Commentary for Tuesday, Nov 4, 2014 – Gold closed down $1.90 at $1167.40 taking a breather but the dollar was only somewhat weaker. It looks very quiet out there which is surprising considering the big short position the paper traders are holding.
Whether this is the calm before the storm or a market which may be tired – further downside remains to be seen. If there is any sort of financial hitch or something which might look like a game changer you could see this market bounce higher as the shorts cover.
Still the general trend is lower and technically the bears are in charge.
Oil is once again under pressure – which is a gold negative. The Saudis announced they would sell oil to the US at $77.00 per barrel – it appears they are trying to remove the incentive for US shale oil production which could dramatically change the world oil dynamic.
Also the US Trade Deficit for September looks like $43 billion – this is up nearly 10% from August. Basically that would serve to weaken the dollar as more dollars are exported in return for incoming goods.
Finally the news relative to gold is not all bad – with today’s close at $1167.40 we have recently visited the low $1160.00’s now three times and found support. This will also discourage the large short contingent so perhaps market volatility will calm down and help gold to regain its footing.
Silver closed down $0.24 at $15.93 and surprisingly there is not a line out the back door – investors are still interested but at these prices I would have expected a punch. But don’t get me wrong last month we sold more American Silver Eagles than in any month in the past four years.
Platinum closed down $18.00 at $1224.00 and we are seeing some trades of gold bullion for platinum bullion. Palladium was off $13.00 at $791.00. Still this area of precious metal investment remains small potatoes compared to gold and silver bullion – that’s why I like it so much. There is little supply comparatively and investor demand is still in the early stages – most people who think about gold or silver don’t even consider this group of metals.
The consistent demand for gold from both China and India is one of the constants in the precious metals business. This information however gets sent to the back burner especially when the market is defensive.
I think however that this is exactly the right time to remember both India and China have a plan which most of the time goes unnoticed by Western investors. Americans pay plenty of attention to foreign gold buyers when the markets are moving up but when they are moving down this information is discounted.
Sooner or later the transfer of real gold from the West to the East will tip in favor of those countries that have a genetic disposition towards gold – a kind of gold DNA which is completely lacking in the United States.
This from Koos Jansen (Bullionstar Blogs/Ed Steer’s Gold & Silver Daily) – Insatiable Chinese Gold Demand Continues Unabated – “As we can see in the table, China has net imported 46.7 tonnes in week 43 and 1036 tonnes year to date (until October 24). Note, these are estimates, but have proven to be very precise. I’ve been reporting on these numbers for a while now and sometimes I don’t realize anymore how much gold we’re actually talking about. While 99 % of the financial industry has no idea how much gold is being soaked up by China – because they rely on numbers from the World Gold Council – we (me and regular readers) are almost habituated to these immense numbers. 46.7 tonnes of gold are 3,736 London Good Delivery bars, more than 46 thousand 1 Kg bars and about the same amount as the official reserves of Finland, imported in one week! Additionally, this excludes PBOC purchases, which is not being bought through the SGE, according to an SGE official. Though a CGA official confirmed the PBOC is buying continuously.”
Yesterday I suggested that even with negative gold and silver news – the physical demand across our counter was surprisingly steady. Not record setting of course but in light of everything that has happened – we still see more buyers than sellers and virtually no capitulation.
How can this be in light of the negative market slant? When gold began to weaken (Oct 21st) gold was trading around $1240.00. At this time we saw several large gold bullion sellers. And since that time gold has lost about $80.00 – not gradually but a move which dropped out of the sky. Certainly it was helped by the ending of the US quantitative easing program and eventually the announcement by the Bank of Japan that it would institute yet another massive round of QE to help the Japanese economy.
But during this fall we have seen no capitulation by gold bullion holders. Very large buyers have not returned but the small to midsize gold bullion market seems intact. So here is a question to ponder: has a small but significant portion of the American gold bullion market adopted the Chinese and Indian attitude relative to gold?
I’m not talking about die hard gold supporters who believe in an “end of the world” scenario. I’m suggesting a relatively new component who believe the paper dollar is doomed. A similar new faction might also be seen in the unexpected move by the small group of people in a few states who want to create real legal tender gold and silver coins.
Read what Barry Norman (FXEmpire) has to say –“Demand for physical gold in the world’s biggest markets for the metal appears to be holding up well despite the sudden falls in price, which has puzzled many bullion traders. The main triggers for demand at present seem to be private purchases of jewellery with buyers piling in, especially in emerging markets in Asia and India, to take advantage of lower prices. China’s imports of gold in September were up significantly month-on-month, as were the country’s exports of gold jewellery valued at $10.7bn. Most of this gold went to Hong Kong.”
The walk-in cash trade was again very active – but our phone business was surprisingly on the slower side.
The GoldDealer.com Unscientific Activity Scale is a “8” for Tuesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Wednesday – 3) (last Thursday – 5) (last Friday – 5) (Monday – 8). 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 very busy and see a low number – or be very 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 – perhaps a week or two. 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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