Commentary for Thursday, Jan 28, 2016 (www.golddealer.com) – Gold closed down $1.20 on the Comex today at $1114.90. So gold is hanging “around” so to speak but a lower closed today is not good considering the aftermarket yesterday was up as much as $8.00 after the FOMC appeared dovish in it comments. What is interesting is that Janet Yellen and group did nothing but the trade did not interpret her comments as dovish enough.
Gold did see a pitch to the upside on the open but like I have been saying – this market lacks conviction. We opened around $1110.00 moved to $1123.00 and sold off into the $1012.00 area before settling.
While this may not seem like much before you jump to conclusions look at the dollar. The Dollar Index closed yesterday at 98.92 and today has traded between 98.43 and 99.11. We are currently trading around 98.59 and yet gold moved lower.
And crude oil has been steadily stronger – this week. Tuesday we were trading less than $30.00 a barrel and today we are closer to $33.78. It would take a wizard to call this market but higher prices (something nobody expected) will help stabilize the world economy. It will also help Wall Street and China but it will take some of the safe-haven aspect away from gold.
There are two good things to take away from gold’s current condition. First, it remains defensive but is acting more like a safe-haven asset than it has in the recent past. Second, this is turning into a trader’s market – choppy up and choppy down profit taking versus the usual short exploration.
This is true because while gold has regained some of its old mojo essentially because the world paper markets are shaky it has not overcome the fear of Fed “normalization” of interest rates because even though the rest of the world is messy the US seems to be getting on its economic feet. Consumer confidence numbers are moving higher – real estate is doing just fine – wages are getting some traction. But then there is that pesky stock market and the red ink in China – you see what I mean – this is beginning to look like a back and forth tennis match.
That is why I don’t see a real break to the upside soon – nor do I see a significant drop in the price of either gold or silver. Just more of the same – testing recent lows with a scare or two thrown into the pot now and again just to keep everyone honest.
Silver closed down $0.21 at $14.23.
Platinum closed down $14.00 at $866.00 and palladium closed down $9.00 at $491.00.
This is our usual Thursday Chicago Mercantile Exchange report covering the last 5 trading days – so we are looking at the trading volume numbers for the “February” Gold contract: Thursday 1/21 (178,737) – Friday 1/22 (142,743) – Monday 1/25 (176,358) – Tuesday 1/26 (197,690) – Wednesday 1/27 (168,706).
We have introduced silver to our CME rundown – so we are looking at the trading volume numbers for the “February” Silver contract: Thursday 1/21 (48,797) – Friday 1/22 (45,772) – Monday 1/25 (37,400) – Tuesday 1/26 (56,610) – Wednesday 1/27 (37,694).
This from Kira Brecht – Is Gold Part Of Your Retirement Plan? Maybe It Should Be –
How much have you saved for retirement? If you are like most Americans, probably not enough.
There are a variety of polls and surveys, but none of them are rosy and optimistic. Most reveal that Americans, weighed down by debt, a lack of significant wage growth, and a consumer spending mentality simply have not socked enough away for retirement. One survey revealed that 28 percent of Americans have less than $1,000 in savings that could be used toward retirement, according to the 2015 Retirement Confidence Survey, Employee Benefit Research Institute and Greenwald & Associates.
Retirement is a different game for generations of citizens today. Company pensions in the private sector are few and far between, which leaves the old-school model of the "three-legged stool" obsolete. Financial planners of yester-year would point to the three potential income streams retirees can lean on during retirement years:
- Company pensions
- Social Security
- Your own savings
Guess what. The stool has fallen down and is broken. Unless you are an American working in the public sector, you probably aren't getting a pension. So, what's next? Social Security. Uh, bad news there too.
According to a recent report from the Congressional Budget Office, under current law they project that Social Security’s trust funds will be exhausted in 2029.
What does that mean? Benefits in 2030 would need to be reduced by 29 percent from the scheduled amounts.
Where do the funds come from? Social Security is funded primarily from payroll. Today, 96 percent of that tax revenue comes from the payroll tax—or 12.4 percent of people’s earnings, the CBO says.
The problem is that the U.S. sees a lopsided demographic impact.
It is estimated that 10,000 Baby Boomers retire every day, which is expected to continue into 2029. Oh—there is that year again. It's not really that far away. As Boomers retire it leaves less workers in the workforce to pay into Social Security. It's all very simple—less coming in, more going out equals a slash in benefits.
So, there went a significant portion of the second leg of your stool.
What's the third leg? Your savings. Now this is where it is time to get serious. With company pensions all but non-existent in the private sector, Social Security crumbling, you will need to rely on you in retirement.
Some simple rules of wealth building include pay yourself first. An argument can be made for diversification into gold as part of your retirement portfolio. Gold is a currency without a country and can help maintain purchasing power. The value of paper money rises and falls. Declines in the U.S. dollar means you can purchase less. The dollar has been rising over the past year, but all markets go in cycles including currencies.
Billionaire investor Warren Buffett highlighted this critical point in his 2014 letter to Berkshire Hathaway shareholders. He wrote about how over the past 50 years, the purchasing power of the U.S. dollar decreased by 87%. That means it now takes $1 to buy something that could be purchased for 13 cents in 1965, as measured by the Consumer Price Index.
Another factor in favor of gold as part of your retirement portfolio is inflation. Gold is a hedge against inflation. While inflation is low now, again markets and economies move in cycles. In the 1980's inflation levels hit 14% in the United States. Inflation is a wealth killer. A priority on your retirement funds should be getting it back and preserving your wealth, your purchasing power and protection against inflation. What's in your portfolio now? Time to make a plan.
Some comments about placing bullion into your retirement plan. For the most part this transaction is pretty straightforward – choose which bullion product you desire, set up the plan and call us for direction. The basic rule is to choose those bullion products with low premiums.
If you have run into a telemarketing scheme involving bullion coins be careful. These jokers don’t care a fig about you or your retirement. They are selling “limited edition” mint issues at two or three times their weight.
This scheme will land the sellers in jail eventually but at that point more than half your retirement money will be lost and telemarketers have no resources to go after. So caution is needed – avoid “gimmick” new production coins from various world mints which trade for ridiculous premiums. You worked too hard for the money to give it away to a company with a hard-sell and a smart story about how you are going to make a fortune.
The walk-in cash business picked up a bit today and so did the phones but I’m still disappointed in the volume numbers. The public is buying but there is not much buzz downstairs which really points to a loss of interest.
The GoldDealer.com Unscientific Activity Scale is a “ 4” for Thursday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Friday – 4) (Monday – 3) (Tuesday – 3) (Wednesday – 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.
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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.
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