Gold Remains Very Quiet

Gold Remains Very Quiet

Commentary for Monday, Aug 25, 2014 (www.golddealer.com) – Gold closed down $1.30 today at $1277.30 in a market which showed a $4.00 trading range from overnight Hong Kong/London through domestic trading close. A negative for gold today was that the Chinese only imported 22 tons of gold from Hong Kong down from last month’s 40 ton figure.

Consider however that while Hong Kong is still China’s big dog when it comes to gold imports they are up to something in Singapore and real gold import numbers are still a state secret. Chinese banks are now experimenting with direct importation into the Shanghai free trade zone so numbers will never be really transparent.

The plus and minus for gold remains a tough call and while the bears are now in charge two forces still rule the short term direction. First, the minus for gold – the continued tapering of quantitative easing by the Federal Reserve remains a drag on the market. But like everything related in the physical gold market this is not money in the bank. Why? Because most believe this will eventually push interest rates higher and many believe the labor and real estate market can’t stand the pressure. Second, the plus for gold relates to safe-haven buying because of the Gaza and Ukraine conflicts. These are endemic of long standing problems and neither has a ready solution.

Also consider the problems in Europe – these too are endemic with no easy solutions. ECB President Mario Draghi has been stellar at promising to do anything necessary to keep things moving but he still has not come up with the key to unlocking Europe’s lack of economic growth.

It is self-evident that gold is weaker and a negative bias is in place, but the picture becomes blurred if commentary in the physical market gets too negative. At the lower end of current trading range even gold pessimists don’t want to be too short. Over the last year gold has dropped $120.00 or about 9% which is certainly not an optimistic picture but during that time we have had 2 attempts at breaking above $1350.00. Both were caused by geopolitical problems and these problems have not been solved – so while not intractable neither is going away.

This of course is a negative argument – but it does keep the short players honest. That is why I remain convinced that for the short term gold prices will remain capped but the downside is also limited. So even as the Federal Reserve winds down quantitative easing – gold’s negative bias might just flatten out especially in the shorter term. This will place gold in another holding pattern waiting for inflation or the next round of safe-haven buying. And in the meantime remember that lack luster buying from both India and China will not last forever and world Central Banks will no doubt continue adding to their holdings – a consistent trend in these times of massive currency expansion.

Everyone interested in the real ownership of gold bullion should know about GATA (Gold Ant-Trust Action Committee – www.gata.org). These are the folks that believe the price of gold has been manipulated and present a challenging argument with some of the best known gold commentators in the business. The following was posted on their website – an event which happens each year and always promises lively debate – The New Orleans Investment Conference. If New Orleans is not on your agenda I believe much of the discussions will be taped and offered for sale after the event.   

Dear Friend of GATA and Gold:

As always unafraid of controversy, the New Orleans Investment Conference in October will feature a debate on whether central banks manipulate the gold market, with your secretary/treasurer arguing in the affirmative and Casey Research founder Doug Casey arguing in the negative.

The debate will be moderated by money manager, financial commentator, and fellow conference speaker Adrian Day.

Casey is an investor and author who has appeared on hundreds of television and radio programs. His company, Casey Research, publishes newsletters and operates Internet sites. Its flagship publication is the newsletter Conversations with Casey.

Casey, his biography says, "has visited more than 175 countries, most of them several times, and lived in 10. His main sport is polo but he also has been active in skydiving, martial arts, scuba, auto racing, and competitive shooting."

Your secretary/treasurer is a high school graduate who played softball occasionally until he got old but still dresses himself.

The New Orleans conference is always great fun in a fascinating city, and this year’s conference will include a presentation by former Federal Reserve Chairman Alan Greenspan, who has agreed to answer questions from the audience, including questions about gold. Also speaking will be GATA Chairman Bill Murphy. So the conference is sure to be of great interest to those who follow GATA’s work.

The conference will be held from Wednesday through Saturday, October 22 to 25, at the beautiful Hilton New Orleans Riverside Hotel on the city’s famous Riverwalk, just a few blocks from historic Jackson Square, the New Orleans Cathedral, and the French Quarter.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

This from David Stockman (ContraCorner.com) – The Italian Job: How Borrowing and Printing Lead to an Economic Dead End – “So why does this abysmally failed and dangerous experiment continue unabated—as Yellen will undoubtedly confirm at Jackson Hole?  Self-evidently, it is irresistibly convenient to both Wall Street and Washington.

The former gorges on a massive diet of carry trade gambling windfalls thanks to ZIRP and the Greenspan/Bernanke/Yellen “put”; and the latter gets a fiscal get-out-of-jail-free card owing to the Fed’s massive repression of interest rates. Indeed, with the public debt now topping $17.7 trillion, the implicit (and fraudulent) debt service relief from current ultra-low interest rates amounts to upwards of $500 billion per year.

Stated differently, where there should be extreme caution on Wall Street, there is actually irrational exuberance beyond Alan Greenspan’s wildest imagination back in December 1996. And where there should be fiscal panic in Washington owing to prospective red ink of another $15 trillion over the next decade (under “un-rosy scenario”), there is unmitigated and universal complacency.

The evil of monetary central planning, of course, is exactly what is unfolding: it drastically distorts pricing signals and thereby sows the seeds of eventual financial correction shocks and the consequent economic disorder. But there is something else, and it’s worse. Namely, the addiction to money printing and artificial debt fueled stimulus has become so deeply entrenched in the Wall Street-Washington corridor that the mainstream narrative has lost any semblance of historical perspective and realistic appreciation of the dead-end path on which the system is now embarked.

The monumental extent of monetary expansion and debt accretion since the turn of the 21st Century, for example, goes unrecognized, and is assumed to be merely a permanent and sustainable feature of the financial landscape. And that blindness might even be understandable had it been accompanied by an unusual surge of prosperity of the “party now, pay later” variety.  In fact, however, the core metrics of prosperity —— real GDP growth, breadwinner employment, investment in productive assets and real household incomes—-have all gone in the opposite direction, having fallen drastically below all historical norms.

The contrasts below are dispositive. Real GDP growth during the last 14 years has averaged only 1.8%—-barely half the average rate during the prior 50 years. Likewise, breadwinner jobs are still 5% below their turn of the century level; real net investment in plant and equipment is 20% below its late 1990s levels; and real median household income is down by 5%.”

Now before you say here we go again – well – here we go again. All the ingredients for the next financial “dog and pony” show are in the stew. Everyone knows it but the headlines trumpet economic success albeit this time around they are cloaking the results with more than typical “we still have work to do”.

If the above is interesting enough to make the case that gold bullion under your pillow is a good idea you should also consider David Stockman’s bestseller – The Great Deformation: The Corruption of Capitalism in America – (Amazon) an absolute must read if you are worried about your financial future.

The Great Deformation is a searing look at Washington’s craven response to the recent myriad of financial crises and fiscal cliffs. It counters conventional wisdom with an eighty-year revisionist history of how the American state—especially the Federal Reserve—has fallen prey to the politics of crony capitalism and the ideologies of fiscal stimulus, monetary central planning, and financial bailouts. These forces have left the public sector teetering on the edge of political dysfunction and fiscal collapse and have caused America’s private enterprise foundation to morph into a speculative casino that swindles the masses and enriches the few.

Defying right- and left-wing boxes, David Stockman provides a catalogue of corrupters and defenders of sound money, fiscal rectitude, and free markets. The former includes Franklin Roosevelt, who fathered crony capitalism; Richard Nixon, who destroyed national financial discipline and the Bretton Woods gold-backed dollar; Fed chairmen Greenspan and Bernanke, who fostered our present scourge of bubble finance and addiction to debt and speculation; George W. Bush, who repudiated fiscal rectitude and ballooned the warfare state via senseless wars; and Barack Obama, who revived failed Keynesian “borrow and spend” policies that have driven the national debt to perilous heights. By contrast, the book also traces a parade of statesmen who championed balanced budgets and financial market discipline including Carter Glass, Harry Truman, Dwight Eisenhower, Bill Simon, Paul Volcker, Bill Clinton, and Sheila Bair.

Stockman’s analysis skewers Keynesian spenders and GOP tax-cutters alike, showing how they converged to bloat the welfare state, perpetuate the military-industrial complex, and deplete the revenue base—even as the Fed’s massive money printing allowed politicians to enjoy “deficits without tears.” But these policies have also fueled new financial bubbles and favored Wall Street with cheap money and rigged stock and bond markets, while crushing Main Street savers and punishing family budgets with soaring food and energy costs. The Great Deformation explains how we got here and why these warped, crony capitalist policies are an epochal threat to free market prosperity and American political democracy.”

The walk-in cash trade was at times very busy and at times very quiet – one thing is sure – there was not much in the way of anxiety one way or the other which pretty much describes overnight and domestic trading. The phone trade was steady but large buyers and selling are absent. 

The GoldDealer.com Unscientific Activity Scale is a “2” for Monday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Tuesday – 3) (last Wed – 4) (last Thursday – 4) (last Friday – 3). The scale (1 through 10) is a reliable way to understand our volume numbers.

Email confirmation using a PDF File when buying or selling is functional. It also includes the various forms of payment and includes bank wire instructions. And you can now see your actual invoice or purchase order on your computer screen.

When you buy or sell please check to see if we have your current email on file and that your computer will accept our email (no spam).

About shipping information – when buying or selling your rep will walk you through your current mailing information. Thanks for keeping us up to date if you have moved.

Our four flat screens downstairs with live independent pricing (BullionDesk.com) are a big hit with the cash trade. Live pricing moves all the buy/sell product prices on a real time basis. Yes – you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. When buying from us remember if you exceed $10,000 in cash (the real green kind) a Federal Form is necessary.

In addition to our freshly ground organic coffee offered visitors throughout the day we have added cold bottled water, cokes and Snapple. We have also added fresh fruit in a transparent attempt to disguise our regular junk food habits – which seem to grow when things get this quiet. And it does not help that the world famous Randy’s Donuts is just down the street. 

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Thanks for reading from your friends at GoldDealer.com and enjoy your evening.

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