record year with withdrawals well in excess of those of 2013, which totalled almost 2,200 tonnes. As we have said in these pages before, whether one considers SGE withdrawal figures to equate to Chinese gold demand, which the Peoples Bank of China would seem to suggest, or whether the true consumption figure is actually quite a bit lower as the mainstream gold analysts reckon, they still remain an excellent indicator of demand growth or fall in the world’s biggest market for the yellow metal.

Time was when Chinese mainland net imports from Hong Kong were considered the best proxy for Chinese demand and up until just over a year ago this was very much the case with the majority of Chinese gold imports coming in by this route. But since then the Chinese have opened up the routes by which gold can be imported and we suspect that now at least 40% of gold imports, probably even more so far this year, go directly into the Chinese mainland via ports such as Shanghai and Beijing, thus bypassing Hong Kong altogether.

For example, perhaps the most important route for gold into China is from the UK to Switzerland, where the gold is re-refined into more suitable sizes for the Asian markets, and then on to China. Bloomberg reports that, for example, in March 46.4 tonnes of gold were exported from Switzerland directly into China with only 30 tonnes going to Hong Kong – around a 60:40 ratio. The fact that such a high percentage was thus going directly to the Chinese mainland received little or no comment despite this being such a significant switch in the gold trade route. This compares with figures late last year which had a little over 30% of Swiss gold exports to China and Hong Kong going directly to the mainland with the balance to Hong Kong. It was also noted that US trade statistics for gold exports showed that in early 2014 nearly all the gold exported to China and Hong Kong was directly to the latter, while by late in the year 36% was going directly to the mainland (See: 36% of October U.S. gold exports to China went direct rather than via Hong Kong).

Thus Hong Kong, as a trade route for gold into India, can no longer be considered a proxy for Chinese demand and reports suggesting otherwise should be ignored. Indeed, one of these was the recent Reuters article headed China’s gold imports from Hong Kong dipped to 7-month low, with the article seeming to imply that this meant that Chinese demand was falling off sharply too. The report ended with the sentence “China does not provide official trade data on gold, so the Hong Kong figures serve as a proxy for flows to the mainland”. As noted above, in our view they no longer do and should be totally disregarded as such an important indicator nowadays, although Hong Kong still remains an important gold import route.

China is now reported to be further relaxing its restrictions on import routes in allowing Chinese mining companies with overseas gold mining subsidiaries, to import their gold directly to the mainland too, as well as allowing more banking entities to import directly. All this could make Hong Kong increasingly less relevant as an import route for gold into China."

The walk-in cash trade was slow to average with no buzz and the phones were the same even though our Activity Scale moved to a respectable 5. There has been some physical gold buying from the ethnic crowd which is encouraging but generally this market feels heavy.

The GoldDealer.com Unscientific Activity Scale is a “ 5” for Wednesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Thursday – 4) (last Friday – 3) (Monday – 6) (Tuesday – 3). 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.

When buying or selling you will receive an email confirmation. This includes a PDF File to confirm your invoice or purchase order and includes forms of payment and bank wire instructions. When doing business please check to see if your current email has been entered into the new system and check to see if your computer will accept our email (no spam).

We always appreciate keeping us up to date when moving or changing your email.

We believe our four flat screens downstairs with live independent pricing (BullionDesk.com) are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.

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. We will even wire funds into your account that same day for a small service fee ($25.00) if you are in a hurry.

In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s).

Like us on Facebook and follow us on Twitter @CNI_golddealer. Sal is now in charge of our Facebook page and he is a self-proclaimed expert on gold conspiracy theory. He would be happy to respond to even the most ridiculous conspiracy assertion on our Facebook page so why not join the fun?

Thanks for reading – we appreciate your business and enjoy your evening!

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.

Leave a Reply