Commentary for Monday, July 15, 2013 – Gold closed up $6.00 at $1283.80 in late market action probably reacting to weaker than expected US economic news but I still believe this market is just marking time. Gold is certainly more optimistic these days but with Chairman Bernanke speaking again this week I would not be holding my breath. It really is crazy that this market is so captivated with what our working Chairman has to say and short-term momentum in gold did experience a snap-back after his last words of wisdom but for some reason the markets never remain convinced for any length of time.
With today’s disappointing economic numbers you would think the precious metals would be more positive but the technical traders remain confused and ready to run in my opinion at the drop of a hat. So gold will have to show strength above $1300.00 before attracting more long players and more positive press. The entire CNBC news group remains negative and even public positive comments are waning so perhaps we are at the bottom of the sell off curve. Doug Casey believes investors should buy gold at these levels and he has been in this game for a long, long time.
Silver was higher by $0.06 at $19.83 and considering the percentage sell off I would have expected more action but this market too is really quiet.
Platinum was up $11.00 at $1421.00 and palladium was higher by $10.00 at $732.00.
Palladium has not been my favorite over the years but this from Allen Sykora (Kitco) is interesting – R.J. O’Brien: Palladium Most Resilient Precious Metal So Far In 2013 – Palladium remains the most resilient precious metal so far this year, although exchange-traded-fund holdings have improved for both platinum and palladium, says R.J. O’Brien & Associates. The firm puts nearby support for spot palladium around $710, with resistance around $728 to $730. “The platinum and palladium ETFs have seen inflows since the beginning of the year, with palladium gaining 17% in absolute volume terms,” R.J. O’Brien says. “The price has been the most resilient of the precious metal complex, only declining 1% YTD, and is entirely consistent with our view of a deficit market lasting a number of years. The anomaly is however platinum, where the price has declined by 11% YTD, despite a large ETF inflow (an increase of 44% since the beginning of the year).” However, the firm adds, this inflow was almost entirely due to the start of a new South African-listed platinum “Analysts think the platinum anomaly can be partially explained by sufficient above ground stocks in platinum to start a new ETF without impacting the price and it allows South African investors the ability to express a long metal-short equity view more easily due to limitations in foreign investments,” R.J. O’Brien says.
Walk-in trade at the CNI Building was slow today but steady and the phones were average to nothing happening so the public does not seem to be in any hurry to take advantage of these lower prices.
I read a commentary on the internet last night which claimed dealer physical shortages were right around of corner: this has to be hype because the physical market feels like the good old summer time…slow and almost lethargic.
Could things change soon? Perhaps but from what sector would we see the needed big change-up pitch? Inflation is under control, US economic numbers are somewhat stuck but the mood is improving and Wall Street is happy. No one sees a double dip economy and as long as interest rates remain on the cheap side (following our English friends) everyone is happier for now.
What is needed to push gold and silver higher is for the velocity of money to increase dramatically and considering we have worried about deflation for years this normal cycle will take time. A collapse in the Middle East spells big trouble for everyone but that is not likely so in the meantime enjoy the weather (or not) and wait for the normal economic rebound to once again become inflationary. 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).