Commentary for Thurs, June 12, 2014 – Gold closed up $12.80 today at $1273.60. The rise in gold’s price today was primarily safe haven buying caused by the increasing tension in Iraq. Traders gave the entire region a pass yesterday but today are beginning to worry that the ease in which insurgents won key cities will encourage the radical base. This in turn may have wider consequences in the region to include the oil producing areas.
But the rise in gold was modest at best and in a normal scenario should have been worth $20.00 maybe more so what other factors are at work? The revision lower of economic numbers this morning and the steady grind of a lower euro have capped any potential gains in gold. Now consider that the short players are tired having pocketed a considerable amount of money pushing the market from $1310.00 (early May) to its most recent bottom of $1245.00 (last May).
Still the short-covering rally which we have seen since that point should combine with more recent bullish factors (war and revision numbers) to produce more enthusiasm within the gold ranks. Since this has clearly not happened I would conclude this market – even for committed physical buyers and sellers is tired. It may be that most interested folks are now sitting on the sidelines – scratching their heads and saying – “let’s just wait and see what happens to the price of gold”.
Silver followed gold higher up $0.36 at $19.51and we have once again entered that zone which is just high enough to cap buying from those now used to prices in the less than $20.00 zone. We have seen mostly smaller to moderate buying with at least one whale unloading.
Platinum closed down $40.00 at $1441.00 and palladium was also down sharply off $41.00 at $819.00.
LONDON, June 12 (Reuters) – Platinum and palladium posted their biggest daily losses for nearly a year on Thursday, after South African producers said they had reached “in principle” undertakings with the union to end a crippling five-month strike. The Association of Mineworkers and Construction Union (AMCU) took the wage offer from Anglo American Platinum Ltd, Impala Platinum Holdings and Lonmin Plc to their 70,000 striking members. That fuelled expectations that an end to the strike that has disrupted global production could be in sight.
Even though the press was horrible for both platinum and palladium I think the big drop in prices is overdone. The trade thinks there is still some downside but considering the big discounts from all-time highs it is difficult not to buy these dips.
The “complete destruction of the dollar story” has been around since I got into this business in the early 1970’s. And frankly the physical gold business has always had at its core (perhaps 10%) a group of folks who simply don’t trust big government and so the story has a number of iterations.
I really did not buy the argument then and still doubt the construct today but never miss an opportunity to read about it from reasonable people with conviction. Not goof balls who are trying to sell something but folks who present a theory based on what they consider reasonable evidence. So I present the latest of my recent forays into this fantastic consideration which came from Ed Steer (Gold and Silver Daily) – Mike Maloney: Death of the Dollar [Update] – For more than four years now, Michael Maloney has been demonstrating to audiences around the world that every 30-40 years the world has an entirely new global monetary system, that the current monetary system (the U.S. dollar standard) is aging and becoming unstable, and, just like the previous monetary systems, will soon implode. On June 1st, 2014, at the Cambridge House Investment Conference in Vancouver, Canada, he updated his “Death of the Dollar” presentation and showed how the “Nails in the Coffin of the Dollar Standard” are now coming faster and are more furious than ever before. He believes that there will be a global currency crisis before the end of this decade and that the days of the dollar standard are numbered. In a second presentation on the same day he makes the most convincing argument yet that there is a massive deflation coming, that there will probably be an overnight devaluation of the dollar and huge overnight revaluation of gold, and, though it will be painful for most, it is the greatest opportunity in history for those who are prepared. This 24:52 minute video presentation by Mike was posted on the hiddensecretsofmoney.com Internet site yesterday—and it’s definitely worth watching. I spent a lot of time with Mike Maloney, Dan Rubock and James Anderson at the Vancouver show ten days ago—and they’re all great guys.
This from A. Ananthalakshmi (Reuters) is interesting – Shrouding China’s gold trade, more imports go under the radar – *China gold imports via Shanghai rise – sources and data * Boosted ahead of launch of a global bullion exchange in Shanghai * Bypassing Hong Kong as a gateway means China imports shrouded – SINGAPORE, June 11 (Reuters) – Banks have started trial gold imports directly into the Shanghai free trade zone ahead of the launch of a gold exchange there, threatening to further obscure the level of buying by the world’s top consumer.
The bulk of gold bought by China used to flow through Hong Kong, making its export data a useful proxy for Chinese demand as Beijing treats data about imports of the precious metal as a state secret. But Reuters calculations using export numbers from data provider Global TradeInformation Services show that China’s direct gold imports jumped to nearly 150 tonnes in the first quarter.
Excluding Switzerland, which did not disclose country specific data in 2013, direct imports nearly doubled in the period from a year ago. The number does not provide a complete picture as some exporters do not provide gold trade data and others do not break down their exports by country.
“If gold enters China via Shanghai then it is not going to be easy anymore to draw conclusions about Chinese demand by just looking at Hong Kong data,” said Carsten Fritsch, an analyst with Commerzbank AG.
The Shanghai Gold Exchange (SGE) – the world’s biggest platform for physical gold trade – is in talks with foreign banks and producers on the new exchange in the city’s pilot free trade zone. The exchange is set to launch physically deliverable gold contracts, with the metal allowed to be stored in vaults in the free trade zone.
Banks had already started imports through the free trade zone, said a source at a gold-importing bank in China. “Shanghai should play a far bigger role once the international exchange is open,” said the person, who declined to be named. SGE officials had requested that banks import through Shanghai, though no formal directive was issued, according to a second source familiar with the matter.
The request to import through Shanghai in the first quarter could be in part to trial the new vaults in the free trade zone, said the source. SGE did not respond to requests for comment.
SHANGHAI VS HONG KONG – Hong Kong has historically been the gateway for gold into China, as Chinese banks buy gold from foreign banks that have branches and vaults there. From Hong Kong, the gold then heads across the border to Shenzhen to SGE’s vaults. But with the new exchange in the free trade zone, foreign banks, refiners and mints could send directly to the mainland. While direct imports are still less than those from Hong Kong – which exported 287 tonnes to the mainland in the first quarter – the pace at which they are growing will make it more difficult to use the Hong Kong figures as a proxy for Chinese demand.
Chinese imports from Hong Kong fell to a 14-month low in April, fanning a belief that demand in the country was weak after last year’s record purchases, but some of the fall could be explained by increased volumes going through Shanghai. “It’s going to become tricky to know anything about gold in China now,” said a trader in Hong Kong. “There is no doubt going to be some confusion understanding their buying pattern.” (Editing by Ed Davies and Michael Urquhart)
The walk-in cash trade was underwhelming today and so were the phones. I think the public liked the pop in gold but were scared by the drop in both platinum and palladium. Add to this the usual summer doldrums and we were off to a slow start which came to a virtual halt by the second pole (for you horse racing fans). At any rate they are still pounding away at our new systems and the downstairs is not busy but noisy.
The GoldDealer.com Activity Scale is a “3” for Thursday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Friday – 6) (Monday – 4) (Tuesday – 4) (Wednesday – 3). The scale (1 through 10) is a reliable way to understand our volume numbers.
Live pricing on the site moves all bullion products up or down during the day. The Bullion Products link on the home page now includes our Bid (blue) and Ask (green) prices. Premium quotes vary with product and look like this “spot plus $15.00” or “spot plus $50.00” and bullion products list them under the live prices on their respective landing pages.
This makes product comparison simple and GoldDealer.com is the only precious metal site on the internet with this transparency. Live Chat is doing well and new customers like setting up their own encrypted accounts. We recommend upgrading old browsers to Google Chrome (free/secure) especially as our site becomes more advanced.
Sign up for our daily Gold Newsletter on the Gold Newsletter page if you are so inclined. Also note that our old Specials Email list is not compatible with the new format so we have cleared all data.
If you want to be notified about specials please check the Special Offers box under All Bullion Products. Also note that the email list for the Gold Newsletter and our Special Offers are separate.
Email confirmation using a PDF File when buying or selling is functional. It also includes the various forms of payment and includes bank wire instructions. And you can now see your actual invoice or purchase order on your computer screen.
When you buy or sell please check to see if we have your current email on file and that your computer will accept our email (no spam).
Also a reminder about shipping information – when buying or selling your rep will walk you through our most current mailing information. Please keep us up to date if you have moved.
The new USPS server is installed with the upgraded post office software! This new system will allow you to track USPS like Fed Ex – provide pinpoint location – allow you to reschedule if you were not home during the delivery and even provide text updates en route.
Our four flat screens downstairs with live independent pricing (BullionDesk.com) are a big hit with the cash trade. This live stream moves all buy/sell prices so the cash buying or selling public can see the markets move on a real time basis. Our site uses the same pricing model so no more guessing and we guarantee your satisfaction.
Like us on Facebook and follow us on Twitter @CNI_golddealer. Thanks for reading and enjoy your evening.