Commentary for Wednesday, May 28, 2014 (www.golddealer.com) – Gold closed down $6.10 at $1259.30 in a technical follow through firmly putting the bears in charge. Better than expected economic news in America helped and a quieter Russia/Ukraine also helped the bears. Still with gold these days it is not a matter of who is interested – only the price of exchange.
Anytime there is a sudden move to the downside in a market which has been basically range bound for an extended period I expect bargain hunting. Like I said yesterday, before you jump out the window consider that gold’s fail-safe line over the last 12 months is $1200.00.
So your downside for bargain hunting is small and the overall market discount from old highs is about 30%. For those looking to add gold bullion to their holdings or new buyers consider the “step-buying” program – this works regardless of where gold moves over the next year.
Our Exchange Traded Fund Totals is presented each Wednesday. And this popular information now includes platinum and palladium. What all ETF’s are doing as defined by total ounces – gained or lost will provide an independent idea of market thinking on the short to medium term.
All Gold Exchange Traded Funds: Total as of 5-21-14 was 54,931,954 ounces. That number this week (5-28-14) was 55,092,010 ounces so over the last week we lost 160,056 ounces of gold.
It might also be interesting to note that in 2013 the record high holdings for all gold ETF’s was 85,112,855 ounces. In 2014 the record low was 54,799,910 ounces.
Silver closed unchanged at $19.04 today and physical trading across the counter was quiet and is holding steady at just above its lowest level this year ($18.99).
All Silver Exchange Traded Funds: Total as of 5-21-14 was 629,977,502. That number this week (5-28-14) was 628,654,430 ounces so over the last week we lost 1,323,072 ounces of silver.
Platinum also closed unchanged at $1465.00, palladium closed up $6.00 at $839.00 and we are selling the Baird Rhodium Bar at $1305.00.
All Platinum Exchange Traded Funds: Total as of 5-21-14 was 2,747,004 ounces. That number this week (5-28-14) was 2,801,166 ounces so over the last week we gained 51,162 ounces of platinum.
All Palladium Exchange Traded Funds: Total as of 5-21-14 was 2,781,805 ounces. That number this week (5-28-14) was 2,812,537 ounces so over the last week we gained 30,732 ounces of palladium.
From Chuck Butler (Ever Bank World Markets and theguardian.com – The head of the International Monetary Fund has warned that a persistent violation of ethics among bankers and rising inequality pose a major threat to growth and financial stability. Christine Lagarde told an audience in London that six years on from the deep financial crisis that engulfed the global economy, banks were resisting reform and still too focused on excessive risk taking to secure their bonuses at the expense of public trust. She said: “The behavior of the financial sector has not changed fundamentally in a number of dimensions since the crisis. While some changes in behavior are taking place, these are not deep or broad enough. The industry still prizes short-term profit over long-term prudence, today’s bonus over tomorrow’s relationship.
Some prominent firms have even been mired in scandals that violate the most basic ethical norms – Libor and foreign exchange rigging, money laundering, illegal foreclosure.”
Remember my old slogan – “get real, in your hand, gold bullion and don’t worry about what hits the fan”. Actually I just made that up but my point is a serious consideration. You and I have not got much of a clue as to what was done in our interest after the 2008 financial blowup. And the reason many feel safer is because the price of gold has moved lower. To many this daily price is kind of like a financial thermometer or canary in the coal mine. And this approach is never good – so slogan or not mack sure there is some gold bullion insurance in a safe place and sleep better at night.
From Kira Brecht (TraderPlanet/Kitco) – The World Is Still Awash In Easy Money – Did I wake you from your nap? Yep, markets have been kind of boring lately. Implied volatilities on the major G-10 currencies are at multi-year lows. U.S. Treasury yields have fallen since the beginning of 2014, the U.S. dollar index is virtually unchanged on the year. And, gold is about $100 an ounce higher since the start of the year, but now stuck in a tight range. What does this all show? Hint: the major developed economies are still struggling on the growth front. Check out the Big Three global central banks —the U.S. Fed, the European Central Bank (ECB) and the Bank of Japan (BOJ). The three most influential global central banks are still boasting extremely accommodative and easy monetary policy stances. Sure, the Fed is “tapering” or cutting back on its monthly asset purchases, but the Fed is still buying each month, not selling, and the fed funds rate has been stuck at zero to 0.25% since December 2008. A more “normal” rate of 4% is still likely years away. And, there still remains speculation that the Yellen and company could be forced to “taper the taper” if economic growth numbers take a turn for the worse. After all, its summer now and you can’t blame weak growth on the weather any more. Shifting to Asia, the jury is still out on whether the Bank of Japan will be forced to implement even more dramatic quantitative easing after the recently imposed Japanese consumption tax. In April, the Japanese government implemented a new sales tax from 5% to 8%, which is expected to push the economy into negative growth in the second quarter. Sure, first quarter growth exploded to a 5.9% annualized rate, but that’s because everyone was buying new cars, dishwashers and anything else they might need before they had to pay 3% more for it in April. Wells Fargo projects a 0.1% decline in second quarter GDP growth in Japan this year. And, if third quarter growth fails to bounce back, the BOJ will most likely be forced to change its stance and implement even more quantitative easing in order to stimulate the economy. Meanwhile the euro area continues to battle sluggish growth and a deflationary trend. Nomura forecasts overall 2014 GDP growth in the Euro area at a mere 0.9%, with the CPI at 0.8% down from 1.4% in 2013. Market watchers widely expect fresh action from the ECB at its June 5 policy meeting. Nomura forecasts that the ECB will slash its refi rate to 0.15% and reduce its deposit rate to -0.10% In June. Traders will be watching closely to see if the ECB takes even more dramatic steps with the potential for actual broad-based asset purchases. What does this all show? The global economy and its major economies are still struggling to regain a strong pace of growth in the wake of the 2008 global financial crisis. Total global GDP growth is forecast at 3.3% in 2014 by Nomura, with the developed nations growing at a 1.9% rate and the emerging markets growing at a 4.7% pace. This is not an environment where aggressive central bank tightening will be seen any time soon. Gold may be trading sideways in an early summer slumber. But the world remains awash in easy money and that remains bullish for gold.
The walk-in cash trade was again steady most of the day with almost all buyers and the phones were busy both ways although we did see a few large sell orders in early trading. So the public still remains cautious especially if they purchased early in the 10 year bull cycle and are still sitting on profits. I always like to keep a core bullion holding but would not have a problem lightening up my position if I really hated the market. For the record however the number of sellers which entered the market early have dwindled considerably over the last few years.
The GoldDealer.com Activity Scale is a “6” for Wednesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Wednesday – 4) (last Thursday – 3) (last Friday – 3) (Monday – closed) (Tuesday – 5). 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.
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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.