Commentary for Monday, Jan 13, 2014 – Gold closed up $4.20 at a very reasonable $1250.90 as some commentators claim a short covering rally or bargain hunting. I don’t know about that because this market still looks directionless and because of that still subject to volatile swings one way or the other. Still gold did close higher this third day in a row and is now at its highest level in 4 weeks. Little fanfare as accompanied this rally but some key levels have broken higher: gold moved above its 50 day moving average ($1248.00). The jobs number announced Friday added some coal to the fire as some believe this encourages further quantitative easing but the markets discounted this notion almost immediately claiming an anomaly.
Silver closed up $0.16 at $20.36 and continues buzz free.
Platinum moved higher by $7.00 at $1443.00 and palladium was down $6.00 at $739.00.
Positive stories about gold are getting harder to find. This from Allen Sykora (Kitco) is worth a peek: ETF Securities: Gold Potentially Forming Double Bottom – Gold is potentially forming a double bottom, says ETF Securities. The precious metals ended the first full trading week of 2014 on a strong note, boosted by the disappointing December U.S. employment data on Friday, the provider of metals exchange-traded funds says. Gold dipped into the $1,180s on the final day of 2013, holding just above the June low for the year. “Gold may be carving out a double bottom near the US$/1,200 level, supported by strong physical demand, notably from Asia,” ETF Securities says. “Indicative of strong physical demand, gold one month forward rates remain negative. At the end of 2013 when the December futures contract expired, the gold futures curve was in backwardation, another indication of strong physical demand. In contrast to a year ago, after the strong tailwinds coming from the global economic rebound in 2013, analyst consensus expectations for 2014 are strongly in favor of continued depreciation in gold prices and appreciation in equity prices. The bearish gold story is well known: increasing bond yields, coupled with a stronger U.S. dollar as the Fed tapers its stimulus activities because of fading tail risks, is keeping investment demand for gold muted. Increasingly compelling though is the contrarian stance on the back of fundamentally attractive precious metals prices, which ended 2013 below most all-in-cost of production estimates, about US$1,200 for gold.”
Note the word “potentially” in the title. The double bottom (bullish) technical pattern in gold has been apparent for sometime but positive publicity is no-where to be found. Guaranteed low interest rates by the US and Europe (usually very bullish for gold) are rarely mentioned as a gold positive. A roaring appetite for gold by China and India is pushed aside.
If gold bullion is mentioned as the only real foil against another financial Black Swan the writer is considered a fringe player. The fact that all Central Banks of the world are watching gold like a hawk and many continue to accumulate is lost in the European “recovery” talk.
Why? Because we are close to or at the bottom of this blow off stage and the psychology working against gold should be at its all time highest. CNBC this morning was talking about $1040.00 citing the usual Federal tapering and no inflation.
But where are the big sellers? We don’t see many gold whales moving their long time positions into cash even though most large dealers we talk to admit things are slow and publicity in the stock market is hurting business.
Remember all the “cash for gold” businesses which span up overnight when prices were moving higher. Most are now closed and some have changed their name to reflect a pawn license. With all this negative publicity we might be through with this nuclear winter sooner than later and remember the “huge sell off” was really only about 30%. Now compare that to the decade long bull market in gold and it puts today’s price in perspective. The bears are still in control but things have a way of changing very fast in the physical market especially when fiat paper money is concerned.
The walk-in cash trade and national phone business was a carbon copy of Friday. Slow with everyone working on what’s for lunch. Sal went from 9 in the morning to almost noon without mentioning even one conspiracy – now that is slow.
The GoldDealer.com Activity Scale is a “4” for Monday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Tuesday – 9) (last Wednesday – 3) (last Thursday – 3) (last Friday – 4) (Monday – 4). 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 working and posted (upper right hand corner of the home page) and now are included on individual landing pages. Live pricing and the change function works: the consumer can now compare the Comex close with live product pricing for a transparent picture.
Changes on the GoldDealer.com continue: The Bullion link is now operational meaning like the old site all products are shown in the old order and on one page. Both the bid and ask price will soon be displayed.
Premiums are displayed on the product landing page. Live Chat is doing well and new customers like setting up their own encrypted accounts.
Thanks for your patience. We have implemented many of your suggestions so let us hear what makes you smile. Most of these changes will be implemented over the next several months and thanks for your comments.
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