Commentary for Tuesday, Dec 10, 2013– Gold closed at a three week high today up $27.10 at $1262.40. Now considering gold was looking very closely at $1214.00 last week the floor talk goes something like this: is it possible in this sea of bad gold news that the short players are played out?
I would not get too excited about this scenario but there is something going on and if we challenge the big $1300.00 again it would be significant that the $1200.00 level might just be the “worst case” scenario.
And the European inflationary playbook is out as ECB President Mario Draghi claims Europe will not suffer Japanese like deflation. This again implies fiat money is no problem and will be used to cope with economic problems and also reinforces his often stated position that interest rates will remain low.
So where is gold heading in the short term? While the latest higher prices are encouraging it is still too early to say whether this strength has confirmed a bottom. Perhaps we are just experiencing further short covering.
The low interest rate talk out of Europe was unnerving but still I don’t see a big follow though on the physical side across the counter.
This would indicate that recent higher prices in gold has everyone’s attention but as of now the public still remains cautious.
So the old quantitative easing question is still the big elephant, and until the Fed takes action I believe gold will remain defensive.
But keep in mind you can’t keep beating this QE drum and not produce actionable results. Everyone will tire of the story and look elsewhere for the cause and effect.
Silver closed up $0.61 at $20.25 and this again is a story of is the glass half full or half empty. We are selling enough silver bullion to keep everyone busy – this morning’s Brinks delivery filled up the inventory room with brand new JM 100 ounce bars – but considering the discount from highs I think the buyers today are the committed.
The new spec action is still waiting on the sideline hoping for lower prices, which is probably not the best way to approach this market. I have always been a step buyer meaning if I like the trade and the market shows indecision I will spread my bet over a period of months with smaller purchases.
The US Mint has stopped delivery of current year (2013) American Silver Eagles which it does this time each year to give itself time to retool for the coming year (2014). There are still 2013 Silver Eagles out there but soon these will begin to disappear and premiums will rise until the Mint once again turns on the presses. Some dealers will offer 2014 US Silver Eagles in a delayed delivery program which is fine but don’t pay a big premium.
Platinum followed gold higher up $20.00 to $1387.00 and palladium was up $3.00 at $737.00. Figure this one out: China reported auto sales up 46% from a year ago.
The walk-in cash trade was average today and so was the phone business: curious really considering the pop in gold prices. The GoldDealer.com Activity Scale remains at “4”. The CNI Activity Scale takes into consideration volume, open and closed orders (buying precious metals and selling precious metals), the cash trade, and the hedge book: (last Wednesday – 6) (last Thursday – 7) (last Friday – 6) (last Monday – 6) (Tuesday – 4). The scale is 1 through 10 and we believe this is a reliable way to “sense” real bullion business.
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Remember our best price guarantee (buying or selling) so call Kenny at 1-800-225-7531. The CNI Holiday Schedule: We will be closed Tuesday, Wednesday and Thursday (Dec 24th, 25th and 26th) for Christmas. For New Year’s we will be closed Tuesday and Wednesday (Dec 31st and Jan 1st): a reminder that shipping during the holiday season slows so your patience is appreciated. Thanks for reading and enjoy your evening.