Commentary for Tuesday, Aug 19, 2014 – Gold closed down $2.60 today at $1295.10 but considering the stronger dollar (81.89 – Reuters calling a 9 month high) we could have done worse.
The dollar was supported by good news in housing starts – low inflation numbers and continued weak oil prices.
In the shorter term compare today’s close ($1295.10) to Gold’s Moving Averages – 50 Day ($1305.00) – 100 Day ($1296.00) – 200 Day ($1284.00). A move below the 200 Day Moving Average will portend a test of the $1240.00 support.
Also compare the closing price today of Texas Light Crude ($94.76) to its Moving Averages – 50 Day ($101.00) – 100 Day ($102.00) – 200 Day ($99.00). This close is not good and lower prices are the result of Saudi and Iran production coupled with increasing talk of US oil sources coming on line. Some will say that demand is lagging but others claim the newly deployed fracking method in the US is the next big thing in discovery. Fracking is a way of developing oil fields which in the past were ignored but many believe the practice is dangerous.
So a stronger dollar – weaker oil – a continued strong stock market – less tension in both Gaza and Ukraine – and low inflation continue to pressure gold lower.
But I would not jump out the window just yet – even with all these negatives we are holding the important 200 Day Moving Average ($1284.00). And things change fast in this market so look for the bargain hunters to step up their game and safe haven buyers to return when geopolitical tensions return.
This Friday news from Jackson Hole, Wyoming will add another dimension to the price of gold. Yellen’s commentary on interest rates will reinforce the notion that there is still plenty of work to be done and cheap money remains king – even though US economy numbers improve. And the release of minutes from the Federal Open Market Committee will be studied carefully.
Silver closed down $0.22 at $19.38 and continues to struggle which is surprising even if you are not a big fan. With an improving economy you would think silver usage should be moving higher – the use of solar panels for example has skyrocketed.
And if you look at Silver’s Moving Averages it will also portend lower prices. Silver closed today at $19.30 – 50 Day Moving Average ($20.49) – 100 Day Moving Average ($19.97) – 200 Day Moving Average ($20.10). With today’s close we are below the 200 Day Moving Average – which is not good technically.
Could silver trade significantly lower? Perhaps – but consider that support above $18.00 goes back more than 5 years and the physical market begins to get hot at current levels because we are at or below production costs.
At any rate if you are a long term player in the physical market we are now approaching “cheap” and downside appears limited.
Platinum closed down $6.00 at $1438.00 and palladium was off $15.00 at $879.00.
I am beginning to feel good about gold today as the media is back to bashing – here are a few quotes from FXEmpire: Gold Flat As Traders Wait for Jackson Hole Speeches – Oil Prices Just Can’t Stop Falling – Gold Plunges on Softening Tensions in Iraq and Ukraine. When this commentary becomes completely vitriolic it is time to buy all you can.
I was reading the Daily Pfennig (Chuck Butler) when he mentioned Professor Kotlikoff.
The name sounded familiar but I could not place it so I used Google and came up with a 2013 post which is interesting:
America in Worse Fiscal Shape than Detroit – Professor Laurence Kotlikoff (Greg Hunter/USA Watchdog.com) – Boston University Economics Professor, Laurence Kotlikoff, says, “The country is in worse fiscal shape by many miles than Detroit. So, the country is essentially bankrupt.”
Dr. Kotlikoff estimates the long term debt and liabilities of America are more than $200 trillion! He is spearheading a bill in Congress called The Inform Act. It is an attempt to wake up the nation to our dire financial situation so something can be done to fix this enormous problem.
Dr. Kotlikoff explains, “The bill has been endorsed by over 1,000 economists, including 15 Nobel Prize winners in economics . . .Never in the history of this country have this many top economists from all political persuasions endorsed a piece of legislation like this.” Dr. Kotlikoff and his fellow economists all contend, “The country needs to do honest accounting.” The professor charges the government is “disguising the true problem.” Dr. Kotlikoff says, “The government is printing mountains of money to pay its bills. The Fed is printing 29 cents of every dollar that Uncle Sam is spending.” What happens if this continues? Dr. Kotlikoff says, “Eventually somebody recognizes this and starts dumping the bonds, and interest rates go up, and inflation takes off, and were off to the races.”
In closing, Dr. Kotlikoff warns, “This is going to crash, but there are different ways for cancer to kill you. It can be very gradual . . . or it can attack some organ and you can die overnight. Either of those outcomes can happen.”
A recent article on Bloomberg (Debarati Roy) was interesting – here are a few quotes for the bulls which are still waiting patiently. Billionaire Paulson Maintains Stake in Biggest Gold ETP – Billionaire hedge fund manager John Paulson stuck with his holding in the biggest exchange-traded product backed by gold as prices rose on demand for a haven.
Paulson & Co., the largest investor in the SPDR Gold Trust (GLD), kept its stake at 10.23 million shares in the three months ended June 30, a government filing showed yesterday. The holdings were unchanged for the fourth straight quarter. Gold rallied 9.3 percent in 2014, defying bearish forecasts from Goldman Sachs Group Inc. and outperforming equities and bonds amid escalating conflicts in Eastern Europe and the Middle East.
The haven appeal may be waning amid concern that the Federal Reserve will raise interest rates as the U.S. economy accelerates, according to Lance Roberts, the chief strategist for STA Wealth in Houston.
“Gold has been reacting to the headlines, but everyone is not jumping in as there is a lot of optimism about the U.S. economic growth,” Roberts, who helps oversees $600 million, said in a telephone interview Aug. 13. “Concerns about the U.S. raising rates will continue to weigh on gold.”
Assets in the SPDR Gold Trust are down 0.3 percent this year to 795.6 metric tons, after a 41 percent plunge in 2013. Holdings in global ETPs reached 1,707.9 tons on June 20, the lowest since 2009. They tumbled 33 percent last year, helping to erase more than $73 billion from the value of the funds.
Paulson’s rather large stake in the price of gold is well known – but the post adds another positive comment relative to gold:
“Bullion jumped 70 percent from December 2008 to June 2011 as the Fed bought debt and held interest rates at an all-time low.
Paul Singer, founder of the $24.8 billion Elliott Management Corp., said in a letter to investors dated July 28 that gold presents a “unique and not really very expensive” trading opportunity, anticipating prices may rise on mounting inflation concerns.
“People will want to hold gold because of the global political turmoil,” Jeff Sica, who helps oversee $1 billion at Sica Wealth Management in Morristown, New Jersey, said in a telephone interview Aug. 13. “Also, you need to hedge against future inflation.”
The walk-in cash trade was back to modest today – nothing special but there was a decent flow to the trading. The phones were also back on track after yesterday – not hurried but there was action both ways – no whale action however.
The GoldDealer.com Unscientific Activity Scale is a “3” for Tuesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Tuesday – 2) (last Wednesday – 2) (last Thursday – 3) (last Friday – 4) (Monday – 3). The scale (1 through 10) is a reliable way to understand our volume numbers.
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 – which seem to grow when things get this quiet. And it does not help that the world famous Randy’s Donuts is just down the street.
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