Gold Moves Higher on EU and China Concerns

Gold Moves Higher on EU and China Concerns

Commentary for Monday, Feb 24, 2014 – Gold closed up $14.40 at $1338.30 today reaching its highest level in 4 months and now challenging last year’s October high of $1350.00. A number of factors have pushed prices higher like the end of the Chinese New Year holiday, a weaker dollar, and problems in the emerging markets. The American Gold Buffalo 1 oz was popular with gold investors today.

Gold also continues higher over concerns that the “recovery” in Europe is having problems. And the most recent talk coming from the EU is simply that they will do anything necessary to continue an accommodative financial approach. More quantitative easing from our friends across the water supports gold prices. The Bank of Japan has adopted this loose money approach sometime ago in her fight against deflation and there really has not been much progress in correcting economic conditions in Europe. To fix problems in the smaller countries would take a draconian approach to entitlements and real job creation. This old story has been rehashed since the 2008 financial collapse but little gets accomplished once higher bond prices takes countries like Spain out of the financial press. So Europe creates and enables a banking system which needs financial stimulation on a regular basis and gold benefits. There are also continued worries about a slowdown in China which should be bad for gold. Any downbeat economic data from this industrial giant is bad for commodities but look at today’s action as gold rises in value.

And the Ukrainian violence has consequences as this country now faces default because of the fighting in the streets. The IMF will step in and see what can be done but this once again points to a banking system which does not work and will need further financial support. Where do they draw the line? Actually they are also between a rock and hard place because if they don’t further back the collapsing system they risk serious collateral damage in the entire region. All of this mess supports gold prices and further flight to quality which is a term which has not been talked about much lately. 

Finally recent strength in gold is self-fulfilling in a technical and momentum sense. You can feel there is something changing in the way investors look at gold. This is not just the normal reaction to higher prices although it does mean that, there is a change in the mood about gold. It is not completely positive by any means but it is significantly less negative if you get my meaning. People are now talking about the double bottom ($1200.00) in June and December of last year and considering the possibility that further declines are not in the cards. I am not completely convinced because this latest reach above $1300.00 is still new and looking at the longer term charts overhead resistance is strong enough to send the optimists home especially with possible profit taking. But there is something in the air which is not as dire as it once was and the focus on the next leg down ($1000.00) has disappeared. At any rate let’s enjoy what’s on the table and hope for continued good news. 

Silver followed gold higher up $0.27 at $22.04. The frequency of buying and deal size is increasing. The American Silver Eagle 1 oz was the popular silver bullion choice today.

Platinum closed up $13.00 at $1440.00 and palladium was up $3.00 at $743.00. Rhodium continues to get new buyer attention as sales of the Baird 1 oz bar move higher.   

From the Huff Post Business (Mark Gongloff): The Fed Was Hopelessly “Behind The Curve” During The Financial Crisis, New Transcripts Show – Federal Reserve policy makers were repeatedly caught by surprise as the economy and financial markets collapsed around them in 2008, according to newly released transcripts of their meetings from that year. If you believe, for some reason, that the Fed has special fortune-telling abilities, these records should disabuse you of that notion pretty quickly. Repeatedly throughout that crisis year, the Fed took relatively hopeful views of the economy’s fate, only to play catch-up when the situation got much worse than they expected, sometimes in a matter of just weeks or days. To be fair to the Fed, the unfolding economic collapse took a lot of people by surprise. And the Fed did act fairly aggressively when it got around to acting. But these records are reminders that the human beings pulling the strings of the world’s largest economy are no better than most other economists at predicting the future. "We were seriously behind the curve in terms of economic growth and the financial situation," then-Fed Chairman Ben Bernanke said during an emergency conference call on Jan. 21, 2008. It would not be the last time. The Fed decided on that call to slash its key interest rate by three-quarters of a percentage point, a shockingly bold move after it had decided not to cut rates during another emergency call just 12 days earlier. Even with the large cut on Jan. 21, the Fed knew it hadn’t done enough. Bernanke suggested that it should have cut by a full percentage point or more. Instead, it waited just nine days and slashed another half-percentage point from its target rate on Jan. 30. Repeatedly throughout the first month Fed officials described themselves as "behind the curve." And yet they seemed to forget that lesson later in the year. The most egregious example came during its policy meeting on Sept. 16, 2008, when the Fed decided not to cut interest rates to help the economy, even though Lehman Brothers had just collapsed and insurance giant AIG was in the grips of a crisis that threatened to bring down the whole financial system. At that time, many Fed officials were far more worried about inflation risks than about the risk of an economic collapse and depression. The word "inflation" occurs 129 times in the Sept. 16 transcript; the word "recession" was uttered just five times. ("Laughter" is noted in the transcript 22 times.) Even current Fed Chair Janet Yellen — who was then the president of the San Francisco Fed and had frequently been prescient about the growing risks to the economy — argued for standing pat on Sept. 16. She did so despite the fact that she still saw signs of growing economic weakness, including a slowdown in demand for plastic surgery in wealthy San Francisco neighborhoods. Financial markets kept deteriorating in the days after that meeting, prompting an emergency Fed conference call on Sept. 29. Amazingly, the Fed again decided to take no action. It wasn’t until Oct. 7 that the Fed finally got around to cutting interest rates. Even then, some Fed policy makers wanted to quibble about the Fed’s outlook for inflation, refusing to believe that the economy had tipped into a deep hole. As late as Oct. 29, the Fed still expected unemployment to peak no higher than 7.6 percent in 2009. It hit 7.8 percent just three months later, and surged all the way to 10 percent by late 2009. Between January and October, the Fed often failed to appreciate what was happening to the economy and the financial system. In April, for example, not long after the collapse of Bear Stearns, Bernanke gave himself a gentle high-five. "Let me first say that I think we ought to at least modestly congratulate ourselves that we have made some progress," he said. "Our policy actions, including both rate cuts and the liquidity measures, have seemed to have had some benefit. I think the fear has moderated. The markets have improved somewhat." The Fed did cut its target rate by a quarter-percentage point at that meeting, but made no change at its next meeting in June, even after the collapse of mortgage lender Countrywide Financial. By mid-July, government-backed mortgage companies Fannie Mae and Freddie Mac were under constant assault in financial markets. Astoundingly, Fannie and Freddie were mentioned only once at the Fed’s June policy meeting, and got no mention at all during a July conference call. At least the Fed’s private discussions were consistent with its public statements: In July, Bernanke declared to Congress that Fannie and Freddie were "adequately capitalized" and "in no danger of failing." Both failed and were taken over by taxpayers less than two months later. Fannie and Freddie did get 12 and 13 mentions, respectively, at the Fed’s August meeting, when the end was near. But the Fed was not overly concerned about the broader implications, holding its policy steady at that meeting. The Fed still expected inflation (mentioned 322 times in that transcript) to rise in the second half of the year. At least the Fed seemed aware of its own limitations. At that fateful Sept. 16 meeting, one Fed economist said: "We did receive a great deal of macroeconomic data since … last Wednesday. We didn’t seem to get any of it right, but it all netted out to just about nothing." And everybody had a good laugh.

Many commentators have made this point in the past but this re-look at what really happened is interesting and the first time I have seen anything approaching a reality check. This all of course reinforces my private financial project of bullion information to the public before this entire fiat currency scheme once focuses on the holes in a system everyone has come to trust. If the Federal Reserve can get it wrong what are the chances of a less structured international system going over the cliff and beginning a series of falling dominos? I am not advocating the end of the world scenario here and believe such a collapse is not in the cards because it is too easy for world governments to inflate but I am saying that betting your entire financial future is not worth the risk. If at the end of all this turmoil it turns out that gold and silver bullion was not needed so much the better. But to scramble after the fact really makes no sense.

The walk in cash trade was steady most of the day and the phones were busy even considering the generally higher price trend. So I would say the average public buyer is back but still cautious. 

The Activity Scale is a “5” for Monday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Wednesday – 4) (last Thursday – 5) (Friday – 5) (Monday – 5). The scale is 1 through 10 and a reliable way to understand our volume numbers.


On the new site: Comex closing prices are posted on the home page and individual product landing pages. Live pricing on the site moves all bullion products up or down during the day. The change number included next to the live pricing uses yesterday’s Comex closing prices as a reference. So if the change number is green and shows up $3.00 this is in reference to yesterday’s close. You now don’t have to visit several sites to find the Comex close relative to live trading numbers which are independently verified. 

We reworked the All Bullion Products link on the home page. It now includes our Bid (blue) and Ask (green) prices. When you hover over it with your cursor the text is highlighted.

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 easy and is the only site on the net with this transparency. For example click on the link American Gold Eagle and under Our Live Buy Price and Our Live Sell Price you will see: our Buy Premium Spot + $15.00 and our Sell Premium Spot + $50.00 – Easy.  

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The four flat screens downstairs with live independent pricing ( is a big hit with the cash trade. This live stream moves all the buy/sell prices on each product so the cash buying public can see the markets move on a real time basis. Our site uses the same pricing model so no more guessing.

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American Gold Buffalo 1 oz American Silver Eagle 1 oz

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