Commentary for Wednesday, Dec 11, 2013 – Gold closed down $3.90 in lackluster trading to close at $1258.50 with virtually no reaction to the budget deal which was passed under the radar.
As usual both the Republicans and Democrats claimed victory and they might both be right in that we seem to have avoided all that expected angst which could have supported higher gold prices but no one wants to tangle with entitlements.
Traders are still focused on the outcome of next week’s Federal Open Market Committee. It is amazing to me that floor sentiment now favors immediate taper and the subsequent pressure of gold prices.
Going against the trend (not such a bad idea these days) is Kira Brecht (Kitco/TraderPlanet) who makes a great case to – Sell the Rumor, Buy the Fact: Could Gold Rally on Tapering?
Of course it could but the chances of such a happening are against the majority thinking and if tapering happens as soon as everyone thinks there could be another $50.00 downside in gold.
But then again as the old saying goes…this market is so conflicted especially at these lower levels and with a mess of wild cards out there like China (continuing its monetary easing programs), Japan (ditto) and Europe really looking for a way out of the continued monetary confusion. I appreciate Europe is getting better but like our own entitlement programs they have not come up with a way to tame the tiger.
And unless the entire world simply blooms with renewed industry growth (not likely) the old imbalance problems will come home to roost and the most probable answer become monetary expansion.
But who knows really because even within this convoluted world economy you must deal with the reality of the physical demand from China and India. So reports surfaced today that North Korea has been selling gold to China not that they have much of anything left as some believe North Korea is on the verge of financial collapse.
Silver closed up $0.05 today also in quiet trading at $20.30. So we seem stuck within a dollar on either side of $20.00. Still we are selling all the JM 100 oz bars we can buy so the public seems happy and not too concerned that silver has not been able to break into higher territory.
Platinum closed down $3.00 at $1384.00 and palladium was unchanged at $737.00
This from Casey Research/Ed Steer’s Gold and Silver Daily: Gold premiums soar in India – An Indian wedding without gold is an unheard of thing. With the nation moving into wedding season mode, gold importers are making hay across the country, asking for extremely strong premiums from jewellers, who have been rushing to get hold of the precious metal. “Imports are down to a trickle. There is absolutely no gold available anywhere in the country. Most jewellers have been making do with recycled gold, but given the wedding season that is upon us, many of us are finding it difficult to keep pace with the soaring demand for gold,” said Manish Kedia, bullion retailer. While some retailers said they paid up premiums as high as $120 an ounce last week, on December 6, premiums crossed $180 an ounce higher than London prices. This news item, filed from Mumbai, was posted on the mineweb.com Internet site yesterday.”
This should make for interesting reading not because India is big on gold and not because recent government moves have suppressed gold ownership.
It is interesting because given the poor state of health recent gold news has been suffering through it is amazing that when people want gold and there is not much around they will pay the price no matter how high. This is bedrock in the gold community because real believers remember when they had to wait in line to either buy or sell and price was not a determining factor.
And when the reality of “no real physical gold” emerges like we are now seeing in India the public will pay unheard of premiums just to get out of paper money. Keep this in mind when considering a gold pricing strategy. Today because prices are on the wane selection in the bullion department is excellent and premiums are cheap. Tomorrow this dynamic could be turned on its head as selection becomes second rate and premiums increase.
The walk-in cash trade and phones were quiet today settling into what looks like typical pre-holiday interest as people move their attention from the precious metals to family and traveling.
The GoldDealer.com Activity Scale is again a “4” with buying and selling once again split pretty evenly. The CNI Activity Scale takes into consideration volume and the hedge book: (last Thursday – 7) (last Friday – 6) (last Monday – 6) (last Tuesday – 4) (Wednesday – 4). The scale is 1 through 10 and we believe this is a reliable way to “sense” real bullion business.
The new GoldDealer.com site is up and running and we continue to make changes and adjustments to various pages. Some pages on the old site were not carried forward so while the site ID has not changed a particular landing page might need adjustment. This new approach will show you live buy and sell bullion prices but you must talk with a live person to confirm and receive an order number. It will also soon include Live Chat, you will be able to set up your own customer account, receive automatic email confirmation, and ask for the daily Gold Newsletter email.
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