Commentary for Friday, Aug 8, 2014 (www.golddealer.com) – Gold finally moved down $1.90 at $1308.90 after trading higher over increased Russian tension and US airstrikes into Iraq. As traders saw that the Iraq airstrikes were limited in nature and the Russians ended their military exercises on the Ukrainian boarder the tension diminished and the possibility of safe haven buying in gold disappeared.
Still gold was up $15.00 on the week and I think traders are weary of being short – there are too many factors which might reignite gold’s recent upward movement. For now however – we expect relatively flat markets and perhaps even some profit taking into next week. But the mood in the physical gold industry is decidedly lighter.
The new Kennedy gold half dollar is being distributed by the Mint. This is just another gold bullion coin which will be produced in large quantities – it contains 0.75 ounce of pure gold and because it is new hustlers will certify the coin (PCGS and NGC) and ask a big premium. Don’t go for this malarkey – we will soon have them in stock and sell them cheap.
Silver closed down $0.05 at $19.90 in subdued trading but we are seeing some bargain hunters at this below $20.00 level which has been the case on all recent pullbacks. The latest Royal Canadian Mint addition to the “Birds of Prey” series is the Bald Eagle (1 oz) – we are taking orders at $2.60 over spot and delivery will be around August 19th.
Platinum was down $2.00 at $1480.00 and palladium was up $4.00 at $860.00.
Precious Metal Closes for this week – Aug 4 through Aug 8 – 2014
Gold Silver Platinum Palladium
Mon $1,287.70 $20.19 $1466.00 $855.00
Tues $1284.90 $19.79 $1456.00 $848.00
Wed $1306.70 $19.88 $1465.00 $848.00
Thurs $1310.80 $19.95 $1482.00 $856.00
Fri $1308.90 $19.90 $1480.00 $860.00
So which way is gold going next week? This is what the GoldDealer.com employees think – 4 believe gold will be higher next week – 6 think gold will be lower and 3 believe it will be unchanged.
To this we are adding something interesting – a real survey on what our customers think about the gold market next week.
Like the employees they were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 customers – unscientific yes but worth considering because these people actually took action: 41 people thought the price of gold would increase next week – 40 believe the price of gold will decrease next week and 19 think prices will remain the same.
Again the European Central Bank has reaffirmed its intention to keep money cheap this week – keeping interest rates at near zero. This was done to help insulate Europe from the economic push back from Russia over further sanctions and the possibility that such sanctions could further degrade the perhaps “non-recovery” taking place in the EU. One thing is for sure – money over there will remain very cheap which will support gold in the longer term.
From Shiyom Seth (Mineweb) – Central Banks Continuing to Boost Gold Reserves – Given the crisis in Ukraine and deteriorating ties with the West, Russia has been aggressively accumulating gold reserves.
The IMF, in its recently released International Financial Statistics report, showed that the Russian central bank has hiked its gold holdings by 16.8 tonnes to 1,094.8 tonnes in June.
Indeed, most central banks are increasing their gold reserves, IMF data showed. Russia, Mexico, Kazakhstan, Kyrgyzstan, Tajikistan, Serbia, Greece and Equador have all reported higher gold reserves for June.
Between Q1 2009 to Q1 2014, Russia’s gold reserves almost doubled to 1,040.71 tonnes, while India’s central bank increased its gold reserves 56% to 557 tonnes. China’s central bank, on the other hand, increased its gold reserves 75% to 1,054 tonnes when it last stated official reserves in 2009, data showed. It is widely believed that China has accumulated larger – possibly much larger – reserves since.
The global meltdown of 2008 sparked off the current race to buy gold.
While 2012 was the strongest year of central banks buying gold in half a century, in mid 2013, the part withdrawal of fiscal stimulus and a reduction in the risk on environment saw prices collapsing in the gold market to as low as $1,200 an ounce from a peak of about $1,800 an ounce of a year ago.
Contrary to expectations almost none of the central banks liquidated part of their gold stock. If anything, they continued to buy up more gold along with investing in stocks as part of their asset diversification.
By the end of 2013, global central banks were estimated to hold 30,500 tonnes of gold, which is about one fifth of all the gold ever mined.
Apart from Russia, Turkey and Mexico central banks, those of Philippines, Kazakhstan, South Korea, and Indonesia were some of the biggest buyers of physical gold in 2013, data showed.
In the first half of 2014, these purchases accounted for 113 tonnes of the overall gold bought in the world, with central banks from Russia, Iraq and Kazakhstan in the lead.
Incidentally, even as the US is talking of an economic turnaround, central banks around the world are viewing the news with a jaundiced eye. That is because while the Federal Reserve talks of an interest rate hike to curb inflation, the European Central Bank is working at keeping its interest rate low, on the other hand.
Analysts point out that in addition to such contradictory signals, there are other upheavals around the world which are set to continue to add to the uncertainties in the bullion market.
The Russia-Ukraine rebellion, the Israel-Gaza war, the crisis in Iraq – central banks do not think this is the time to stop buying gold. What is also supporting the sentiment is that safe-haven buying has boosted gold demand.
Did you ever wonder what bigger players like Central Banks and mining companies do with the gold they own?
Actually such a question probably never entered your mind unless you have considered Gold Lease Rates.
Like money in your bank account earns interest in dollars – real gold bullion can earn interest in gold. It does not matter what the price of gold is at the time of the deal and it does not matter what the price of gold is at the end of the deal. The gold bullion lender is going to get back his original number of ounces plus a predetermined interest rate defined in gold.
So if the lease rate was 1% and you lent 100 oz for one year – you would get back 101 ounces. The time of the lease is defined in advance (1 month, 3 months, 6 months or one year).
The gold leasing rate has sometimes been blamed in a variety of conspiracy plots relative to fixing or influencing the price of gold on the international market.
In reality the daily gold price is mundane – more buyers the price goes up – more sellers – the price goes down. And despite conspiracy theory – gold lease rates are a fairly simple way of managing real gold demand over longer periods of time.
And regardless of your own personal position in gold bullion – the lending of gold for gold gain is a closed club. It’s easy to study lease rates but very difficult to get into this fraternity.
A small observation regarding our presentation of the gold, silver, platinum and palladium charts: If you had your Sherlock hat on you will have noticed that for some weeks our old presentation of these charts which present things like moving averages and pricing over a long period of time have been missing.
The reason we are told from the mysterious techs is that this information was somehow playing havoc with our encrypted site. Well the magicians have figured out a way around this small problem and they are back on the Home page – left side under Read Before Investing – Precious Metal Graphs.
While they were missing we developed a second more comprehensive set of graphs which present our live pricing stream in the usual metals. You will find these also on the front page – upper right hand corner under the New York Comex Close information – entitled Live Gold Graphs and below that Live Silver Graphs. To access this wealth of information click either the titles or the larger pictures below these live links (information provided by our friends at FastMarkets.
Believe me with these two resources you will be able to sort out virtually any price – historical or live which relates to gold, silver, platinum or palladium.
So why is this so important? Well it isn’t unless you are obsessed like us with the price of gold, silver, platinum or palladium. But further and more importantly you will note in each case these graphs come from completely independent sources – a clue the old detective would enjoy because you the consumer now do not have to rely on any selling dealer to value your product.
A small reminder – Placing gold and silver bullion into your IRA is a good idea. If that gold or silver bullion is certified – so called First Strike or Special issues graded by PCGS or NGC – do yourself a favor and research pricing before signing the paperwork. A few telephone calls could easily save you 30% perhaps more and the compounding mistake relative to your IRA funds is much larger when figured over the years you work before retirement.
Again the walk-in cash trade was just average even with resumed violence in Gaza and the US air strikes against ISIS.
This illustrates the disconnect between the physical markets and the paper spec players. The phones were also quiet – another indication that the US public is not concerned about escalation in either war, curios in that problems in Ukraine and Gaza are not going away and anyone who watches international events must surely see a trade war brewing between Russia and the US.
The GoldDealer.com Activity Scale is a “3” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 2) (Tuesday – 3) (Wednesday – 4) (Thursday – 3). The scale (1 through 10) is a reliable way to understand our volume numbers.
Email confirmation using a PDF File when buying or selling is functional. It also includes the various forms of payment and includes bank wire instructions. And you can now see your 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).
About shipping information – when buying or selling your rep will walk you through your current mailing information. Thanks for keeping us up to date if you have moved.
Our four flat screens downstairs with live independent pricing (BullionDesk.com) are a big hit with the cash trade. Live pricing moves all the buy/sell product prices on a real time basis. Yes – you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. When buying from us remember if you exceed $10,000 in cash (the real green kind) a Federal Form is necessary.
In addition to our freshly ground organic coffee offered visitors throughout the day we have added cold bottled water, cokes and Snapple. We have also added fresh fruit in a transparent attempt to disguise our regular junk food habits – which seem to grow when things get this quiet. And it does not help that the world famous Randy’s Donuts is just down the street.
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Thanks for reading from your friends at GoldDealer.com and enjoy your weekend.
Disclaimer – The content in this newsletter and on the GoldDealer.com website is provided for informational purposes only and our employees are not registered financial advisers. The precious metals and rare coin market is random and highly volatile so it may not be suitable for some individuals. We suggest before deciding on a course of action that you talk with an independent financial professional. While due care has been exercised in development and dissemination of our web site, the Almost Famous Gold Newsletter, or other promotional material, there is no guarantee of correctness so this corporation and its employees shall be held harmless in all cases. GoldDealer.com (California Numismatic Investments, Inc.) and its employees do not render legal, tax, or investment advice.