Gold Drifts – Short Covering Finished for Now

Gold Drifts – Short Covering Finished for Now

Commentary for Thursday, Dec 11, 2014 ( – Gold closed down $3.80 at $1225.10 in continued chart consolidation but it is clear the fizz has moved on – short covering evaporated – bargain hunting got lost and safe-haven buying is on hold.

It’s amazing what a few quiet days of trading can do to cap reasonable short-term strength in the gold market.

The Dollar Index was stronger today moving from 87.95 to 88.79 probably on continued better economic news and this pushed gold lower. And the resumed slide in oil prices was also another harbinger of lower gold prices – WTI crude was trading at $60.94 a barrel today and floor talk is that even lower prices are in the making.

I think lower oil is a much bigger factor in the price of gold today than most believe – it’s not just that we have moved from $100.00 dollars to $60.00 a barrel that would be bad enough – but we have seen the majority of the slide in 3 months.

The World Gold Council announced Russia added 19 tons of gold to their stockpile last month making the total 1168 tons. The ruble hit a new low today – so the price of gold as defined by their currency continues higher.

This is the third day in a row gold has held above $1200.00. No big deal really but it’s worth noting that recent previous attempts above $1200.00 have quickly failed – so the more days we hold this recent gain the better the technical picture becomes.

Still I am not excited about how fast we ran out of gas – even with many professionals claiming we have a short-term bottom in place. The big question remains “in place” for how long without showing additional safe-haven strength. Gold looks like it will be struggling to show a 2% rise in price this year – so at least we are not dealing with losses.

Silver closed down $0.08 at $17.05. Still the action has turned cold – like the weather in LA.

This is hard to believe – read this article by Coin World – The Mint has sold 43,051,000 ounces worth of American Eagle .999 fine silver bullion coins as of Dec. 10, according to its website. That tops the previous single-year sales record of 42,675,000 ounces, a mark set in 2013.

"Our American Eagle gold and silver bullion coins remain the coin of choice for investors around the world," U.S. Mint Deputy Director Dick Peterson said in a Dec. 9 release. "We are proud of our role as a leader in the global bullion coin market." After 3,426,000 ounces of U.S. Mint silver were sold in November, December is off to a strong start with 1,504,000 ounces already spoken for. Two times during 2014 monthly sales totals have exceeded 5 million coins. In March, 5,354,000 coins were sold, and 5,790,000 were sold in October.

Platinum was unchanged at $1243.00 and palladium was down $2.00 at $819.00.

Chicago Mercantile Exchange reports for the last 5 trading days – so we are looking at the trading volume numbers for the February Gold contract: Friday 12/05 (233,468) Monday 12/08 (234,103) – Tuesday 12/09 (230,992) and Wednesday 12/10 (237,167) Thursday 12/11 (233,726). These number remain very high – indicating a great deal of activity.

The following is interesting from The Economic Times / Casey Research – Ed Steer – Indian households spend 8% of its daily consumption on gold jewelry and coins – KOLKATA: An Indian household spends 8% of its daily consumption on gold jewelry and coins, which is only marginally behind medical expenses and education, according to a joint report by industry body Ficci and the World Gold Council. This startling revelation comes at a time when India’s current account deficit has widened sharply to $10.1 billion, or 2.1% of GDP , in the second quarter of FY15 due to high gold imports.

The report, `Why India needs a gold policy’, has come out with seven key recommendations for an effective gold policy for India. Elaborating on the recommendations, Somasundaram PR, managing director, World Gold Council India, said there’s a need to establish an India Gold Exchange along the lines of Shanghai Gold Exchange to ensure pricing standardization, better transparency and enhanced demand-supply analysis.

India is the second largest consumer of gold, next to China, with an annual consumption of 850-900 tonne. The report says that a gold board should be set up to manage imports, encourage exports and facilitate development of infrastructure needed to ensure that the Indian gold market functions to its maximum strength. It recommends development of accredited refineries in line with international standards, including upscaling the current domestic refineries. Somasundaram said that Indian banks should be allowed to use gold as part of their liquidity reserves which would incentivize them to introduce gold-based savings products.

"There’s a need to revitalize gold deposit schemes and introduce gold-backed investments and savings products," he said. The report stressed the need to create a more active marketing strategy for Indian handcrafted jewelry along the lines of "India-made jewelry", like the Swiss-made watches. It also pointed out that standardization of gold is necessary so that buyers and sellers can have faith in both the quality and price of their products.

The report also assesses policies adopted in countries like Turkey and China that have faced similar challenges and have devised public policies which have monetized the local stock of gold. The recommendations in the report, is backed by a survey conducted among 5,000 respondents across the country whose family in come varies between less than Rs 2 lakh and more than Rs 25 lakh per annum.

The survey shows 77% of respondents bought gold at least once during 2013 and more than half bought more gold last year than in the previous year. Incidentally, gold prices went up to Rs 33,000 per 10 gm as the government introduced strict import curbs and the rupee weakened against the dollar. "This data shows that India has a large appetite and therefore there’s a need for a gold policy which can be effective in the long term," WGC’s India head said.

For years I have been getting emails from folks suggesting a new currency is needed in the United States – and that currency should be made from real gold and silver. The proponents of this idea claim that such “hard money” will keep the government honest because only a return to the gold standard can save the world from currency destruction.

The idea is not new – in fact many people have tried to produce their own “money” – some like Joseph Lesher (1900 – Victor, Colorado) produced a substitute silver dollar called Lesher Referendum Dollar. Another failed but noble effort and I actually have one in my coin collection.

But my answer to all of these inquiries is similar – the government hates competition especially when it comes to making legal tender regardless of what the metal content.

So this post from is a cautionary tale about one Bernard von NotHaus – probably not his real name – but no matter. And this story has been circulating in numismatic cycles for years but the final resolution is worth reading if in some intense financial insight – after a few beers you decide that what is needed in this financial mess is a new kind of currency.

Bernard von NotHaus Sentenced to Probation for Liberty Dollar Conviction – Bernard von NotHaus, creator of the American Liberty Dollar (ALD), was sentenced to three years probation by a federal judge on December 2. This comes almost four years after his March 18, 2011 conviction in federal court on counterfeiting and conspiracy charges.

Von NotHaus was the founder and president of Liberty Services, formerly known as the National Organization for the Repeal of the Federal Reserve and the Internal Revenue Code (NORFED), a group the Southern Poverty Law Center says had connections to anti-semitism and the radical right.

Starting in 1998 and ending in July 2009–nearly two years after federal officials raided the group’s headquarters in Evansville, Indiana–NORFED and subsequently Liberty Services exchanged Liberty Dollars for federal reserve notes, with the intent to mix Liberty Dollars into the money supply of the United States to actively compete with U.S. currency. Von NotHaus’ leadership of both Liberty Services and NORFED officially ended on or around September 30, 2008.

The federal investigation of von NotHaus and his organization(s) began in 2005 and concerned the alleged minting of Liberty Dollars, then valued at approximately seven million dollars.

In 2006, the United States Mint, in coordination with the Justice Department, issued a press release warning consumers not to confuse Liberty Dollars with legal tender U.S. currency.

In the 2007 raid, federal officials seized documents and almost two tons of Ron Paul gold Liberty Dollars from Liberty Services’ office in Evansville. Other amounts of gold and silver were also taken.

Von NotHaus’ conviction in 2011 was on charges of conspiracy to publish, possess and sell/utter counterfeit coins in violation of 18 U.S.C. § 371, mail fraud or aiding and abetting in violation of 18 U.S.C. §§ 1341 and 2, and counterfeiting, uttering counterfeit coins, or aiding and abetting of such in violation of 18 U.S.C. §§ 485, 486 and 2.’Uttering’ is the act of putting coins or currency into circulation.

Until Tuesday’s decision by U.S. District Judge Richard L. Voorhees in Statesville, North Carolina, von NotHaus faced over 20 years in federal prison. Instead, the 70-year-old von NotHaus was sentenced to three years probation on each of the three counts, to be served concurrently. He will also be serving six months house arrest.

The walk-in cash trade was again slow today and the phones were just average.  

The Unscientific Activity Scale is a “3” for Thursday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Friday – 3) (Monday – 4) (Tuesday – 4) (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.  

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 ( 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.

Like us on Facebook and follow us on Twitter @CNI_golddealer.

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 evening.

Disclaimer – The content in this newsletter and on the website is provided for informational purposes only and our employees are not registered financial advisers. The precious metals and rare coin market is random and highly volatile so it may not be suitable for some individuals. We suggest before deciding on a course of action that you talk with an independent financial professional. While due care has been exercised in development and dissemination of our web site, the Almost Famous Gold Newsletter, or other promotional material, there is no guarantee of correctness so this corporation and its employees shall be held harmless in all cases. (California Numismatic Investments, Inc.) and its employees do not render legal, tax, or investment advice.

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