Commentary for Friday, April 4, 2014 – Gold closed up an important $18.80 today at $1303.20 on a combination of missed job’s data and short-covering in a nervous market. Also note that margin requirements were lowered today for gold and silver which helps buyers enter the market. The dollar was flat.
Forbes – “Jobs numbers released by The Bureau of Labor Statistics Friday were strong enough to keep stock markets in the green Friday morning but brought little joy to job watchers. Employers added 192,000 jobs in March, slightly below the 200,000 economists expected. The unemployment rate, which is drawn from a different survey of households, remained steady at 6.7%. The labor force participation rate came in at 63.2%, up slightly from February. The employment-population ratio was 58.9%, also just a tick above last month’s number. The February employment number was revised up to plus 197,000 jobs. January payroll was also revised from 129,000 to plus 144,000, total employment gains those months were therefore 37,000 greater than previously reported. Job growth averaged 183,000 in the prior 12 months.”
To say that the gold market was focused on jobs might be an understatement considering the pop in gold prices today. The numbers were only slightly off according to Forbes so there are other factors creeping into this happy move above $1300.00. And gold began rising in the overnight Hong Kong and London markets and continued higher into domestic New York trading. In the background of this almost happy talk is the fact that unemployment is still twice as high as it was pre-recession and there are others who would paint an even bleaker picture pointing to those in the workforce who have just quit trying. Then there is that encouraging bounce higher off the just tested $1282.00 level this week.
The jobs’ number got all the attention because it provides those looking for a reason to claim quantitative easing will be modified and so bullish for gold. The chances of QE modification at this point (meaning changing the prescribed $10 billion dollar increments lower) is nil in my opinion. Don’t get me wrong the folks who claim that QE will continue indefinitely because all world governments are now hooked on the punch bowl might be right, but if they are hyper-inflation is the only probable outcome.
I never bought this idea because it leads to anarchy and world powers are content enough to steal from their citizens a little at a time. Think about it – hyper-inflation would mean the end of all things still reasonably good in the world and if you were in charge of the cookie jar (like all governments) why chance a revolt from the hoi polloi?
But today’s jump in gold prices does point to how stressed this market has become even in what looks like a range bound market with little buzz. It is kind of like everyone wants to knock gold in favor of now overpriced stocks at 18 to 1 or higher multiplies and the DOW reaches for another all time high. But there are some danger signals as even Cramer (CNBC) this morning commented on the dearth of IPO’s and perhaps more than a few public offerings based on little more than wishful thinking. Cramer no less with comments like that almost seems sacrilegious.
But make no mistake – if things turn sour on Wall Street more than plenty of money will be flowing into gold. Not that I suspect a rat even at record DOW levels, but there is that underlying tension.
Finally just because gold popped higher today does not mean we will see further confirmation next week. Gold must relearn to assert itself between above $1300.00 and then reach nicely for $1400.00 before the rank and file paper trader will capitulate. In the meantime expect bear-market raids to be the norm.
Silver closed up $0.14 at $19.92. This market has seemed quiet all this week but sometimes my office upstairs misses the buzz so Kenny suggested I consult the Great Computer in the Sky for an oracle like reading. Wow, the sale of silver bullion products has come back to life and is now being led by Silver Eagles and Canadian Silver Maple Monster Boxes.
(Kitco News) – A majority of participants in Kitco News’ weekly gold survey look for the price of the metal to rise next week. Out of 33 participants, 18 responded this week. Eleven see prices up, while five see prices down and two see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical chart analysts. Last week, a majority of the survey participants said they looked for prices to decline this week. As of 11:30 a.m. EDT Friday, Comex gold for June delivery was up $11 for the week to $1,305.30. “I am slightly bullish for next week,” said Kevin Grady, president of Phoenix Futures and Options LLC. “Gold has held its old resistance level of $1,277 — now support — perfectly. The key for me, however, is that the gold forward rates have gone into backwardation. This basically is telling us that the price sensitive physical buyers have once again entered the market. “The $1,270 support level is still a pivotal number for us; however, it is important to note that we have seen a tremendous amount of liquidation from the longs this past week so I would anticipate less sell stops upon a breach of that support level.” Adrian Day, president and chief executive officer of Adrian Day Asset Management, also looks for higher prices, commenting that the previous correction lower, after Federal Reserve Chair Janet Yellen’s mid-March comments about interest rates, was overdone. “A correction was overdue, given the geopolitical premium in the price in early March, but now the correction has run its course,” Day said. “Yellen’s comments were misunderstood, and Yellen herself has backtracked. Gold is due for a rally.” Ralph Preston, principal with Heritage West Financial, looks for a pullback based on the technicals, however. “Unless the market closes back over $1,320 in the coming days, the market will have a disposition to test the $1,250-$1,260 support zone,” he said. “Barring a Russian incursion into the Ukraine or deeper into Eastern Europe or some other unforeseen event, gold should technically float lower.”
In the old days you could walk into a good dealership, put down cash and walk away with product. This is still true with us and a few others but most of the volume business is done nationally using the internet. The gold and silver market is not government regulated like the stock market. Other than normal business licenses there is no special requirement necessary to call yourself a precious metal dealer. And the gold business has always had its share of dealers with no regard for your money. So don’t assume that nice dealer on the other end of the phone has your best interests in mind. The chances are literally 50/50 that you are talking to a “phone room” designed to part you from your money so let’s be careful.
To avoid problem dealers (there are at least two still out there) look for precious metal dealers who belong to ICTA (Industry Council for Tangible Assets) and the PNG (Professional Numismatists Guild). Dealers who are members of both organizations are held to a higher ethical, financial and professional standard. Look for memberships in both ICTA and PNG from any national dealer and avoid headaches.
The walk-in cash trade today was busy and so were the phones. Not typical busy, however there have been a number of mid-size to large orders but no whales are on the horizon. I think today is a great example of the pent-up action still just under the surface for the precious metals. Any real reason for higher prices steps up the physical game. The ruckus introduced by Stanley Steamer today helped set the stage (we clean all rugs twice a year on both floors). I know you don’t really care but the noise overlay reminds me of what the trading floor used to sound like in the old days before ICE and electronic trading.
The GoldDealer.com Activity Scale is a “4” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 4) (Tuesday – 3) (Wednesday – 5) (Thursday – 4). The scale (1 through 10) is a reliable way to understand our volume numbers. Our most sold product for the day was the Silver Buffalo Round.
On the new GoldDealer.com 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.
We reworked the All Bullion Products link on the home page. It 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 net 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.
Sign up for our daily Gold Newsletter on the Gold Newsletter page if you are so inclined.
Email confirmation using a PDF File when buying or selling is functional and includes payment instructions. You can now see the actual invoice or purchase order on your computer screen.
When you buy or sell please check to see if we have your current email on file and that your computer will accept our email (no spam).
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.
Our best price guarantee (buying or selling) remains famous so call Kenny (1-800-225-7531) and get more money in your pocket. We guaranteed your satisfaction and include our No-Nonsense Policy (NNP) which clients consider a welcomed extra. And steering is also not allowed. Steering is the derogatory trade term used to talk you out of what you want (low cost bullion) and into stuff with big telemarketing commissions. Like us on Facebook and follow us on Twitter @CNI_golddealer. Thanks for reading and enjoy your weekend.