Commentary for Friday, Jan 10, 2014 – Gold closed higher today up $17.40 into the weekend at $1246.70. A nice move not so much as a pure number but what I call a relief pop to higher ground. The technical picture is still a mess so who knows what will pan out next week but if further negative economic data floats to the surface it can’t be bad for gold. Of course a poor jobs number does not make a trend but it did push the dollar lower and so gold smiled in the storm.
Silver followed gold higher up $0.54 at $20.20 and the $20.00 number is beginning to put me to sleep. There are plenty of big players in the LA physical market who believe there could be lots of action to the upside if we could break the $21.00 overhead resistance. Once considered a piece of cake now gains of a dollar or two seem like heavy lifting.
Platinum closed up $17.00 at $1436.00 and palladium closed up $9.00 at $745.00. Both of these are sleepers in my mind but the real physical action seems subdued in platinum. There were a few whales who recently loaded up on palladium bars.
This is what some are now questioning: Christopher Rugaber (AP): “Analysts now estimate that the economy expanded at a healthy annual rate of 3 percent to 3.5 percent in the October-December quarter. That’s up from earlier forecasts of a 2 percent rate or less. It would follow a strong 4.1 percent growth rate reported for the July-September quarter.”
So the above is the commonly believed upbeat picture of the economy. The weaker jobs number seen Friday dropped out of the sky. It could lead to a weaker dollar and Fed reassessment regarding further quantitative easing. This of course would support gold prices but it is a bit early for the shorts to jump ship. The jobs reports could be inaccurate, an aberration or caused by the severe cold weather pattern. But at the root of the question is whether the unemployed numbers are really going down because of an improving economy. If a person looking for a job decides to drop out of the race they are no longer counted in the government data. I know it sounds weird but that is the way Uncle figures things. At any rate it is too soon to make a big judgment about gold pricing but today’s jump was a small insurance option.
In the Kitco News Gold Survey, out of 33 participants, 23 responded this week. Twelve see prices up, while five see prices down and six see prices trading sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts. Last week participants were bullish. As of noon EST, February Comex gold prices were up $4.60 on the week. Prices rose after a weaker-than-expected nonfarm employment report from the U.S. Department of Labor showed only 74,000 jobs were created, versus about 200,000 expected. Charles Nedoss, senior market strategist with Kingsview Financial, said gold is attempting to take out some important technical chart resistance as it trades near $1,250 an ounce. “I think we could be sideways to a little higher next week. Gold is developing a little momentum,” he said. “But we have to clear $1,250 to bring a little sponsorship and more volume in this market. If we can’t do it by early next week, then I think the market turns (to the) sellers.” Those who see weaker prices said the buying gold has enjoyed in the first two weeks of 2014 is unlikely to last. “Reallocation of commodity tracking funds should be complete by mid week. Funds that needed to buy gold via the reallocation will have done so, removing a bullish prop,” said Ira Epstein, director of the Ira Epstein division of The Linn Group, referring to the index rebalancing that is currently occurring in all commodities. Several participants said they are neutral on the market or expect prices to hold in a range. “Fundamentally I’m bearish, but it’s very hard to trade here with the market in a range. You just get chopped up. I think eventually we test the lows of $1,100, but it’s a question of when. Right now the funds buy on dips and sell on rallies. So I’m (neutral),” said a bullion dealer at a North American bank.
Rumor Dave checked in…nice to hear from him again: I noticed your reference to me today and did not understand to what you were referring. The only new thing I have seen lately is the excellent article on ZeroHedge by Nanex proving that the recent plummet in gold was a HFT algorithm specifically designed to torpedo the market and silver apparently just went along for the ride. I don’t know who Nanex is but the article made sense to me. I agree with Ted Butler that the precious metals market is being manipulated and the CFTC is impotent at best, complicit at worst. I don’t see any reason to keep repeating that observation. Either people believe it or they don’t, we won’t be able to prove it until it is too late to make any difference. I don’t know who Frank Zaludek is but he seems to be writing for a much more naïve audience than I am and I am glad to see him doing it. I don’t agree with all of his opinions but his facts are believable thus far. I don’t think anybody knows the facts for sure. When you mentioned “the numbers are the numbers” the other day I wrote a rebuttal but decided to let it pass. Personally I think the numbers are worse than useless, they are often misleading, but we do have to understand how they affect the market. Remember when the Supreme Court, in their infinite wisdom, declared that dispensing propaganda to US citizens is constitutional? Doesn’t that give the government carte blanche to lie to us? I think it does and I think they do. I believe nothing. As they say about Obama, “if his lips are moving, he is lying.” But he certainly isn’t the only one. The reason I am sending this to you is because I didn’t write it for publication but as a dialog to perhaps give you some ideas. When I write for publication I prefer to give references so that people can read the original work and come to their own conclusions. For example, I think all would benefit from reading the Nanex article. If you would like me to write about any of these subjects let me know, otherwise I will wait for something that interests me. I did like your use of the word “nefarious,” my motto is “never use a little word when a big word will say almost the same thing.”
The walk-in cash trade was very slow today and we had to check the phones a few times to see they were operational. The action we did write continues to be from new customers.
The GoldDealer.com Activity Scale is a “4” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Monday – 7) (last Tuesday – 9) (last Wednesday – 3) (last Thursday – 3) (Friday – 4). The scale is 1 through 10 and we believe this is a reliable way to “sense” real bullion business.
On the New 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 works and the change function is also working. The consumer can now use a perfect pricing model to choose the right bullion product anytime we are open. 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 and the list is still growing so let us hear what you want. Most of these changes will be implemented over the next several months and thanks for your comments.
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Even though the activity scale was a 4 we sold a lot of Canadian Silver Maple Leafs and 90% Silver Bags.
