Commentary for Tuesday, April 21, 2015 ( www.golddealer.com) – Gold closed up $9.40 on the Comex today at $1202.90. This looks like some safe-haven buying as the Greek default possibility is once again considered.
This entire debt mess is turning into wonderment – even the EU deep thinkers can’t solve this mess. So for now gold is the beneficiary but believe me Greece is small change relative to problems in the US and Europe. These massive inequities create no public heat at all and so it’s amazing that this small country moves the gold price needle.
There was also some short-covering here in the paper market which is good because it keeps the wolf at bay during the beginning of the soon to be EU quantitative easing fiasco.
Now consider a much more important metric: the central banks of the world continue to accumulate gold when the public and paper traders think the price of gold is moving lower. Reports have the Russians buying 1 million ounces of gold in April bringing their estimated total holdings to 39.8 million ounces (1237 tonnes). The US holds 8,000 tonnes of gold and the world central banks have been net buyers for 14 quarters. The Royal Bank of Canada claims central bankers purchased 409 tonnes in 2014 – the second largest yearly accumulation in 50 years.
As far as gold bullion sales across the counter – generally things have been slow until late yesterday when a number of whales showed up. Now certainly a few large 6 figure buys does not make a trend but this is first of the big boy buys we have seen in a while.
The dollar was also a bit weaker in late trading which helped firm gold up on the short term. The Dollar Index range today was 97.64 through 98.46 and is 97.95 as of this writing – so we are moving lower on the daily range. There is also some credible commentary indicating the big push to higher ground in the dollar may be coming to an end. I am not sure at this point but if true it would certainly support gold above $1200.00.
Silver was higher by $0.12 at $16.00 with no real big action to report across the counter.
Here we go again! The Canadians are minting a small silver coin with a face value of either $100.00 or $50.00 and selling the product for its face value. Anytime you are paying a big premium for a bullion coin hold on to your wallet. This interesting take on legal tender coins is almost as old as I am – they tried it a number of times in the past 30 years. And they aren’t the only ones – the Japanese have also played this goofy card. The problem is that after these coins are sold for their “face value” to consumers there seems to be no reliable way cashing them in for “green”. The idea has been a flop in the past and there is no reason to believe things will change.
Platinum was up by $4.00 at $1152.00 and palladium was up $2.00 at $774.00. Things have quieted down here too but we still see the occasional trade of gold bullion for platinum bullion.
This from Reuters – The dollar held gains on Tuesday, drawing support as the euro slid overnight on increasing worries that Greece could default on its debt and eventually exit the single currency.
Athens is in negotiations with its Eurozone partners and the International Monetary Fund over reforms required to unlock remaining bailout funds. Public sector entities have been ordered to transfer idle reserves to the central bank to help with a cash squeeze.
The Greek crisis would have typically boosted safe-haven appeal for bullion, but the strength in the dollar, along with a sharp rally on Wall Street on Monday, offset any such bids.
Asian stocks were firm after China’s latest step to prop up its faltering economy lifted global equities.
Another focus will be U.S. economic data and a Federal Reserve policy meeting later this month for clues on when the U.S. central bank could start raising interest rates.
Russia’s gold reserves rose to 39.8 million troy ounces as of April 1 from 38.8 million ounces a month earlier, the central bank said on Monday.
Bullion investors were also watching physical demand in top consumer India, which on Tuesday celebrates the Akshaya Tritiya festival, considered one of the most auspicious days to buy gold.
Supply of the yellow metal into India has risen sharply in the build-up to Akshaya Tritiya, although it remains to be seen if consumers will lap up gold products with their usual enthusiasm, after a drop in gold prices.
The walk-in cash trade was steady today and so were the phones.
The GoldDealer.com Unscientific Activity Scale is a “ 5” for Tuesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Wednesday – 2) (last Thursday – 2) (last Friday – 2) (Monday – 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.
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