Commentary for Thursday Oct 3, 2013 – Gold closed choppy down $3.20 at $1317.40 so holding the important $1300.00 level but where is the conviction? Want the secret answer to our government spending problems? Print more and spend more…it makes everyone happy!
Gold did trade as low as $1302.00 but managed to recover but the market remains unsure and unsteady. If you are optimistic $1340.00 represents the first big overhead resistance and there are some who believe a break above this number would mean fireworks but I just don’t see the necessary enthusiasm.
Silver closed down $0.10 at $21.74 in very quiet trading and the physical market remains steady but also not impressive.
The most significant declines today were seen in platinum down $20.00 at $1372.00 and palladium down $20.00 at $700.00. Amazing really considering how strong car sales are but perhaps a hidden signal that the worldwide recovery is not as robust as promised.
We are now looking at day 3 of the Congressional shut down. Stocks have begun to trend lower in reaction I think to the possible Big Bang (October 17th) debt ceiling debate. The physical gold market does not seem to be bothered one way or the other but you might see a pop to higher ground in gold if this debt debacle becomes a reality and traders further exit the dollar but this is a dangerous gamble.
I always think gold makes sense in the longer view but since the “problems in Syria” trouble was addressed and the pop above $1400.00 forgotten in early September this market has looked like it wants to move lower. Granted by mid-September there was another pop higher when the Federal Reserve decided not to taper but this too was short-lived and so gold moved flat to lower for the rest of the month. Yesterday’s job’s report disappointed and Congress can’t come up with a reasonable funding strategy so confusion reigns.
With this volatile mixture there is no possibility that tapering will become a reality in 2013 and the Dollar Index seems happy below 80 so why does gold look tired? There are enough good reasons to think gold should be retesting $1400.00 into the holiday season not trying the hold the poky $1300.00 level so why are the bears in charge?
I am not sure (perhaps better times have taken some of the “safe-haven” status away from gold for the present) but to me the trend looks lower so consider the possibility that we will retest its most recent low ($1200.00 – July 2013). Physical demand will come into play and support prices and so will the possibility that the dollar continues lower. I think the calls for $1000.00 gold unlikely even with some tapering early in 2014 so this continued unwinding gives real owners the chance to add bullion at depressed levels.
My pet strategy is simple: stay on course and buy weight only. So get out your pencil and figure the price you are paying above melt. Continue this approach until you have about 20% of your investment capital in some combination of gold, silver and platinum bullion. Stay away from gimmick new issues with high premiums and be a value buyer only.
By the time this current cycle shakes out inflation will have stirred and investors will realize that the minor central banks of the world along with China and India are on to something concerning gold. Don’t look for a big comeback in this market that story is for telemarketers looking to rob the uninformed. I think gold will remain uninteresting short term and provide plenty of buying opportunities for believers.
But remember when the rest of the world decides the big gold rush is over that will be the exact time you should be stepping up your purchases. There is no hurry here but continue to buy weakness because sooner or later all those government IOU’s will become due and payable. Remember also that the 2008 financial collapse which pushed gold to all time highs might have just been a warning. The next time around (and there will be a next time) might be much worse so continue your gold insurance program.
Our walk in cash business and the national phone business were on the slow side today. It is possible the continued debt talks have gotten everyone’s attention.
My almost famous LA Physical Business Number is as follows (note the change to a running weekly tally): (Mon: 3 – Tues: 5 – Wed: 2 – Thurs: 4). For those who have asked this scale is based on combined volume numbers and anything over “5” is relatively busy.
Phase One of our new golddealer.com web site will soon be complete and includes a new look along with live pricing. It will also include Live Chat and you will be able to set up your own customer account. Look for further interface improvements before year end which makes accounting, shipping and tracking easier (check to see if we have your email in the new system) and we now offer the choice of USPS or FedEx Ground. This new look will also include Independent Storage so you can buy or sell with a phone call and not have to visit the post office.
If you visit CNI in person look for the new flat screens with live feed and graphs (gold, silver, platinum and palladium). This will drive all our bullion products and we have programmed the premium spreads on each line to make your choices easier and cash is always available. There is nothing like this on the West Coast and offers visitors complete transparency before purchase or sale. Like us on Facebook and follow us on Twitter @CNI_golddealer. Notice our Daily Gold Newsletter archive has been moved and enlarged (30 days) to our Facebook page. Thanks for reading and enjoy your evening. These markets are volatile and involve risk: Please Read Before Investing
Written by California Numismatic Investments (www.golddealer.com).