Commentary for Friday, Dec 20, 2013 – Gold closed up $10.10 at $1205.10 in a pop-back move which some see as an important regaining of the $1200.00 level but what I think is just a small short covering bounce going into the weekend. The important metric to be seen relative to this recent taper move comes from the Shanghai Gold Exchange where new buyers pushed volumes to the highest levels in 10 weeks.
Still the US economy continues to show improvement, the stock market is drinking champagne and 2014 looks like a big year with continued low interest rates.
This lack of financial stress and no banking problems reinforces the notion that the Obama administration and the Federal Reverse are a winning combination for the present. As far as the really minor reduction in the $85 billion a year Federal program I think this was more a symbolic move by the leaving Federal Reserve Chairman. Mr. Bernanke does need to take a bow for avoiding financial collapse and I think this token reduction is a nice way of saying “Well folks we can’t keep this up forever but at least we began to head in the right direction under my watch”.
All of this in the absence of inflation and physical support by the Asian and Indian crowd points to a directionless gold market at best or softer prices in 2014.
With inflation and a jump in the physical market the bargain hunt is on so it is possible we will see a continued bear/bull fight until further easing becomes part of the soup. One thing is for sure: prices are getting cheaper as this market continues to unwind.
Silver was up $0.28 at $19.42 and activity across the counter continues steady, not hurried but surprisingly steady.
Platinum closed up $13.00 at $1332.00 and palladium closed up $1.00 at $698.00.
So for sure this has been tough week for the metals unless you like cheaper prices.
In the Kitco News Gold Survey, out of 34 participants, 23 responded this week. Of these, eight see prices up, while 11 see prices down and four see prices sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts. Last week, there were a nominal number of survey participants who saw weaker gold prices. As of noon EST Friday, February gold on the Comex division of the New York Mercantile Exchange was down about $31 an ounce for the week. Participants who see prices sliding further next week said the downward trend should continue to assert itself. “Both the major long-term and secondary intermediate-term trends are down. Major support is at the monthly low of $1,179.40 from June 2013,” said Darin Newsom, senior analyst at DTN. Adam Hewison, president and chief strategist with INO and MarketClub.com, agreed. “Bruno the bear is coming on strong next week and Bruno the bear has been right all year. The trend is bearish and Bruno has the odds in its favor for gold to hit $1,000 in 2014,” he said. Participants who see higher prices said they believe that year-end book-squaring will dominant market action next week. Since speculators are heavily short gold, there might be some of these traders who buy back these previously sold positions and that could lead to a temporary boost in prices. “I think we could go higher next week on short covering into the end of the year, but after that, when the New Year comes, (prices will go) south, south, south. I’m very bearish,” said a North American bullion dealer. A few traders are expecting the market to move sideways. Frank Lesh, broker and futures analyst with FuturePath Trading, said he’s expecting prices to be range-bound. “Gold has tested the year’s lows and held as shorts cover and book profits into year end. Trade will be dominated by the short-term players and thin out the next two weeks. This is one market that will be happy to put the past year behind. I expect gold to be range-bound and steady for the next two weeks,” Lesh said.
The walk-in cash trade continues active with buyers and sellers evenly divided. The phone business was steady all day mostly buyers. The GoldDealer.com Activity Scale being a “6” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Monday – 3) (last Tuesday – 4) (Wednesday – 3) (Thursday – 5) (Friday – 6). The scale is 1 through 10 and we believe this is a reliable way to “sense” real bullion business.
We have had server problems with the live pricing aspect (good grief these things are complicated) of the new site this week. They should soon be fixed and thanks for your patience. The system however requires that you call and talk with a live person to confirm and receive an order number. It includes Live Chat and new customers can set up their own encrypted accounts. The automatic email confirmation (buying precious metals or selling precious metals) is still spotty. I have tried to call the President for advice but he has been too busy to return my call.
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The CNI Holiday Schedule: We will be closed Tuesday, Wednesday and Thursday (Dec 24th, 25th and 26th) for Christmas. For New Year’s we will be closed Tuesday and Wednesday (Dec 31st and Jan 1st): a reminder that shipping during the holiday season slows so your patience is appreciated. Thanks for reading and enjoy your weekend.
In the store today our popular products were the American Silver Eagle and the Pamp Suisse Gold Bar Kilo