Commentary for Monday, March 3, 2014 (www.golddealer.com) – Gold closed up $28.70 at $1350.10 and continues to be headline driven as tensions grow between the Ukraine and Russia. At this point Russian troops are organizing on the Ukrainian border but no fighting has been reported and it seems unlikely the US wants any part of this latest intervention. Oil prices which have remained north of $100.00 for sometime added another $2.00 per barrel which supports higher gold prices. While all of this is tenuous in my opinion gold closed at its highest point since late October (2013) as the Russians raise their banking interest rate by 1.5% to support the ruble and stem the flow of capital out of the country.
Silver was higher by $0.24 at $21.44 and such a small move would indicate that higher prices in silver at least on the short term are not in the cards even with international and oil problems.
Platinum did follow gold higher up $14.00 at $1461.00 and palladium was also up $5.00 at $749.00.
How about two opposing views relative to gold from Debbie Carlson (Kitco) – Gold Prices Could Stay Firm As Long As Russia/Ukraine Tensions Remain – UBS – The rising tensions between Russia and Ukraine “spurred safe-haven gold buying in a market which had been looking stale in recent days,” says UBS. “Gold prices have been caught between resistance at $1,361 and support at $1,307 for some time now. Gold’s current safe-haven bid should help to overcome technical resistance, especially if the Ukrainian crisis escalates.” UBS also notes the correlation between gold prices and the S&P 500 stock index remains negative, which should support gold as low as risk aversion hits stocks. “We expect that so long as Ukraine/Russia tensions remain high, gold will remain bid, but that needs to come from fresh longs as gross shorts are now much reduced.”
Chinese Gold Demand Remains Sluggish – Chinese gold demand is weakening, notes UBS and Mitsubishi, and that could be problematic for the yellow metal they say. “Chinese demand, one source of positive sentiment for gold so far this year, is showing some signs of slowing down – volumes trailed off by the end of last week and the SGE (Shanghai Gold Exchange) discount to spot deepened to $2,” UBS says, adding that the SGE started 2014 at a $20 premium. Mitsubishi says with the yuan at an eight-month low versus the dollar, the fall in the SGE premium and gold moving into a seasonally weak time, the yellow metal “may lack crucial physical demand support in the coming weeks. Confounding expectations, the Indian government has so far not moved to relax gold import restrictions, meaning that there will be no release of pent-up demand in that country for the moment. Geopolitical uncertainty surrounding Russia and Ukraine may drive gold higher again in the short term but eventual economic improvement in the U.S. and an associated stronger dollar is likely to weigh on gold longer term,” Mitsubishi says.
Opposing views and typical of gold sentiment these days. Even with the Russian military problem in the Ukraine and this most recent flight to quality most observers see this intervention problem as temporary. And CNBC sees this economic slowdown as weather related meaning no change in tapering and most take a soft position on returning inflation. With bank security off the back burner and in the closet the immediacy of gold ownership has been replaced with a more optimistic take on today’s world. So there are a number of factors which weigh on the continued upward trend in gold.
But let’s not get too complacent about gold’s role in today’s financial landscape. If any one of the above factors blow up gold will make new highs in a matter of a few months. It only takes a bankrupt Ukraine to highlight the gaping holes in the world financial system. The Russians show military force and the stock markets of the world move into the red. Financial tension has always been gold’s trump card and its insurance value against calamity is worth remembering.
There seems to be a good chance of the US Mint making a Kennedy half dollar medal in pure gold which will commemorate the 50th anniversary of his assassination. If they choose to make the coin in a one ounce size it would be distributed by the Mint and probably take its place along with other modern issues. I mention it here only to lament the fact that the US Mint already produces a dizzying array of modern issues in both gold and silver, most of which will eventually trade for their weight. So don’t pay a big premium even if you are a Kennedy fan and remember modern issues are not rare in any sense.
Even with the big pop in gold prices today the walk-in trade was on the slow side and the phones were just average. This again is an indication that the public may be a bit suspicious as gold shows a big $100.00 jump in value over the last month but is actually down more than twice that amount or about 15% over the past 12 months.
The GoldDealer.com Activity Scale is a “4” for Monday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Tuesday – 4) (last Wednesday – 3) (Thursday – 3) (last Friday – 3). Our scale (1 through 10) is a reliable way to understand volume numbers.
On the new GoldDealer.com site: Comex closing prices are posted on the home page and individual product landing pages. Live pricing on the site moves all bullion products up or down during the day. The change number included next to the live pricing uses yesterday’s Comex closing prices as a reference. So if the change number is green and shows up $3.00 this is in reference to yesterday’s close. You now don’t have to visit several sites to find the Comex close relative to live trading numbers which are independently verified.
We reworked the All Bullion Products link on the home page. It now includes our Bid (blue) and Ask (green) prices. When you hover over it with your cursor the text is highlighted.
Premium quotes vary with product and look like this – “spot plus $15.00” or “spot plus $50.00” and bullion products list them under the live prices on their respective landing pages. This makes product comparison easy and GoldDealer.com is the only precious metal site on the net with this transparency. For example click on the link American Gold Eagle and under Our Live Buy Price and Our Live Sell Price you will see: our Buy Premium Spot + $15.00 and our Sell Premium Spot + $50.00 – Easy.
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Email confirmation when you are buying or selling is functional. A PDF file will be added which will create a picture invoice identical to the store invoice. This invoice will include information like wiring instructions.
The four flat screens downstairs with live independent pricing (BullionDesk.com) is a big hit with the cash trade. This live stream moves all the buy/sell prices on each product so the cash buying public can see the markets move on a real time basis. Our site uses the same pricing model so no more guessing.
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