Commentary for Thursday, Dec 12, 2013 GoldDealer – Gold closed down $32.50 at $1226.00 and began to meltdown in overnight Hong Kong/London trading which continued weaker into the domestic market.
There are a number of reasons: (1) economic numbers coming out of Europe are a disaster which moved the dollar higher. (2) US retail sales were strong in November further reinforcing the talk that the Federal Reserve will modify the $85 billion a month Uncle is paying to keep interest rates low and encourage further economic expansion. (3) Yesterday’s under the table debt agreement between the Democrats and Republicans seems to have worked wonders at dissuading the pessimists that we will somehow run out of money.
Still the unemployment numbers are weary at best so I don’t know how this whole diminished expectations thing is going to work and gold with all the fanfare is only down $4.00 on the week.
This from Jim Wyckoff (Kitco): “In overnight news, industrial output in the European Union fell sharply in October—down 1.1% from September and the steepest monthly decline in a year. Forecasts were for the number to be up 0.2%. This report is one more argument for the European Central Bank to keep its monetary policy very accommodative. ECB president Mario Draghi on Thursday reiterated his desire to keep the ECB’s easy money policy in place and he also said deflation is not a problem in the EU. However, the fact that Draghi keeps bringing up the deflation matter, amid an extended period of very low inflation in the EU, suggests he is indeed at least a bit worried about it.”
Silver was down $0.90 and once again we are struggling with the $20.00 number but physical activity remains steady. Jim Rogers claims he would rather own silver over gold and also points out that the debt deal takes away any Congressional restraint and allows the Fed to print away.
Platinum followed gold lower off $20.00 at $1364.00 and palladium was down $17.00 at $720.00.
I would not be surprised to see follow through selling Friday morning as this market tests for further downside action so my $50.00 prediction is getting some play. Still the jury is out as far as significant damage to the price of gold below $1200.00. We will just have to wait and see what the Fed does this coming December 17th and 18th.
The walk-in cash trade and phones were active most of the day but not hurried. The GoldDealer.com Activity Scale was a “5” with buying and selling once again split pretty evenly. The CNI Activity Scale takes into consideration volume and the hedge book: (last Friday – 6) (last Monday – 6) (last Tuesday – 4) (last Wednesday – 4) (Thursday – 5). The scale is 1 through 10 and we believe this is a reliable way to “sense” real bullion business.
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