Gold Settles for Book-Squaring into the Long Weekend

Gold Settles for Book-Squaring into the Long Weekend

Commentary for Friday, Aug 29, 2014 (www.golddealer.com) – Gold closed down $2.90 at $1285.80 initially moving to as high as $1292.00 over the Russian incursion but as fears abated trading moved to book-squaring ahead of the long weekend.

On the brighter side gold did close above its 200 Day Moving Average ($1285.00) and prices, at least over the Labor Day weekend seem firm because of potential safe haven buying. On the week gold was up a very tepid $7.00 and a better word to describe trading would be “flat” with little real interest either here or in Europe.

Economic news continues to be encouraging as the Chicago PMI scoring a higher than expected 64.3 – a big recovery from last month’s number and further indication that the Federal Reserve can continue its tapering program. The Purchasing Managers Indexes are economic indicators derived from month surveys of private sector companies. This type of positive economic information helps keep the dollar strong and a lid on the metals.

Platinum closed down $1.00 at $1425.00 and palladium was up $12.00 at $903.00. Palladium has been strong all week because traders believe that the Russians will retaliate against sanctions by holding palladium production from the market. Rhodium closed unchanged at $1325.00.

Some considerations about gold in the shorter term: (1) Europe is looking at deflation so regardless of the strong US dollar these two forces must at some point be reconciled. (2) The US stock market is an unbeatable act at the present – this will continue to drain speculative funds from otherwise gold friendly investors. (3) The Russian/Ukraine situation is much more serious than generally understood. The American public discounts this because the “back and forth” seems benign. This is not true in Europe because those folks still have up front and personal experience with World War II. A gold flight to quality over there is a real possibility if things get out of hand and could push prices substantially higher in the short term.  (4) No trader wants to be either long or short into a long weekend – so the closing Friday paper market is more book-squaring than anything else – just defensive. (4) The ISIS threat is becoming a bigger reality. President Obama is rightly cautious and so is England. This is another mess which will support gold prices. (5) The continued tapering by the Federal Reserve will pressure the price of gold but not to the extent that everyone believes. (6) In the not too distant future gold will once again become a hedge against all things unforeseeable as the mega trend continues to support long term accumulation. This “long term” trend approach has been documented and shared by the Aden Sisters for years. Keep in mind that gold has been either sideways or down in value for several years. The sellers have pretty much played their hand so in the physical market those still standing will continue to hold. So I am convinced that with the physical selling trend abating – the continued central bank accumulation and the real threat of inflation the future for gold looks brighter than the paper press might have you believe.

MOSCOW, August 27 (RIA Novosti) – The Russian oil company Gazprom Neft has agreed to export 80,000 tons of oil from Novoportovskoye field in the Arctic; it will accept payment in rubles, and will also deliver oil via the Eastern Siberia-Pacific Ocean pipeline (ESPO), accepting payment in Chinese yuan for the transfers, the Russian business daily Kommersant reported Wednesday. The Russian government and several of the country’s largest exporters have widely discussed the possibility of accepting payments in rubles for oil exports. Last week, Russia began to ship oil from the Novoportovskoye field to Europe by sea.

Two oil tankers are expected to arrive in Europe in September. According to Kommersant, the payment for these shipments will be received in rubles. Gazprom Neft will not only accept payments in rubles; subsequent transfers via the ESPO may be paid for in yuan, the newspaper reported. According to the newspaper, the change in currency was made because of the Western sanctions against Russia. In March, in response to Crimea’s reunification with Russia, the United States and the European Union introduced a number of targeted sanctions against Russia. As the Ukrainian crisis escalated, the United States introduced several new rounds of sanctions targeting Russia’s defense, energy and banking sectors, and persuaded its allies to blacklist several Russian citizens and companies. As a protective measure, Russia decided to avoid making its payments in US dollars, which can be tracked and controlled by the United States government, Kommersant reported. Gazprom Neft gained control over the Novoportovskoye field in 2012. The field’s recoverable reserves exceed 230 million tons of oil and 270 billion cubic meters of gas. It is located in the Arctic and is part of the Yamal-Nenets Autonomous District.

Precious Metal Closes for this week – Aug 25 through Aug 29 – 2014

            Gold                Silver              Platinum         Palladium

Mon    $1277.30         $19.33             $1420.00         $889.00

Tues    $1283.80         $19.37             $1421.00         $888.00

Wed    $1281.90         $19.39             $1421.00         $893.00

Thurs  $1288.70         $19.53             $1426.00         $896.00

Fri       $1285.80         $19.40             $1425.00         $908.00

So which way is gold going next week?

This is what the GoldDealer.com employees think – 5 believe gold will be higher next week – 4 think gold will be lower and1 believes it will be unchanged.

Also consider a survey on what our customers think about the gold market next week.

Like the employees they were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 customers – unscientific yes but worth considering because these people actually took action: 55 people thought the price of gold would increase next week – 26 believe the price of gold will decrease next week and 19 think prices will remain the same.

The walk-in cash business today was frantic all day – mostly small to mid-size with a good mix of buying and selling. The phones however remained somewhat on the quiet side.  

The GoldDealer.com Unscientific Activity Scale is a “2” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Friday – 3) (Monday – 2) (Tuesday – 4) (Wednesday – 2) (Thursday – 4). 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 remember we will be closed this Monday for Labor Day.

Disclaimer – The content in this newsletter and on the GoldDealer.com website is provided for informational purposes only and our employees are not registered financial advisers. The precious metals and rare coin market is random and highly volatile so it may not be suitable for some individuals. We suggest before deciding on a course of action that you talk with an independent financial professional. While due care has been exercised in development and dissemination of our web site, the Almost Famous Gold Newsletter, or other promotional material, there is no guarantee of correctness so this corporation and its employees shall be held harmless in all cases. GoldDealer.com (California Numismatic Investments, Inc.) and its employees do not render legal, tax, or investment advice.

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