Commentary for Tuesday, Nov 25, 2014 – Gold closed up $1.60 at $1197.10 in typical holiday trading – a bit on the boring side but there was a sudden sell-off in early New York trading but the market quickly recovered. Perhaps this was some short-term testing to the downside by the short trade looking for weakness on thin volume.
Still the quick recovery might indicate that while American traders are already on the Turkey Road the market in general remains defensive – with some tension in the air. I think the general feeling is not particularly bullish – the longer term technical picture being what it is but the trading floor may sense there are bigger moving parts especially in Europe and Russia.
The Dollar Index came off its highs reacting to poorer than expected economic data. This helped support gold at the upper end of its current trading range. The Dollar Index closed yesterday at 88.15 and of this writing is trading at 87.96 – so somewhat weaker. When and if this trend will reverse is key to understanding the price movement in gold. But with other major currencies being inflated at a greater rate the rest of the story will have to be told at a later date.
This from Market Watch – Economic data: The revised GDP report showed that the economy expanded even faster than previously reported; however, analysts warned that the growth rate is likely unsustainable. Weighing on sentiment was a surprise dip in consumer confidence index in November, as consumers were less optimistic about both current and upcoming conditions.
U.S. home prices were just about unchanged in September, as annual growth cooled to the slowest year-over-year pace in two years, moving the market closer to sustainable gains, according to data released Tuesday.
This from James Hyerczyk (FXEmpire) – Hedge Funds Increase Long Gold Positions – “One factor helping to underpin gold prices is the strong counter-trend buying by the hedge funds. So far their participation has only been strong enough to complete a 50% to 61.8% retracement of the break from the October 21 top at $1256.20 to the November 7 bottom at $1132.00. On any weakness, these buyers may show up to produce a potentially bearish secondary higher bottom. This is chart pattern that bullish traders should be waiting for. The first level to watch for buying is $1170.00.
On Friday, the Commodity Futures Trading Commission reported that hedge funds and money managers boosted net long positions in gold futures and options to 60,307. This was the highest level since late October. Look for the rally to extend if the funds continue to liquidate shorts and increase longs.”
Silver closed up $0.18 at $16.55. Holdings in silver ETF continue to expand. They currently stand at 19,885 tonnes – which is up about 140 tonnes in the past month. This supports the idea we hear across the physical counter – that silver seems cheap. I am reminded of course that silver just 10 years ago was $6.00 but considering we are in a new era of silver bullion awareness I expect bigger things as the world economy settles down. If silver doubles to $33.00 we are still well below 2011 peak so diversification here makes sense – especially if you have been waiting for a better deal.
Platinum closed up $16.00 at $1223.00 and palladium was also higher by $6.00 at $795.00. I like the platinum bullion play here because its premium is cheap ($26.00) relative to gold.
With many countries in the world inflating – including our own (even as quantitative easing has been stopped) it is a wonderment why we are not seeing rising gold prices pushed by rising inflation. But enough of that for now – let’s look at the critical reason monetary debasement is now essential. No government wants to be truthful with their citizens regarding real debt or entitlements. Of course disclosure would be a good idea because it would allow Americans to understand – be frightful – come to their senses and finally do something about this growing debt time-bomb.
The only reason our debt-hand has not been forced is because all money worldwide is cheap. And as long as interest rates are near zero this monetary expansion works to the benefit of the inflation government. But what do they do when interest rates rise and the cost of finance places all these wonderful programs on the griddle?
As far as who should move first – it should be us because the Europeans have completely abrogated their responsibility. The IMF has done some talking along these lines but scant progress has been made because most of the countries they can pressure are already dead broke.
This from Lance Roberts (X-Factor / Contra Corner) – Go Figure – 86 Million Full-Time Workers, 148 Million Govt. Beneficiaries – “The market rallied sharply on Friday on the back of announcements that China was cutting its overnight lending rate and Mario Draghi promising to buy more bonds if necessary to ensure the return of inflation.
Here is a question for you: “Since stocks are supposed to be a reflection of economic growth, then why are stocks rallying on the back of news that clearly show deteriorating economic conditions?”
The reason that stocks are rallying is obvious: Liquidity.
What should be surprising is that despite globally low interest rates, massive liquidity by Central Banks and complete support for the banking system – inflation remains virtually non-existent. Such realities are not going to stop the Eurozone and Japan from doing more but therein lies Einstein’s definition of insanity.
Meanwhile, back in the U.S., the Federal Reserve has stopped their latest rounds of bond buying and are now starting to discuss the immediacy of increasing interest rates. This, of course, is based on the “hopes” that the economy has started to grow organically as headline unemployment rates have fallen to just 5.9%. If such activity were real then both inflation and wage pressures should be rising – they are not.
The Dismal Economy – According to the Congressional Budget Office study that was just released, approximately 60 percent of all U.S. households get more in transfer payments from the government than they pay in taxes.
Roughly 70 percent of all government spending now goes toward dependence-creating programs. From 2009 through 2013, the U.S. government spent an astounding 3.7 trillion dollars on welfare programs. In fact, today, the percentage of the U.S. population that gets money from the federal government grew by an astounding 62 percent between 1988 and 2011.
Recent analysis of U.S. government numbers conducted by Terrence P. Jeffrey, shows that there are 86 million full-time private sector workers in the United States paying taxes to support the government, and nearly 148 million Americans that are receiving benefits from the government each month.
Yet Janet Yellen, and most other mainstream economists suggest that employment is booming in the U.S. Okay, if we assume that this is indeed the case then why, according to the Survey of Income and Program Participation conducted by the U.S. Census, are well over 100 million Americans are enrolled in at least one welfare program run by the federal government. Importantly, that figure does not even include Social Security or Medicare.”
(Here are the numbers for Social Security, Medicaid and Medicare: More than 64 million are receiving Social Security benefits, more than 54 million Americans are enrolled in Medicare and more than 70 million Americans are enrolled in Medicaid.)”
The above information should scare the average American citizen. It should be a wakeup call regarding government largess and its eventual outcome. But this has been going on for so long that it’s being ignored because there is no apparent victim.
Of course the victim is the American way of life but for now the “free lunch” crowd is winning. And the American state of affairs is actually not so bad when compared with many countries in Europe. So if the American window for turning this debt spiral around is getting smaller – what about everyone else? Is it possible that the Keynesian economic theory model is broken?
The most obvious result to be expected from this “create more fiat paper to pay current and future debts” is inflation. But if you wave the inflation flag today you might be deemed unstable in the current economic environment especially with the profits being made on Wall Street.
During this admittedly slow holiday season it might be time to reconsider the consequences of a debt model which has been adopted worldwide. And the importance of gold bullion as an insurance ticket against an increasing debt model which is sure to go bankrupt.
The walk-in cash trade really slowed down today and so did the phones. This is holiday trading at its best – slow and boring but who can argue with Thanksgiving – which reminds me the store will be closed this Thursday and Friday.
The GoldDealer.com Unscientific Activity Scale is a “3” for Tuesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Wednesday – 5) (last Thursday – 4) (last Friday – 6) (Monday – 4). 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.
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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We will be closed Thursday and Friday (Nov 27th and 28th) for Thanksgiving.
The American Gold Buffalo Proof sold well today.
Thanks for reading – your friends at GoldDealer.com. Enjoy your evening and we appreciate your business.
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