Commentary for Friday, Dec 12, 2014 (www.golddealer.com) – Gold closed down $3.10 at $1222.00 in a light round of profit taking into the weekend. So this market is beginning to look pretty flat although gold was up $36.00 on the week.
To shake off the recent doldrums gold must move above its 100 Day Moving Average ($1235.00) or suffer the “another attempt” syndrome. Not helping matters is the slide in crude oil – this from CNBC – Making new multiyear lows this morning, U.S. crude was under continued pressure as the International Energy Agency cut its forecasts for global oil demand growth in 2015.
Producer Price Index was announced today – this from Uncle Sam – see you thought all those taxes you are paying were being wasted: “The Producer Price Index for final demand fell 0.2 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This decrease followed a 0.2-percent rise in October and a 0.1-percent decline in September. On an unadjusted basis, the index for final demand advanced 1.4 percent for the 12 months ended in November, the smallest 12-month increase since a 1.2-percent rise in February 2014.”
Looking for any sign of inflation on the wholesale level? It’s not there – and some claim the PPI reflects the CPI (Consumer Price Index) – just thought I would throw that in if your anticipation for higher gold prices short-term includes higher inflation numbers.
U.S. stock futures were sharply lower early today, after a strong rally Thursday lost steam as oil dropped below $60 a barrel in New York trading. The Dow and S&P 500 seem all but certain to post their first weekly losses in two months. (CNBC) – So much for the talk about weaker stocks may bring money into gold. The idea being that overbought stocks would be sold – perhaps in year-end book squaring and the money traded for undervalued gold bullion now trading at big discounts to old highs. When oil is cheap and continues to fall all commodities suffer.
With just hours before a government shutdown, the House narrowly passed a $1.1 trillion spending bill last night and a resolution to fund operations for two days to give the Senate a chance to act. (CNBC) – Oh how times have changed – remember when a food fight over the budget affected the price of gold?
Silver closed down $0.03 at $17.02. I would hate to think that the number 17 had become a “cooler” for the price of silver especially because it has traded around $20.00 for most of 2014.
By the way – those yahoo dealers who claim they have 2015 American Silver Eagles in their vaults already are comical. It is against the law for the US Mint to release 2015 Eagles before the year 2015.
Platinum closed down $10.00 at $1233.00 and palladium was down $3.00 at $816.00.
The week of Dec 8 through Dec 12 – Precious Metal Closes – Dollar Strength and Oil Prices
Gold Silver Platinum Dollar Index
Mon $1194.70 $16.21 $1230.00 89.13
Tues $1231.50 $17.08 $1246.00 88.62
Wed $1228.90 $17.13 $1243.00 88.00
Thurs $1225.10 $17.05 $1243.00 88.59
Fri $1222.00 $17.02 $1233.00 88.31
Palladium Rhodium Oil
Mon $798.00 $1175.00 $62.89
Tues $811.00 $1175.00 $63.23
Wed $821.00 $1175.00 $61.10
Thurs $819.00 $1175.00 $59.15
Fri $816.00 $1175.00 $57.60
Our Patented Employee Survey – Gold’s Direction Next Week?
Of course it’s not really patented but we do have some fun along the way. This is what the GoldDealer.com employees think – 4 believe gold will be higher next week – 3 think gold will be lower and 5 believe it will be unchanged.
Our Patented Customer Survey – Gold’s Direction Next Week?
Like the employees our actual customers were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 transactions – unscientific, yes, but worth considering because these people actually took action: 36 people thought the price of gold would increase next week – 38 believe the price of gold will decrease next week and 26 think prices will remain the same.
Gold prices these past 30 days have been encouraging – we have moved from about $1160.00 to the $1230.00 range on news of short covering – bargain hunting – and continued economic worry in Europe.
But the past few days this generally higher trend has flattened out – the momentum players have looked elsewhere – continued lower oil prices – worries over Wall Street and an overextended DOW have moved to the background and physical bullion selling by us has moved into what can only be called a typical holiday season.
Not bad but ho-hum considering the excitement we have seen these past four weeks. We have not seen much in the way of large gold sellers and the bounce of silver above $17.00 has also taken some of the immediacy away from the physical business.
The holiday season is rarely a big deal in the physical business. Traders go on vacation and market volume becomes thin – trading is quiet. Just look at premiums over spot for typical bullion products. They are cheap – there is plenty of inventory and consumers benefit.
At the same time however profits dwindle and more gimmicks are introduced by less than scrupulous dealers. A “gimmick” is a contrived low mintage gold coin – produced with the help of world mints designed to fool a new bullion buyer into believing they are buying rarity.
The telemarketer then buys the entire production and creates an “exclusive” – meaning you can only purchase it from them. The more “gimmick” products – invented by telemarketers and sold at ridiculous premiums the more fanciful the sales pitch.
So in these quiet times be especially careful of any bullion product not sold at a low premium.
Keep in mind that without a new round of “excitement news” – renewed fear of European problems or a decidedly lower dollar the gold trade is subject to a round of profit taking.
This latest round of higher gold prices has eliminated the short trade and produced about $70.00 in profit for the long trade. And just like the short trade can cover and produce that bounce to higher ground the long trade can book profits and once again push the price of gold below $1200.00.
To me this market feels like it wants to further consolidate – so for the long term accumulator of real gold and silver bullion buy into weakness. Spread out your budget and be patient – sooner or later the ocean of fiat paper money will eventually lose its “value” battle with gold.
So what’s in store for gold in 2015? Probably more of the same – range bound trading with sudden up and down drafts – it’s a sure bet that there are less physical gold investors with the sideways market we have seen over the past three years. And renewed interest in the DOW has also taken gold spec money out of this market.
But make no mistake – there is tension right under the surface because fundamentally everyone is worried about deficit spending worldwide. And most traders will admit that gold has been hammered so a bottom is probably close. That means all those people who were once very interested are just waiting on the sidelines.
As far as 2015 is concerned – I expect a flat to weaker market perhaps through the first quarter – by then gold should resolve this current indecision and the worldwide macroeconomic picture will encourage higher prices.
This memo from our friends at Fast Markets (Tyler Durden) is interesting. What Do They Know? CME Implements Gold, Precious Metals Circuit Breakers Up To $400 Wide – With memorandum S-7258, titled “Implementation of New NYMEX/COMEX Rule Regarding Special Price Fluctuation Limits for Certain NYMEX and COMEX Metals Futures and Options Contracts” released moments ago by the CME Group, and set to become effective on December 21, 2014, and which seeks a 5 minute trading halt when “price movements in lead-month primary futures contracts result in triggering events”… “as a measure that is consistent with promoting price discovery and cash-futures price convergence” in order to “deter sharp price movements that may, for example, be driven by illiquid central limit order books prevailing from time to time in otherwise liquid markets”, one wonders why now, and what does the CME know about upcoming volatility, or lack of liquidity, in the precious metals space that nobody else does (and does any of this have to do with the “berserk” algo test from November 25)?
Anytime there is a change in the trading rules it is scrutinized carefully. And in today’s world there is plenty of commentary about the coming volatility in the price of gold. I don’t know what to make of this change in trading rules – but it sure has gotten some attention.
There was some walk-in cash trade today – we have a large parking lot and Noah had no problem parking his boat – it’s still raining in LA. The phones were just average most of the day.
The GoldDealer.com Unscientific Activity Scale is a “3” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 4) (Tuesday – 4) (Wednesday – 3) (Thursday – 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.
You should now be getting email confirmations which include a PDF File when buying or selling so you can confirm your invoice or purchase order. This information also includes the various forms of payment and bank wire instructions. So when you buy or sell please check to see if we have your current email 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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Our holiday schedule this year – Christmas (Closed Thursday the 25th and Friday the 26th) – New Year’s (Closed Jan 1st and 2nd).
A gentle reminder – each year during this holiday season the packages delivered to all 50 states slow down because Santa has control of the air traffic.
We appreciate your business – thanks for reading and enjoy your weekend.
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