Commentary for Thursday, July 3, 2014 (www.golddealer.com) – Gold closed down $10.30 at $1320.40 on expected profit taking. And higher than expected job creation (288,000) coupled with a lower unemployment rate (6.1%) is the kind of economic news which makes gold bears certain that quantitative easing will continue lower. They are right of course but the conclusion is pretty old news so the pullback in gold is more a matter of profit taking than hoopla about an improving economy.
The jobs report was positive – again. But let’s not get too carried away as CNBC (Santelli) points to low paying and part time workers. And while 288,000 is above expectations it is still an average result and when compared with the 1990 recovery (400,000 jobs number). Another problem with these numbers relative to the broader economy is that they are not creating any pressure for higher wages. So yes, we are doing better – and the Federal Reserve will continue to taper. But interest rates will remain at record lows because the patient is ambulatory but not ready for any long distance race.
I am fond of pointed out that with interest rates at zero imbalances are being created in the economy. We have become accustomed to cheap money for some time now and it is difficult to say where an extension of this policy might lead. One thing is for sure – our Federal Reserve has embarked on an unprecedented path and the ECB has done the same. Where will all this lead?
And while gold is not setting the house on fire it is not doing badly considering we are setting new highs in the stock market. I don’t want to knock stocks as they should be part of any balanced investment portfolio – but this big run does not include the smaller investor.
It’s a mistake to believe this run is the result of better government or the improving economy. This record stock market run was created not by constructive industry but by very cheap money. Will stocks go higher? As long as the Federal Reserve keeps interest rates cheap stocks will continue strong. But a cheap money environment will also support the price of gold.
And the Federal Reserve knows the clock in running relative to inflation.
So what can we learn from the 1 year gold chart? While everyone else is cheering the bounce from $1250.00 towards $1350.00 and the still nervous economy points to continued help from the Fed punch bowl – today we stand about $75.00 higher than we did one year ago (July – 2013). In my book that continues the notion that we are “stuck” as far as gold is concerned – and worse we may stay stuck until the uncertain economy resolves itself.
So instead of bringing out the party hats I would get ready for another test run at $1400.00 (which will make for a three-peat). Now before you say “here we go again” this 3rd attempt presents advantages in the bigger picture. First, we would no longer worry over a test of $1000.00 mark which was on the radar screem the last time we approached $1200.00 (Jan – 2014). Second, three is already a double bottom in gold at $1200.00 and a triple bottom would make for a technically more bullish picture. Third and more importantly another attempt might just work – providing the real break this market needs. It would destroy the naysayers and set in place the “the gold market bottomed in 2014” story which will help with sideliners.
Just some thoughts as we approach one of my favorite days – the 4th of July.
Independence Day to me represents the best of what America stands for and always makes the “doom and gloom” evaporate with exploding fireworks and a dazzling night sky. Of course I was brought up in an era when my uncles set off fireworks in the middle of the street and my cousins carried sparklers in both hands. This Friday is special – enjoy family.
Silver closed down $0.17 at $21.08 and we have seen a pop in 100 oz silver bar sales.
Platinum closed down $6.00 at $1505.00 and palladium was higher by $4.00 at $860.00.
(Kitco News) – Participants in the weekly Kitco News Gold Survey are split on their forecasts for gold’s price direction next week, with no one category garnering a majority and bears having a slight nominal advantage.
Out of 37 participants, 18 responded this week. Of those, seven see higher prices, eight see lower prices and three see prices trading sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
Last week, survey participants were mildly bullish for this week. As of 11:30 a.m. EDT, Comex August goldwas down about $3 for the week.
Those who see higher prices next week said they liked that gold held support above $1,305, even though the metal set its weekly low Thursday.
Technical-chart analysts still see gold rising into next week. Darin Newsom, senior analyst at DTN, said the secondary, or intermediate-term, trend for the August gold contract remains up on the weekly chart. “The next price target is pegged at $1,341.50,” he said.
Bob Tebbutt, independent commodities consultant, said the longer-term monthly charts are also bullish for gold. “I believe that the gold market is on the verge of a major move. Technically support is at $1,200, with resistance at around $1,375. I believe that the market will head higher over the next year. Short term $1,375 will be broken … next week,” he said.
Those who see lower prices said the economic news is becoming bearish for the metal.
“The nonfarm payrolls coming in so strong for June is bearish for the gold market as this another indication that some sort of tightening of the Fed’s stance is on the way, which is inherently bearish for gold. The market has shown marked signs of distribution through the month of June and a break below the $1,300 level portends a test of the lows around $1,250,” said Sterling Smith, futures specialist, commodity research at Citibank Institutional Client Group.
Those who see prices moving sideways or are neutral said they expect gold to consolidate after recent price swings.
The walk-in cash trade was busy most of the day and the phones were less than average.
The GoldDealer.com Activity Scale is a “4” for Thursday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Friday – 2) (Monday – 3) (Tuesday – 4) (Wednesday – 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 our 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 and get cash for your transaction. When buying from us remember if you exceed $10,000 in cash (the real green kind) a Federal Form is necessary.
We would also like to thank Aaron Goggan – Fastmarkets – Head of Business Development North America – for his recent visit to the CNI Building. Aaron / Fastmarkets / Bullion Desk are responsible for a great deal of the independent pricing information we use each day. A very personable chap – Aaron took the time to provide an “inside” view of all the information he provides on a daily basis. Fastmarkets – Delivering a clear and focused understanding of the metals markets.
Like us on Facebook and follow us on Twitter @CNI_golddealer.
We will be closed this Friday (for the 4th of July).
Thanks for reading from your friends at GoldDealer.com and enjoy your long weekend.
Disclaimer – The content in this newsletter and on the GoldDealer.com website is provided for informational purposes only. The precious metals and rare coin market is highly volatile and may not be suitable for some individuals. We suggest before deciding on a course of action that you first 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. Our employees are not registered financial advisers but most have years of experience in the gold business. GoldDealer.com (California Numismatic Investments, Inc.) and its employees do not render legal, tax, or investment advice.