Commentary for Friday Sept 27, 2013 (www.golddealer.com) – Gold closed up $14.80 at a respectable $1338.40 today. It actually traded as high as $1345.00 so right at its 50 and 100 day moving average but the week in general lacked conviction (up $6.00). On a more optimistic note the $1340.00 level has presented problems for gold so if we punch through this overhead resistance you could see a run to the upside.
Silver was quiet up $0.06 at $21.78 although we have seen a number of “big-boy” purchases this week using depository storage. If this sounds interesting call Ken Edwards (1-800-225-7531) for details: storage is easy and you can buy or sell the bars with a simple phone call. Also note the continued cheap premiums on $1000 face 90% bags at under $2.00 an ounce.
Platinum closed up $4.00 at $1416.00 and palladium was up $8.00 at $730.00. The workers at Anglo American Platinum (South Africa) are going to strike over job cuts so further reason to believe platinum will be moving higher in the short-term. There are other positives including solid car sales and better economic numbers both here and in Europe. Why there is not more excitement over platinum is still a mystery.
Worth noting is that the Consumer Confidence number this month disappoints. This survey is done by phone and asks questions about spending, finance and business expectation so it would seem the public is not exactly excited about this recovery. I think the Fed is more sensitive to stuff like this than they would have you believe and so less tapering talk is encouraged.
This according to Marketwatch: “Evans told reporters that there was a “decent” chance of a taper this year, according to a report on Reuters, cited by CNBC. “But whether or not we’ll have enough confidence at the October meeting or the December meeting, I just can’t say that with a lot of certainty… it could go a little bit longer,” he said. Evans was attending a conference in Oslo, Norway. Read more on Evans. ”The U.S. dollar index also slumped to its session low in the wake of Evans’s remarks. However, his comments, overall, were ambiguous. Still, the gold market bulls chose to jump on those specific Evans remarks they deemed to be bullish,” Wyckoff said.”
Gold is being pushed a bit higher on Federal Reserve easing talk but I think there are other factors which support prices at current levels. The dollar is weaker, stocks are moving lower, and there is finally expectation that gold demand from India will pick up seasonally. Finally we are seriously considering the “shut down” issue not in the sense that Congress will drop the ball but pressure is building because time is running short.
I think this is temporary and remember last time (2011) they turned this monetary issue into a political football the government did run out of money for a short period and the result was a resounding yawn. Your money at work folks no wonder the majority of Americans believe the lot (Democrats and Republicans) are not doing a good job.
And now the famous Kitco gold survey: Gold prices are forecast to rise next week, a majority of participants in the weekly Kitco News Gold Survey said. In the Kitco News Gold Survey, out of 36 participants, 19 responded this week. Of those 19 participants, 11 see prices up, while four see prices down and four are neutral or see prices trading in a range. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts. Last week, survey participants were nominally bullish. As of noon EDT Friday, prices were up about $8 on the week. As of Sept. 13, survey participants have been correct three of the past five weeks. Sean Lusk, director commercial hedging division at Walsh Trading, said there are a few reasons why he sees prices rising. The split views of the varied Federal Reserve governors on monetary policy suggest that uncertainty remains, which “conveys to me traders will most likely have a bullish bias,” he said. Gold could also find safe-haven demand if next week’s nonfarm payrolls report comes out disappointing; additionally, gold could find more safe-haven demand amid the fiscal brinkmanship going on in the U.S. Congress, he added. Mark Leibovit, editor, VR Gold Letter, said he’s giving bulls the benefit of the doubt, but is watching technical charts closely. “Under $1,285-$1,300 the chances of seeing a retest of $1,180 or even lower prices becomes a possibility. Bearish sentiment is still high and the ‘fundamental’ case presented by most analysts is bearish. This makes me more bullish, because I believe their view of the fundamental case is incorrect. Gold is a currency and with world currencies all being devalued and the fact they are essentially nothing more (than) paper is enough of a reason to be accumulating gold and to remain constructive,” he said. Those who see weaker prices said gold’s outlook remains soft. “I think gold will be lower next week,” said Kevin Grady, owner of Phoenix Futures and Options LLC. “Although gold may hold a bid as concerns persist about a resolution to the debt ceiling, I think some mines will take advantage of any rally to start hedging. Every recent rally has been met with very aggressive selling. The taper has been postponed but it still looms heavy on gold. Once this program begins and we see interest rates rising, we should be testing our recent lows of $1,182. The mines are starting to realize this. I will be watching the forwards market for the first signs of any major hedging.” A few market participants said they expected gold prices to hold in the current range. “Most markets this week are being held hostage by the budget/government funding battle and it is anyone’s guess as to the outcome,” said Frank Lesh, broker and futures analyst with FuturePath Trading. “Gold posted an inside week — within last week’s range — so no new price discovery to consider….The fundamental factors remain the same, physical buying supports on the dips and ETF liquidation limits the highs. I still view gold as range bound and whichever way it runs, you just have to go for the ride. I remain neutral.”
Tekoa Da Silva (Kitco) has a conversation with James G. Rickards, author of the New York Times best seller Currency Wars. “Sure, this is a worldwide phenomenon. You’re seeing it with massive acquisitions of gold in Russia and China. Now the Russian and Chinese gold was never held by the Federal Reserve back in New York in the first place, so that’s a little bit of a different issue, but they’re acquiring it from their own mines. In the case of China, they’re importing it. I described this in my book Currency Wars. In 2009, the Pentagon conducted a financial war game, the first ever financial war game. I was involved in the game design, working with the Pentagon, and I also participated in the game. We did it at a top secret weapons laboratory right outside of Washington D.C., and one of the scenarios that we put on the table and played out was that Russia and China would acquire massive amounts of gold and then ultimately announce a new gold backed currency and it’s such that Russian natural resource exports, and Chinese manufactured goods could only be paid for in this new currency as a way of marginalizing the dollar. Now, just to be clear, there’s no way that the Chinese yuan or the Russian ruble are going to become reserve currencies anytime soon, maybe ever. So I’m not talking about the Chinese yuan replacing the dollar. That’s not going to happen. But what we were positing was a completely new currency backed by gold to marginalize the dollar. Now it was fair to say we were laughed at by a lot of people and ridiculed for even putting that on the table. But since 2009, things have played out exactly the way we projected, meaning Russia has increased its gold reserves by 65%. They’ve gone from about 600 tons to over 1000 tons. China has increased its reserves by a multiple, they’ve gone from 1000 tons to some number and they don’t disclose it, so you have to use various sources, but somewhere between 3000 and 4000 tons seems to be a reasonable estimate. So Russia and China have proceeded down exactly the path that we projected in 2009 even though people thought that was kind of a joke at the time.”
I found his comment fascinating enough that I bought the book on Amazon. Rickards’ new book (2014) The Death of Money: The Coming Collapse of the International Monetary System from Penguin Random House also looks like a good read. Granted this type of thinking is completely outside the box but should be considered especially if you believe “things” are going to blow up. And before you discount this kind of meltdown it is my experience that about 20% of the people who read this missive are hard-core physical gold and silver buyers who are convinced this is gospel.
The walk in cash business today began slow but picked up in the afternoon and the same was true for the phones. I still think the public is in a “wait and see” position going into the weekend but they are closer to action today than anytime this week. The CNI computers place my almost famous LA Physical Business Number for Friday at “2” (and Thursday was also a “2”). For those who have asked this scale is based on combined volume numbers and anything over “5” is relatively busy.
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Written by California Numismatic Investments (www.golddealer.com).