Gold Lower into the New Year on Book Squaring

Gold Lower into the New Year on Book Squaring

Commentary for Monday, Dec 30, 2013 – Gold closed down $11.00 at $1203.10 so not particularly encouraging into 2014 but we are holding on to the $1200.00 level (barely).

The paper trading markets are very thin these last days of 2013 and this weakness is probably more a matter of tax selling and short “pushing” than any follow through from the recent taper adjustment. Still the economy continues to improve and this will create further reduction in the now $75 billion dollar quantitative easing program which has proven successful for our Uncle Sam.

This lack of problems in Congress over the debt ceiling, the dramatic increase in stock prices, a general feeling that the banking system is safe, and lack of inflation have all contributed to lower gold prices.

Technically the bulls are still in charge and unless gold can gather itself and show some strength above the $1200.00 level expect further bear raids in the paper market. This approach may sound brutal but is really just part of the “how” the commodity market unwinds.

To get back in the pricing game gold must show strength above the $1240.00 mark, a small increment really, but it always seems more difficult with negative head-wind. From current levels a $40.00 push to the upside in 2014 perhaps helped by a whiff of inflation would set a completely different tone for gold. But in the meantime let’s just enjoy a glass of champagne.   

On the plus side we have consistent physical demand for gold dominated by China and India. I would also add that as the middle class expands in other countries (because of cheap labor) expect further support in the precious metal. The reason being their paper currency is not a store of value.

If you are looking for a story consider the disconnect between political uncertainty and the price of gold. Over the weekend I was listening to the BBC commentary about the terror attack in Moscow using a women bomber in a train station. They claim half of the terrorist bombers are women and Russia has seen more than 140 such attacks. That number is stunning in that the publicity is completely lacking in the United States. Other hot spots like the Middle East are still very dangerous and under different circumstances such geo-political play would firmly support gold price.

But for now this safe haven argument is on the back burner.

What do I expect in 2014 for the price of gold? Several pushes at the $1200.00 level to see if the bears can once again load up on short positions. If they are successful the downside could see another $50.00 or $100.00 but note the phrase “if they are successful”.

If these raids fail you will continue to see this back and forth play until either the physical demand wins out or inflation numbers begin to creep higher. At that point gold will have a respectable base on which to build. In the end however everyone should be patient and wait for opportunities.

Silver was down $0.43 at $19.58 and physical across the counter sales seem steady. There is no end to the new silver bullion products produced by sovereign countries and all of them find an eager audience. Believe me the mints produce because they do their homework relative to new demand.  

Platinum followed gold lower down $12.00 at $1364.00 and palladium was off $1.00 at $710.00. I still remain a solid bull when it comes to platinum. It’s cheap, there is not much around, the mine production is problematical and the world economy seems like it is healing which means consumption must move higher. If you have a large position in gold, consider trading some (20%) for platinum bullion.   

The walk-in cash trade was busy all day. This is another great example of how the paper trading world and the physical business is disconnected. For every seller across the counter there are 10 buyers so the physical public does not seem too worried about recent weakness. The phone business was steady and also mostly all buyers. This is the first year I can remember that we have seen very little tax selling when prices were generally weaker. 

The GoldDealer.com Activity Scale being “5” for Monday. The CNI Activity Scale takes into consideration volume and the hedge book: (Closed Tuesday, Wednesday and Thursday) (Friday – 6) (Monday – 5). The scale is 1 through 10 and we believe this is a reliable way to “sense” real bullion business.

On the new site live pricing and the Comex closes are still a work in process. The Bullion link (upper left hand corner of the site) is being modified with traditional sort (all gold, all silver, all platinum, all palladium) we will then add our buy price next to our sell price for comparison and post closings. 

Keep in mind this site is a work in progress which will not be complete until the first quarter of 2014. We have added new buy and sell premiums: Example –

RCM 100 oz Silver BarBuy Premium: Spot – $00.10    Sell Premium: Spot + $00.80

The new system still requires a call to a live person to confirm and receive an order number. Live Chat is doing well and new customers can set up their own encrypted accounts. The automatic email confirmation (buying or selling) needs work.

Thanks for your patience and if you have other ideas an email is appreciated.  

Sign up for our daily Gold Newsletter on the Gold Newsletter page if you are so inclined and remember this is now live for you too so why not sound off?      

The live flat screens within the CNI Building are operational and include premiums so no more calculators to figure the cheapest bullion product. Our best price guarantee ( Buying precious metals or selling Precious Metals ) is famous so call Kenny at 1-800-225-7531.

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For New Year’s we will be closed Tuesday and Wednesday (Dec 31st and Jan 1st).

Thanks for reading and from all the staff have a wonderful and safe New Year! 

Todays big seller was the American Gold Buffalo (Shown Below) and the Australian Gold Kangaroo

American-Gold-Buffalo

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