Gold Moves Lower for the 5th Straight Day

Gold Moves Lower for the 5th Straight Day

Commentary for Friday, Sept 12, 2014 (www.golddealer.com) – Gold closed down $7.50 today at $1229.90 so my feeling that we would eventually test the longer term $1200.00 number has been accurate. Unfortunately this is the 5th day in a row gold has moved lower. If you consider the Jan 2, 2014 low close for gold of $1225.00 we are now looking at 8 month lows.

The big Trifecta plus 1 – pushing gold lower is apparent: an amazing run in the dollar to the upside reacting to a continued weaker euro – the price of oil continues to weaken – and the improving US economy suggests the Federal Reserve quantitative easing program will soon end.

The plus 1 is also dangerous – bearish momentum players.  

And physical demand for gold has also been weaker than expected. Some believe that buying from China and India will move higher as we move away from summer – but it appears the 10% gold import tax now charged by the government of India will remain in place.

Still the activity level at GoldDealer.com continues higher (7) so the public seems to like cheaper prices. The relative order size has been moving lower meaning there are no whales at the present and there are still no large sellers.

Silver closed up $0.01 at $18.54. Still pretty quiet but we are seeing some tire kicking.

Platinum was unchanged at $1371.00 and palladium was up $2.00 at $835.00.  

Precious Metal Closes for this week – Sept 8 through Sept 12 – 2014

            Gold                Silver              Platinum         Palladium

Mon    $1252.70         $18.89             $1398.00         $886.00

Tues    $1246.80         $18.84             $1387.00         $860.00

Wed    $1243.50         $18.85             $1382.00         $848.00

Thurs  $1237.50         $18.53             $1371.00         $833.00

Fri       $1229.90         $18.54             $1371.00         $835.00

Our Patented Employee and Customer Survey – Gold’s Direction Next Week?

OK – it’s really not patented but because we are just old coin dealers with absolutely no pretense – we needed something that sounds more mysterious. 

This is what the GoldDealer.com employees think – 4 believe gold will be higher next week – 7 think gold will be lower and 2 believe it will be unchanged.

Consider a survey on what customers think about the gold market next week.

Like the employees the public 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: 35 people thought the price of gold will increase next week – 55 believe the price of gold will decrease next week – 10 think prices will remain in the same range.

There appears to be a random problem with some emails sent to Ask an Expert. The techs are working this out but in the meantime if you have emailed GoldDealer.com with a question and did not receive an answer please consider resending. This technical glitch will soon be fixed and I apologize for any inconvenience.

I want to restate yesterday’s short term look at gold – slightly modified relative to physical sellers. Gold has been bearish for a month now moving generally downward from $1310.00 to the present close of $1229.90.

A wider view is now necessary especially because the dysfunction between the European Union and the United States looks like it will be with us for some time – as we wind down quantitative easing while they wind up the same misplaced flooding of their fiat currency.  If this continues there will be no race to the bottom in relative currency value – the euro will continue to tank as the dollar becomes the default choice relative to a safe place to hide.

All the other factors which should support gold – the expansion of the ISIS contagion – our own issues with creeping inflation – and unstable Middle East – Russia/Ukraine – the possible implosion within minor EU countries because their massive unresolved debt problems – even the probability that physical demand should soon catch traction because gold is now trading at a significant discount – all of these will dance to the US dollar/euro contango.

Like I said yesterday – intuitively you would have to believe that the dollar would not hold such sway – especially because our recovery is far from guaranteed especially when it comes to the job renewal.

But in the trading business it is best not to get in front of a moving train and the Dollar Index is trading at yearly highs above 84.00!

And now we must consider the possibility of even lower crude oil! As they say, when it rains it pours – the possibility of oil moving below $94.00 a barrel was remote not long ago. We must now consider the possibility that oil might see $85.00 barrel. Amazing – and this is not a good trend for gold.

So what should newcomers do when considering gold bullion? Stand aside for now and decide another cup of coffee is a better idea. What difference does it make if you don’t catch the exact bottom? This shakeout continues and time is always on the side of the patient trader.

If you are a long term – well established player adding to these lower levels is a good idea because buying more often in smaller quantities is the only defense you have in a negative market.

To get a better idea of pricing look at the one year gold chart: We have moved from $1350.00 down to $1200.00 – then reversed direction moving again to $1350.00 and once again down to the $1250.00.

We are now testing the lower levels of this $150.00 range – I had hoped we would hold the $1240.00 recent support but this is not in the cards so consider a test of the $1200.00 (Dec – 2013) level.

In the last 2 years gold has tested this support twice – recovered and moved higher.

This would represent a 37% pullback from the summer of 2011 gold peak of $1880.00 and while no one is claiming gold is approaching the “give up” phase there is no doubt bargain hunters will see long term value. Finally let me also point out an important physical fundamental. We have seen no significant sellers at these lower levels.

American credit-card debt hits a post-recession high (MarketWatch) – Quentin Fottrell – “U.S. consumers may be relying too heavily on their plastic. Americans added $28.2 billion to their credit cards in the second quarter of 2014, the largest amount in the last six years and nearly 200% more than in the second quarter of 2009, when the economy emerged from the depths of the Great Recession, according to new research from personal finance website CardHub.com. After paying off $32.5 billion owed during the first quarter of 2014, consumers ran up roughly 86% more debt during the following quarter.

The average household’s credit-card balance now stands at $6,802, up slightly from $6,628 in the first quarter, but still down from $8,431 at the end of 2008. By the end of the year, this figure is expected to exceed $7,000, reaching levels not seen since the end of 2010. U.S. consumers will be roughly $1,300 away from the credit card debt “tipping point,” where minimum payments become unsustainable and delinquencies skyrocket, the report says.

Experts say that consumer spending accounts for more than two-thirds of U.S. economic output, and credit-card spending in particular shows that people are feeling more confident about their job security and the economic recovery. Earlier this week, the U.S. Federal Reserve said that outstanding revolving credit, which is mostly made up by credit-card debt, increased by 7.4% in July to $880.54 billion, and has been gradually rising since falling to $840 billion in 2010.

Americans are certainly using their credit cards more, says Ben Woolsey, president of credit-card advice website CreditCardForum.com. Following the financial crash, banks charged off lots of balances as uncollectable, reigned in credit lines and greatly curtailed new account signups due to a freeze in the credit markets, he says. “Average figures are greatly distorted by a relatively small percentage of borrowers who carry lots of debt and therefore render any conclusions more alarmist,” Woolsey says.

But some Americans are living beyond their means: 20% of people say could not make ends meet without the use of credit and 22% say they would have to make “significant lifestyle changes” if they cut up their credit cards, according to a new poll of 1,878 credit-card users by the National Foundation for Credit Counseling. “Breaking one of the basic rules of personal finance — spending more than you make — is not likely to have a positive outcome,” says Gail Cunningham, spokeswoman for the NFCC.”

It would seem that the governments of the world are not the only ones who rely on the “debt equation” to solve day to day problems. But only governments are in the unique position of being allowed to print their own money. It is amazing to me that most simply ignore the now more than $4 trillion dollar debt the US has amassed since roughly 2008. And now Europe is moving in that same direction and Japan has already set sail. How in the world is all this money going to be paid back?

Inflation is the only reasonable answer. And so consider how long will this current shakeout in prices continue? Perhaps until the inflation numbers come back up on the radar screen. In the meantime buying a cheap market over a longer period of time makes sense – considering few real government spending red flags have been corrected.   

The walk-in cash business today was moderate and so were the national phones. Considering gold was down 5 straight days – perhaps everyone is tired and looking for a quiet weekend. 

The GoldDealer.com Unscientific Activity Scale is a “7” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 4) (Tuesday – 4) (Wednesday – 5) (Thursday – 5). 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.

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