Commentary for Wednesday, June 19, 2013 – Gold closed higher by $7.00 today at $1373.60 and while the closes came before Chairman Bernanke spoke the market after all this fanfare reacted only marginally higher in anticipation of a no-change policy.
Ron Paul’s statement yesterday on CNBC was interesting in that he claims if the Federal Reserve current monetary policy continues gold will head to infinity. Ron Paul has had mixed reviews over the years but he always gets a star as far as making a statement. No equivocation. Short term interest rates might provide additional information and these have been stronger but it is not likely the Fed will reverse its historically unprecedented accommodative policy.
Silver was down $0.05 at $21.62 and is still hovers around the post high low seen last Thursday. Physical action remains subdued as most large dealers nationwide now have plenty of inventory and shortage talk had pretty much evaporated. There is a strong element regarding silver bullion investment which is not brought out often enough and that is silver’s relative price break meaning it’s cheap compared to gold and so enjoys a wider audience.
Platinum was down $15.00 at $1425.00 and palladium was off $12.00 at $696.00.
Rhodium closed down $25.00 at $1050.00 and surprisingly sales of the new Baird bar are increasing for this dark horse. I would consider a small buy here because rhodium is trading at the very lower end of its pricing curve and may be a sleeper.
There is a school of thought which might be worth consideration if you are a steadfast bull looking for more reasons to stay in the race. Don’t laugh there are core believers in gold that no matter what the price performance will never admit there are other worthy investment areas. Some players think gold is now just looking for a reason (any reason) to move lower because it failed in April and also created collateral damage in the silver market.
In other words the Federal quantitative easing argument now front and center is just the soup de jour and because gold failed technically two months ago it must now be a bad investment and pay with time in purgatory. This bad karma notion might be more powerful than you think especially in America and England. It attempts to explain why gold is behaving badly price wise in psychological terms.
I am not sure this is my cup of tea but there are plenty of real traders that think technical analysis is black magic. So I am not trying to sell the idea but use it as a kind of ballast in relationship as to why everyone is so hung-up on why the possibility of tapering is pressuring gold lower. The notion that gold was overpriced even at its $1900.00 high water mark is preposterous relative to the amount of money which has been created out of thin air.
If gold had quietly proceeded to $2500.00 everyone today would have said it was a natural reaction. Precious metal dealers worldwide would have rejoiced and guaranteed gold was reacting to the gigantic rise in the amount of world currency: paper money which was produced out of thin air in an attempt to thwart the deflation created by a slowing industrial machine. So are there certain pricing models outside the normal reality which must just doom us to what traders think? And are such models then justified after the fact with whatever facts might fit the perceived picture?
No graveyard humor intended but there are innocent men who might have got the gas chamber using a similar approach. I have been a dedicated gold enthusiast for 30 years and so it does not take any empirical evidence to convince me that gold under any circumstance is a good idea. In fact it does not take evidence of any kind and only my instinct that gold is necessary to protect against a heavy handed government.
So perhaps this karma theory is not so farfetched after all. In fact if this latest triangle formation is resolved to the upside and gold continues in a holding pattern how long will it take for commentators to say that tapering monetary policy is actually good for gold? As we wait for this correction to play itself out what other crazy ideas might be put forth as real reasons weighting down gold?
And will this reasoning keep potential buyers out of the market and so missing one of the best opportunities to own gold we have seen this past decade?
Walk in was steady today but phone trade was again quiet almost defensive and waiting because the markets closed before news of the latest FOMC results were released. The after-market was a bit weaker but nothing big and between late afternoon yesterday and early morning today there were a number of big-boy buys which still indicates large money is betting on higher prices in the longer term. 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)