Commentary for Tuesday Aug 27, 2013 – Gold closed up big today up $27.60 at $1420.00 the highest close since May 14th. Although President Obama has yet to make a decision, Secretary of State Kerry yesterday had stern words for the Syrians claiming it was “undeniable” that they used chemical weapons.
Silver also moved higher closing up $0.64 at $24.64.
Oil prices were higher by $3.00 despite the fact that Syria is of little importance to the oil market however regional tensions could easily drive oil higher supporting gold momentum.
Platinum down $12.00 to $1531.00 and palladium up $3.00 at $749.00 in quiet trading and physical buying/selling is not spectacular.
Gold action yesterday was flat and rumors of an imminent US strike against the Syrian government forces pushed gold higher in Hong Kong and London overnight trading. Gold moved from slightly below the important $1400.00 mark to a domestic trading range which reached $1424.00 before settling at $1420.60. This is the technical follow through everyone was looking for but for the wrong reasons.
The US really has no dog in this fight and might again act for what it believes is the right motive and military action against the Assad regime is so complicated it must in the end play into the hands of America’s enemies. There is no easy answer here folks and escalation might prove disastrous even for the right reasons. Make no mistake about the options, if Syria is bombed by air it will respond by attacking Israel.
What a mess so gold is doing what it does best in times of uncertainty which is move to higher ground and see what shakes out. I normally like all moves higher in gold but this one is the worst of all possible situations. First it could lead to international disaster vis-à-vis oil…just when Europe is at least becoming more stable and the US is clawing its way out of the worst depression since the great depression. Let’s hope cooler heads prevail…but then what happens? Gold sells off and this overshadows the legitimate base building we have seen since $1200.00 gold in June.
At any rate I don’t doubt gold’s technical momentum moving through the $1300.00’s against a background of negative news. But I don’t like what I now see because it takes away from a legitimate recovery cycle and without a big follow through will place doubts as to the mega trend which favors long term players.
Finally there is still a lack of day to day escalating physical action necessary to reinforce renewed speculative buying. In other words the paper market pops higher and there is the run to safety in gold because of the possibility of regional war but where are the other forces necessary to support higher prices in the longer term? We are still waiting to see if the Federal Reserve continues its quantitative easing program, we still do not see the necessary inflation wave created by this massive paper influx, the Indian physical buying season has not begun and spec money is still looking for better opportunities short term.
But momentum is momentum and this break to the upside could run especially because we have not yet begun the debt ceiling debates and there is always the pent up demand which has been sitting on the side lines. At any rate use these lower prices to build your core holdings in gold and continue to diversify and consider the famous other four choices: silver, platinum, palladium and rhodium.
There was definitely a snap in business today which always figures when the prices are moving higher and the mix between buying and selling is about even. Today’s social media places any idea within the reach of millions in seconds and so those who have considered gold and paused because of its extended sell off are still watching and waiting. Any change in this “lower” price mind-set might be met with a large public response pushing to get “in” before the Middle East blows.
While I don’t buy this argument it is possible especially if war planes are dispatched from some of those carriers already stationed in the area.
Phones were very active and the walk in cash trade continues steady all day. The CNI computers place my almost famous LA Physical Trade Business Number at an improving “5” anything above this number would represent a serious escalation in business. 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).