Gold Moves Lower with Possible Syrian Solution

Gold Moves Lower with Possible Syrian Solution

Commentary for Tuesday Sept 10, 2013 (www.golddealer.com) – Gold dropped $22.70 today closing at $1364.10 when the President agreed to a UN discussion which would put Syrian chemical weapons under international control. Big news from China as her August industrial production was up 10.4% from a July rise of 9.7% so as usual things are cooking and I suspect this will encourage further gold acquisition further encouraged by lower prices.

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Silver was down by $0.70 at $22.96 as we continue to see steady if not spectacular buying especially in the under $10,000.00 range.

Platinum was down $9.00 at $1475.00 and palladium was up $10.00 at $692.00. Activity in both platinum and palladium bullion continues to pick up.

This from Peter Hug (Kitco) should be required reading: Is Tapering Necessarily Bad? “Surprisingly strong economic reports yesterday stampeded the bulls through a small door. Once $1,397 could not be breached on the upside, selling en-masse developed breaking through several chart support levels, beginning at $1,384.00, then $1,377.00, then $1,372.00 coming to within $3.00 of our $1,358.00 target overnight. All eyes are on unemployment data this morning. A number over 180,000 will reinforce the “tapering” action; a number below 165,000 should be price constructive for the metals. The tapering, when it becomes effective, may not suggest the end game for the metals. It may be a ‘sell the rumor, buy the news’ event. If the Fed indicates that it may begin tapering, say in October, by reducing bond purchases by $10 billion that month, but says it will continue to assess economic data going forward, this will be bullish for the metals – albeit a short term psychological drop may occur. I do not believe the Fed will state categorically that it will reduce tapering by a specified amount every month, without language that reductions are entirely data dependent.”

So we are back to what I call the “all or nothing” solution. This once again is a bad approach to pricing gold because it provides investors with a black or white answer as to owning gold bullion. And in a world as complicated as this one gold has its proper place especially because money is once again circulating. The case for the short term is as I have been saying these past few days either flat or lower depending on Syria. And with the Russian solution to Syria’s chemical stockpiles it appears we have some breathing room.

To be frank both the President and Kerry are out of step with this problem and so a hurried solution could be a disaster but good for gold. A more reasoned approach appears likely because the American public is tired of war which produces little results and takes a no-limit approach to costs: especially with problems at home. At any rate with a Syrian attack less likely gold is moving lower along with the dollar and oil so where does that put us in the bigger picture?

Gold has a great propensity to bounce higher when the general trend is lower and this bear market trap is always heralded as the “bottom” and so clearly the way to gigantic price increases which supposedly are right around the corner. Is it possible that prosperity might be taking the place of catastrophe? Why not as the banks get stronger and jobs begin to appear? Let the waning spec ETF money look for better opportunities at 50 times earnings.

Is it possible that a modest taper is in the cards and gold will survive? My investment friends you might just be looking at the beginning of the long awaited “inflation” phase created by this quantitative easing approach. Money circulates and inflation begins to edge higher. Another possibility would be money circulates and jobs remain damp meaning we are faced with stagflation. But clearly something unusual must happen to get the price of gold back in the headlines. Or does it?

The people who really want to own gold bullion for the right reasons might just like the idea that their favorite government-anti is on sale. No inflation on the horizon? Fine let the real Asian demand support cheap gold ($1200.00 to $1300.00) for now as this market continues to consolidate. In the wider time frame China and India will always bet correctly because they both understand the permanence of gold and temporary nature of fiat paper money.

In the meantime why worry about the price of gold relative to easing or ETF holdings or for that matter the price of oil? Watch the dollar and continue to place gold and silver bullion into their permanent place as road-blockers which protect against government monetary abuse.

Walk in cash business today was slow but the phones were active most of the day. This figures because real bullion buyers always like cheaper prices.

The CNI computers place my almost famous LA Physical Trade Business Number at a middle of the tired road “3”. For those who have asked this scale is actually based on combined volume numbers and anything over “5” would be busy…a “7” would be hot. Like us on Facebook and follow us on Twitter @CNI_golddealer. Thanks for reading and enjoy your evening. These markets are volatile and involve risk: Please Read Before Investing

Written by California Numismatic Investments (www.golddealer.com).

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