Commentary for Friday, Jan 31, 2014 (www.golddealer.com) – Gold closed down $2.60 at $1239.80 which makes for a $25.00 loss on the week. Gold actually began the day’s trading higher ($1254.00) helped by falling equities but it later reversed direction probably because of euro weakness which fueled dollar strength. The 5 day Dollar Index is firm supported by the continued Fed tapering which capped gold on the short-term. The foreign exchange problem in Turkey, South Africa and Argentina supports a stronger dollar as a safe-haven choice.
Silver closed down $0.01 at $19.10 which makes for a $0.64 loss on the week. Silver bullion buyers have been particularly aggressive as silver has made new recent lows: order of product popularity: (1) the $1000 90% silver bag. (2) The 1 oz silver round. (3) The American Silver Eagle Monster Boxes.
Platinum closed down $7.00 at $1376.00 which makes for a weekly loss of $52.00. Palladium closed down $4.00 at $703.00. The most interesting this week was the $52.00 decline in platinum. This happened despite the prolonged strike in South Africa. One would think a strike at the world’s largest producer would push prices higher. But traders cite a big buildup in inventories at Comex as evidence that a shortage is not likely to materialize.
So what is happening with gold? I tend to de-emphasize what others might see as threatening because in general most economies are not in peril they are just in trouble. The stock market is weaker, but we have seen huge increases (30%) this last year so weakness (down 5%) is not a big deal and does not really support the flight to quality issue relative to gold. So the stock/gold relationship is neutral.
The taper should also be taken with a grain of salt. Everyone thought that further tapering might be horrible for gold but initially we are down $20 billion from the $85 billion a month high and interest rates while initially higher are now trending lower and we are still flooding the world with fiat paper. It’s interesting how the thinking about quantitative easing relative to gold is changing.
The Chinese slowdown threat and subsequent decrease in their physical gold appetite is a wash as demand remains firm. And why not prices are inexpensive, the market seems to like the $1180.00 range on the low side and can’t seem to gather any support above $1270.00 so gold continues to unwind with a wait and see attitude. Look at it this way, suppose the new “cheap” turns out to be $1200.00? Everyone would say sure we saw a 30% pull back, everyone is flush with money and interest rates remain low so the water for gold looks fine. Perhaps another change in thinking is in the works.
The problem gold has now is that the big payout story is lost and those who claimed gold would be $5000.00 before the end of 2010 are now writing books about how to make a fortune in the new stock market. Am I excited about gold? I am always excited about owning gold and convincing others this form of insurance is important but I think 2014 will continue the push-pull and undecided nature of gold.
For the planners this delayed reaction is the best scenario because the next big rush into gold will dwarf past gains. If you have not seen our latest DVD End of the Road – How Money Became Worthless contact Sal (1-800-225-7531) for a copy. It makes a simple and compelling case for gold ownership. The DVD is not sensational in its claims and does not predict the end of the world but it does question how we create money and the obvious consequences.
And now the really famous Kitco survey: Survey Participants Lean Bullishly For Gold Market Direction Next Week – (Kitco News) – Split views dominate the weekly Kitco News Gold Survey, although a nominal number of participants lean toward bullish for gold prices next week. In the Kitco News Gold Survey, out of 33 participants, 21 responded this week. Eleven see prices up, while seven see prices down and three see prices trading sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts. Last week participants were bullish. As of noon EST, Comex April gold prices were down $22.40 on the week. Participants who see higher prices said the near-term technical chart trend remains supportive, especially as equity prices weaken. Another said the market is handling the Federal Reserve’s tapering of quantitative easing well. “I feel certainly on tapering is a positive for gold, removing the uncertainly that hurt gold over the past eight months. Moreover, the likelihood that they will cut back on the taper one month in the near future would be quite positive for gold, in my view,” said Adrian Day, president and chief executive officer of Adrian Day Asset Management. Yet a number of survey participants feel that gold’s January rally has run out of steam. “(Comex) open Interest has now declined and is back to the levels it began the year. The $1,275-80 area remains challenging resistance so we look for a little more downside risk to consolidate support levels. I expect the market to be lower than $1,250 at the end of next week,” said Ken Morrison, founder and editor of online newsletter Morrison on the Markets. There are a few participants who are taking a neutral view on gold after this week’s volatile action. “Gold is stuck in a range as safe haven and physical demand supports the market and dollar and equity strength limits the upside. Right now $1,280 and $1,230 are the important levels and we are closer to challenging $1,230 than $1,280. I have been bullish. but this week’s action has changed my stance to neutral,” said Frank Lesh, broker and futures analyst with FuturePath Trading.
The walk-in cash trade was hot all day and the phones were also busy to very busy. I think the public has definitely moved from blasé to interested and while I would not call this a buzz day it was close, and certainly busy enough to gather attention.
The GoldDealer.com Activity Scale is a “6” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Monday – 3) (last Tuesday – 6) (last Wednesday – 5) (last Thursday – 6) (Friday – 6). The scale is 1 through 10 and we believe this is a reliable way to “sense” real bullion business.
On the new GoldDealer.com site: Comex closing prices are posted (upper right hand corner of the home page) and are included on individual landing pages. Live pricing and the change function works: you can now compare the Comex close with live product pricing for a true value picture. The All Bullion Products link lists all products and includes all Bid (red) and Ask (green) prices. For some reason visitors overlook the heading All Bullion Products and move to the sub-categories under it like Gold, Silver, Platinum and Palladium. We are reworking All Bullion Products so when you hover over it with your cursor the text is highlighted.
For those who have asked premium quotes look like this – “spot plus $50.00” or “spot plus $3.00” and bullion products have them listed under the live prices. This makes product comparison easy and GoldDealer.com is the only site on the net with this transparency. For example click on the link American Gold Eagle and under Our Live Buy Price and Our Live Sell Price you will see: our Buy Premium Spot + $15.00 and our Sell Premium Spot + $50.00 – Easy.
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