Commentary for Friday Oct 4, 2013– Gold closed down $7.70 into the weekend at $1309.70 in quiet trading which was off $28.00 on the week. Trading ranges have been tight, rumor driven and generally paranoid because the government continues to argue over money allocation. Actually this indecision in gold might be just what the doctor ordered: it will buy time as the spec paper market decides how to act on what I think is the new non-tapering policy.
Silver was also quiet down $0.04 at $21.70 so we are seeing a compression of prices around the $21.00 level with little movement as silver was down $0.08 on the week. One of the problems with large silver buyers is storage. When our new website is up you will see a link in the bullion section (Independent Storage) which will show you our new CBOT approved storage partner. The fees are cheap and you can now buy or sell with a phone call to Ken Edwards (1-800-225-7531): simple, safe, insured, independent silver storage.
Platinum closed higher today up $15.00 at $1387.00 and palladium was up $2.00 at $702.00. I still believe the platinum market is way too cheap relative to what is really on hand, potential mining problems (guaranteed to blow up sooner or later), and a huge discount relative to old ratios created by the financial meltdown.
And now the famous Kitco News Survey – Neither bulls, bears nor fence-sitters had an outright majority in the weekly Kitco News Gold Survey, although the largest number of responses called for gold to be higher next week. Many describe the precious metal’s direction over the coming week as a tough call due to the uncertainty over how long the U.S. government will be shut down by a political stalemate on a continuing resolution over the budget, with another fight looming over the debt ceiling later this month. In the Kitco News Gold Survey, out of 34 participants, 21 responded this week. Of these, 10 see prices up, while six see prices down and five see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts. Last week, a majority of survey participants were bullish. As of noon EDT Friday, December gold on the Comex division of the New York Mercantile Exchange was down $30.40 the week. George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures, anticipates a narrow range but with an upside bias. More investors could turn to gold if it appears the government shutdown will become protracted, he said. “People would start to take a second look at gold as a (safe) haven,” he said. Ken Morrison, founder and editor of the online newsletter “Morrison on the Markets,” said he does not anticipate a repeat of the apparent fund liquidation that occurred this week, as reflected by lower open interest since last Friday and a decline in prices. “There is support in the $1,300-$1,275 area and we’re assuming major fund long liquidation is unlikely to be as large a factor as this week, so we expect gold to rally toward $1,350 within the week ahead,” he said. Kevin Grady, president of Phoenix Futures and Options, is among those who look for prices to tick lower. “When a market stops reacting positively to bullish news, it usually goes lower,” he said. “We have a possible default looming, yet every time gold manages to rally, the sellers get more aggressive.” The outcome of the political stalemate, of course, will be crucial. Peter Hug, global trading director for Kitco, said “if this garbage continues in Washington on the debt issue, the metals will continue to find, at a minimum, psychological support and potentially have significant upside on a ‘fear’ safe-haven trade. If sanity rules, the market has a heavy tone and levels seen this week, i.e. $1,277 are in the cards.” Surprisingly walk in cash and phone business was active going into the weekend but not like the old days. The reason gold is not more active (volume wise) is because the physical market does not take the gamesmanship in Washington too seriously but they should because there is a possibility that our already 4 trillion dollars worth of red ink might balloon higher.
My almost famous LA Physical Business Number is as follows (note the change to a running weekly tally): (Mon: 3 – Tues: 5 – Wed: 2 – Thurs: 4 – Fri: 6) so you can see physical business for the week was choppy but improving. The public were almost all net buyers and favored gold bullion over silver bullion. For those who have asked this scale is based on combined volume numbers and anything over “5” is relatively busy. The South African Gold Krugerrand makes a wondering present.
Phase One of our new golddealer.com web site will soon be complete and includes a new look along with live pricing. It will also include Live Chat and you will be able to set up your own customer account. Look for further interface improvements before year end which makes accounting, shipping and tracking easier (check to see if we have your email in the new system) and we now offer the choice of USPS or FedEx Ground.
If you visit CNI in person look for the new flat screens with live feed and graphs (gold, silver, platinum and palladium). This will drive all our bullion products and we have programmed the premium spreads on each line to make your choices easier. As usual cash is always available. There is nothing like this on the West Coast and offers visitors complete transparency before purchase or sale.
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Written by California Numismatic Investments (www.golddealer.com).