Commentary for Wednesday, July 8, 2015 – Gold closed up $9.10 today on the Comex at $1161.50, bouncing higher after testing lows overnight in Hong Kong and London as the domestic trade flattened out.
Like I have been saying this pattern is exactly what paper traders enjoy – a push to the downside with lots of fanfare followed by a short-covering rally supported by physical bargain hunting.
Will gold break down in the $1140.00 range? The whole world wants to know that answer but as of yet this has not happened even with the threat of increased interest rates by the Fed as early as September. No one in the bullion trade (that I’m aware) is willing to call a bottom here because the technical picture for gold still looks tenuous – but I can say that the cash physical market across our counter is hot and the phones are steady. Our general volume numbers have been increasing these past few months but nothing that would suggest a market turnaround.
This is interesting because the honest dealers would tell you a few weeks ago this market was covered with ice. What’s more interesting is that it would be a mistake to think that price action has created all this action – look at gold closings over the past few days – Monday ($1172.90) – Tuesday ($1152.40) – Wednesday ($1161.50). The spread was only $20.00.
The same is true of silver’s closing price – Monday ($15.72) – Tuesday ($14.97) – Wednesday ($15.12) – the spread was only $0.75 but action in the physical market has been explosive. Premiums on the usual suspects (Monster Boxes, $1000 face 90% bags and other small silver bullion products) had been increasing for more than a week.
Then the US Mint stopped delivering US Silver Eagles (temporary) and this was enough to bring the house down. The physical market went crazy – and then slowed, probably the result of thin inventory. The premium on US Silver Eagle Monster Boxes increased through yesterday and went fairly flat today (it’s still high – $3.40 over spot). A large seller appeared out of the mist, really. Was there trouble moving this large quantity of Silver Eagles? Nope – most were sold before they were actually delivered.
So is this the big beginning everyone has waited for in silver bullion? I don’t think so but it does clearly show that this market is not going away anytime soon – the small dip in price ($0.75) at the lower end of its current trading range brought in a monsoon of buyers in the typically slow months of summer.
Silver closed up $0.15 at $15.15
Platinum closed down $8.00 at $1036.00 and palladium was up $1.00 at $653.00. A big jump in rhodium bar sales today – big – so the public may not say much about this rare platinum group metal but they are watching prices carefully.
This from Reuters – U.S. Mint sold out of silver coins due to strong demand – NEW YORK, July 7 (Reuters) – The U.S. Mint said on Tuesday it temporarily sold out of its popular 2015 American Eagle silver bullion coins due to a “significant” increase in demand, the latest sign plunging prices have spurred a resurgence of retail buying.
In a statement sent to its biggest U.S. wholesalers, the Mint said its facility in West Point, New York, continues to produce coins and expects to resume sales in about two weeks.
This is the second time the mint has sold out of silver coins in the past nine months – it ran out of 2014-dated American Eagles in November last year.
In 2013, the historic drop in precious metals prices unleashed a surge in global demand for coins, forcing the mint to ration silver coin sales for 18 months. Dealers attributed the recent rush to purchase silver coins and bars to its low price relative to gold.
The gold-silver ratio was “way out of whack”, said Jon Edelman, owner of Edelman’s Coins in Jenkintown, PA. “That was a sign that silver was too low and people started buying. People view it as an opportunity in the long run.”
On Tuesday, one ounce of gold would buy as much as 78 ounces of silver, which is historically a very wide spread. It’s not clear if Tuesday’s rout had spurred a fresh round of spot buying, but demand has been healthy in recent months.
Sharp breaks in gold and silver prices typically boost buying among collectors and other retail investors, whose buying habits are sensitive to price moves. Due to its greater affordability, silver sales tend to outstrip gold in volume terms and attract a lot more retail buyers.
Last month, coin sales surged to 4.84 million ounces, the highest since January and more than double the 2 million ounces sold a month earlier. On Tuesday, spot silver prices sank almost 7 percent to $14.65 per ounce, the lowest for the year as the dollar climbed and amid a broader exodus of cash from commodities.
This from Neils Christensen (Kitco) – German Investors Buying Bullion As Safe-Haven Asset – German investors have been jumping into gold, protecting themselves against a freefalling euro and geopolitical uncertainty, according to European precious metals dealer Degussa.
Earlier this week, the company said in a press release that sales of gold bars and coins increased more than 50% in the first half of the year, compared to the first six months of 2014. Total sales equaled more than €700 million. According to the company, one of the most popular product among German investors as been the South African Krügerrand gold coins.
Wolfgang Wrzesniok- Rossbach, CEO of Degussa, said in the company’s statement that the sales appear to be related to the growing Greece credit crisis. Last week Greece defaulted on its €1.5 billion payment to the International Monetary Fund and in a referendum held Sunday, Greek voters overwhelmingly rejected the terms of the latest bailout offer from the nation’s Creditors.
After an emergency Eurogroup summit Tuesday, Greek formally asked for more financial aid from its creditors and has until Thursday to draft a detailed, cost-assessed plan on the economic measures it would take in exchange for loans. The Eurogroup will review the plan in another emergency meeting Sunday. There is some speculation that this could be the final deadline for Greece as they have to repay 3.5 billion to the European Central Bank by July 20. Analysts say there is between a 50% and 70% chance that Greece will be forced out of the Eurozone.
While Greece’s credit crisis is a major reason behind the drive into gold, Wrzesniok- Rossbach added that a falling euro was another strong motivator.
“Whilst the acute crisis in Greece is the most important driver for gold demand in Germany at the moment, other reasons have been the general weakness of the euro, which started already at the beginning of the year, as well as the zero interest-rate environment,” he said in the press release. “Many customers saw the purchase of gold also as an attractive alternative to holding cash.”
The European gold market saw the biggest gains at the start of the year as gold traded to a high of €1,168.12 against the euro. Although prices have recently been trending lower, gold is still trading around €1,050, up slightly more than 6% on the year.
The euro lost considerable ground against the U.S. dollar in the first three months of 2015, after the European Central Bank announced that it would start buying government bonds in an effort to stimulate economic growth and inflation.
Although EUR/USD is well off its yearly lows, set in mid-March, the currency pair is still down more than 8% on the year.
According to currency analysts, the biggest factor behind the euro’s poor performance is interest-rate differentials. The ECB’s loose monetary policy has been a stark contrast to the Federal Reserve, which has been signaling a potential rate hike sometime this year. Currently, markets are anticipating that the Federal Reserve will hike rates in September.
Currency analysts have been extremely bearish on the euro this year, expecting widening interest-rate differentials to drive the single current to parity with the U.S. dollar.”
All Gold Exchange Traded Funds: Total as of 7-1-15 was 51,259,065. That number this week (7-8-15) is 51,221,000 ounces so over the last week we dropped 38,065 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 51,019,356.
All Silver Exchange Traded Funds: Total as of 7-1-15 was 619,373,374. That number this week (7-8-15) is 619,566,645 ounces so over the last week we gained 193,271 ounces of silver.
All Platinum Exchange Traded Funds: Total as of 7-1-15 was 2,596,617 ounces. That number this week (7-8-15) is 2,606,279 ounces so over the last week we gained 9,662 ounces of platinum. A very popular platinum product this week was the Platinum Suisse Platinum Bar 1 oz.
All Palladium Exchange Traded Funds: Total as of 7-1-15 was 2,972,261 ounces. That number this week (7-8-15) is 2,981,283 ounces so over the last week we gained 9,022 ounces of palladium.
The walk in cash trade was steady most of the day but not as crazy as yesterday. The phones were also busy at times with order size all over the place.
And there was a small line at the back door. We apologize for the wait and by the way your animals are welcome in the store – no need to wait in the car especially in the summer months. We also provide fresh water for them.
The GoldDealer.com Unscientific Activity Scale is an “ 8” for Wednesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Thursday – 7) (closed last Friday) (Monday – 7) (Tuesday – 9). 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).
Thanks for letting us know when you move or change 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.