Commentary for Thursday, April 16, 2014 (www.golddealer.com) – Gold closed down $9.70 in follow through selling at $1293.40. Actually trading was quiet most of the day trading around the familiar $1300.00 level but a late bear market raid pushed prices below gold’s 200 day moving average ($1298.00).
I would not read too much into this further weakness as gold continues to feel around current levels because the gold market is closed tomorrow (Friday) for Easter. On this short trading week gold was down $25.00 and remains primarily defensive.
We will be open tomorrow (Good Friday) along with the banks and post office and expect very little action one way or the other because the metals and equities markets are closed.
The US claims serious consequences for Russia for incursion into Eastern Ukraine. This is a hollow comment from the US and allies who already have plenty on their plate. This entire mess continues to be ignored by traders along with a dollar index below 80.
Silver closed down $0.04 at $19.58.
Platinum was off $9.00 at $1428.00 and palladium was up $5.00 at $807.00.
(Kitco News) – Manufacturers in the Philadelphia area said business conditions improved massively in April, according to a report released Thursday. The index for current activity in the Philadelphia Federal Reserve’s manufacturing business outlook survey rose to 16.6 from March’s reading of 9.0. According to media reports, economists were expecting the survey to show a reading between 9.6 and 8.6. According to the report, April’s reading was the highest since September 2013. “The index has now increased for two consecutive months, following the weather-influenced negative reading in February,” the report said. “The April Business Outlook Survey suggests that activity in the region’s manufacturing sector continued on a path of growth this month.”
This is another sign of better US economic activity which will encourage the Fed’s tapering program and pressure gold prices over the short to medium term.
There is however a great deal of conflicting information regarding our economic recovery like the stagnation in new job creation and the whittling away of our middle class. But encouraging the Federal Reserve is the notion that they have created a huge fiat money system and for the present have gotten away with a dangerous gamble.
From Sharps Pixley regarding recent weakness in gold: China Data Led the Gold Sell-off – More evidences of China slowdown came when China reported that the March M2 growth has slowed to 12.1%, below the central bank’s target of 13%. The aggregate social financing in Q1 has also dropped 9.3% compared to Q1 last year although during the month of March the gauge has risen 120%. China’s Q1 growth slowed to 7.4% compared to the expected 7.3% and 7.7% in Q4. In the U.S., the March Advance Retail Sales jumped more than expected by 1.1% compared to 0.3% in February. The CPI and the core inflation, led by food and rent, rose more than anticipated by 0.2% in March. CPI rose 1.5% year-on-year, faster than February’s yearly rate of 1.1%. Rising inflation removes the fear that the U.S. is falling into deflation and allows the Fed to continue to taper. Physical Demand Trend – While the market has focused on China’s slowdown and her smaller appetite to take up gold so far this year compared to last year, the Chinese demand for gold will likely rise by 19% by 2017 according to the World Gold Council (WGC). China has become the world’s largest consumer of gold last year and is currently consuming around 1,130 tonnes of gold. However, the Chinese gold demand will likely be flat in 2014 while the gold-backed financing will decline as the central bank reins in the credit and trust loans growth. The WGC pointed out that the Chinese bank savings amount to US$7.5 trillion but only about $300bn is allocated to gold, signifying the potential for gold demand to grow as Chinese wealth climbs.
I read Ambrose Evans-Pritchard (The Telegraph) on a regular basis and his latest posting is worth a thought. Budget 2014: Britain’s false recovery is a credit mirage, unlike real recovery in the US – He basically bashes the Brits for poor planning but halfway through the commentary he says: “But what has he done about it? It is rich for the Coalition to pivot now towards manufacturing and exports, four years into its term. Historians will ask whether Mr Osborne wasted his chance to wean the economy off shopping malls, relying for too long on the old formula of easy credit to flatter the figures. Britain has at least avoided the trap of mass unemployment blighting half of Europe. The jobless rate has fallen to 7.2pc. It is 12pc in the eurozone.”
This last sentence is stunning when seen within the American context of an “improving” European economy. The read on this side of the water is that the European Union is getting much better and advocates cite things like the drop in bond rates for such places as Greece and Spain. Fair enough but let’s pose a question or perhaps even a theory. Suppose the US begins to struggle with the same credit mirage? Ambrose does go out of his way to say the US recovery is different but suppose it is not and the lagging jobs number becomes the new “normal”. Not out of the question even by CNBC standards and some academics believe the new QE might just be ineffective when it comes to pushing the current jobs number lower. At any rate the idea that England might be hanging over an economic cliff and Europe might be right behind her is scary. This high-wire act supports the “continued fiat money theory” and may yet be another prime gold mover just when the rumors of European bank failures have faded away.
From Quartz (Lily Kueo/Sharps Pixley) – China – How Marriage is keeping gold’s prospects bright in China – Reuters/John Woo Last year, Chinese families bought 669 tonnes of gold jewelry, about 40% of which was related to weddings, according to a new report by the World Gold Council. Parents on either side of a betrothed couple give the couple jewelry–often a three-piece set of a necklace, pendant and bracelet, what jewelry stores call jiehun san jin, literally “marriage, three gold”—to represent the passing of blessing from the elder generation to the younger. This is even more the case in rural or third and fourth-tier cities where traditions are stronger. “Yellow means rich and abundant… non-destructible. It’s a blessing that is passed on,” Albert Cheng, the World Gold Council’s Asia head tells Quartz. According to government data, the total number of marriages in China has grown 60% over the last decade to reach about 13.2 million as of the end of 2012—one reason why jewelry now accounts for over half of all private consumption of gold in China. As China’s middle class has grown, so has the amount families are spending on weddings. World Gold Council – Gold, once reserved only for the wealthiest families is quickly becoming a major part of China’s mainstream consumer culture. Average middle-class Chinese can afford to shell out $100 or $200 for small accessories. Gold pendants and other gold accessories are also increasingly being given for Valentine’s Day, as well as Mother’s Day and to celebrate the birth of a new child. The amount that Chinese families are spending on gold jewelry has almost risen almost six-fold since 2004, according to the World Gold Council report. Cheng expects jewelry demand to increase another 17% to 780 tonnes by 2017. Total private sector demand should reach 1,350 tonnes by then, which could account for as much as 30% to 35% of global demand, according to Cheng. World Gold Council – While weddings are propping up gold prices for now, in the long run that’s could change because China’s population of the young and marriageable is shrinking. The United Nations forecasts that the number of those between the ages of 15-59 will shrink to 908 million (pdf, p. 20-21) in 2025, from 938 million in 2015. But that effect on consumption won’t be felt until the 2020s, the World Gold Council says, at which point increased consumer spending overall might make up the make up for the difference.
The walk-in cash trade and phones today moved from moderately quiet to very busy which is not typical of the Easter week. At any rate our big activity number yesterday (9) was just that…a big volume day for buying and selling but not a trend. Too bad, I was hoping for something more to whistle about considering how rocky stocks have been.
The GoldDealer.com Activity Scale is a “4” for Thursday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Friday – 3) (Monday – 5) (Tuesday – 5) (Wednesday – 9). The scale (1 through 10) is a reliable way to understand our volume numbers.
On the new GoldDealer.com site: Comex closing prices are posted on the home page and individual product landing pages. Live pricing on the site moves all bullion products up or down during the day.
We reworked the All Bullion Products link on the home page. It now includes our Bid (blue) and Ask (green) prices. Premium quotes vary with product and look like this – “spot plus $15.00” or “spot plus $50.00” and bullion products list them under the live prices on their respective landing pages.
This makes product comparison simple and GoldDealer.com is the only precious metal site on the internet with this transparency. Live Chat is doing well and new customers like setting up their own encrypted accounts. We recommend upgrading old browsers to Google Chrome (free/secure) especially as our site becomes more advanced.
Sign up for our daily Gold Newsletter on the Gold Newsletter page if you are so inclined. Also note that our old Specials Email list is not compatible with the new format so we have cleared all data.
If you want to be notified about specials please check the appropriate box on the site. Also note that the email list for the Gold Newsletter and our Specials List are separate.
Email confirmation using a PDF File when buying or selling is functional and includes payment instructions. You can now see the 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).
Our four flat screens downstairs with live independent pricing (BullionDesk.com) are a big hit with the cash trade. This live stream moves all buy/sell prices so the cash buying or selling public can see the markets move on a real time basis. Our site uses the same pricing model so no more guessing.
Our best price guarantee (buying or selling) remains famous so call Kenny (1-800-225-7531) and get more money in your pocket. We guarantee your satisfaction and include our No-Nonsense Policy (NNP) which clients consider a welcomed extra. Like us on Facebook and follow us on Twitter @CNI_golddealer. Thanks for reading and enjoy your evening.