Gold Settles Quietly – Somewhat Lower

Gold Settles Quietly – Somewhat Lower

Commentary for Friday, Jan 22, 2016 (www.golddealer.com) – Gold closed down a tepid $1.90 today on the Comex at $1097.20. The trading pattern for gold today was more defensive than anything else – it opened lower trading as low as $1095.00 before turning around again moving over $1100.00 – finally settling at the close of $1097.29. This is typical of a continued choppy market into the weekend but at the higher end of its current range. So gold was the picture of stability this week as it fluctuated in a 2% range and was up $6.00.

This from Reuters – “Even with the day's loss, gold was poised to end the week higher. Bullion has benefited from the risk aversion that hurt stocks and crude oil this month, though slow physical demand from major consumers China and India kept a lid on price gains. Gold premiums in China rose only slightly this week and sellers in India offered discounts given poor demand. Holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, rose a further 1.8 tonnes on Thursday, data from the fund showed. That brought its inflow for the week to 4.2 tonnes.”

This again from Peter Hug (Kitco) – A Day of Reprieve? – A little while ago we suggested that this market is a minefield set for nimble traders. The cross-currents continue to ebb by the hour. Weakening oil, equities bolster bids for gold and as a ratio trade hit the industrial metals. A snap-back in oil and equities removes gold’s bid and the ratios improve for the PGM’s and silver relative gold. The metals will all generally trade in the same pattern, but the extent of the moves relative gold, are changing hourly following the trading pattern of oil and equities. It felt like capitulation yesterday in the equity space and with oil’s opening plunge but I suspect this remains a temporary reprieve. Calm in the oil/equity space today should put some short-term pressure on gold, but it is not likely that the drop in oil/equities is over. Gold may trade down to the $1,093 level, if the equity/oil bounce catches wind and the $1,102 level on a close basis remains the obstacle for technical bulls.

I could not help myself – after yesterday’s Hug post of the approaching apocalypse today the comments are tempered. Believe me all traders have such instincts – this is what makes them good traders. Civilians should develop these instincts too, not because I suggest you trade – this is only good for going broke in commodities. But having a trading mentality allows you make decisions – like buying more if the market trends lower or selling product when you are in the green zone.

There is another point here which might be useful – this according to Hug may be a temporary reprieve. And whether he is right about the reprieve does not matter – he is right about the devastation in store if oil continues lower.

Today’s lower gold market is the result of the bounce back in oil – we touched a near-term bottom on Thursday of $28.00 and today we are trading around $31.63 – what happened?

Actually this is the result of a short-covering rally in oil which impacted gold. But it’s too early to say if a few days of panic buying in gold will change the general trend. For this you will need to show more consistency – holding above $1100.00 with follow though.

Anything else is just theater – but like gold, there is a great deal of money “bet” in this theater by paper oil traders – these folks just covered their short positions. As oil moved higher the DOW recovered 200 points (happy day) and every government in the world (except the US) claimed today that further quantitative easing is in the bag.

Draghi (no problem – we will do anything necessary) – China (they claimed this morning they will continue to support the markets) – Bank of Japan – (got plenty of sake and plenty of yen to “help” the markets). Virtually every paper exchange was in the green on the opening – so the psychological turnaround is again at hand.

And gold moves lower as safe-haven support diminishes. All of this is made sure by the dollar – the Dollar Index closed yesterday at 99.12 and today we are trading around 99.30 – so quiet on the dollar front although we did see some firmness over the Draghi comments – oil is the culprit and watching oil will provide short term direction in both stocks and commodities.

CNBC this morning notes that only Brazil seems to have an inflation problem – so there is no doubt what the Brazilians do with their paycheck – they buy gold and are happy for the opportunity.

As far as 2016 price estimations for gold – they should be all over the street based on early returns. One thing is sure – we have changed direction and mind-set twice in the last two weeks so expect continued volatile markets.

Silver closed down $0.04 at $14.04 – a quiet day in the paper trade and in the physical bullion business. The selection of new bullion products available to the public cheap continues to improve and this wider choice is good for everyone.

Platinum closed up $12.00 at $830.00 and palladium closed up $1.00 at $498.00. Platinum is trading for $267.00 less than gold and physical sales of platinum bullion are moving higher.

This from Kitco – 'Maybe' Gold Bottoms In 2016 on Low Mine Supply – Ira Epstein – Although there is hope for gold in the near-term, one market professional still sees the potential for lower prices as seasonal factors start to wear off.

Being slightly more optimistic on gold, in a recent research note, Ira Epstein, director of the Ira Epstein division of Linn & Associates said that 2016 “maybe” the year gold finally bottoms out as the market reacts to lower supplies.

He noted that there are expectations that gold production could fall 3% this year, ending its seven-year streak of increasing supply.

“I’ve been looking to see when the impact of continued low gold prices would impact forward production of gold and believe we’re finally found that infliction point,” he said. “There’s a point where it’s better to leave production in the ground hoping for a better environment in which to produce.”

But, this one positive factor isn’t enough to turn Epstein bullish on prices for the year. Although prices could continue to rise in the first quarter, Epstein said there is still a possibility that gold hits new lows at $1,014 an ounce later in the year as inflation remains relatively nonexistent.

He noted that historical season patterns point to gold peaking by March.

“The odds still favor further downside as long as crude oil prices continue under selling pressure. From time to time we’ll witness “safe haven” buying as was seen at the beginning of this year, but once that wears off bearish forces seem to return to pressure prices lower,” he said in his report.

In the short term, Epstein said that gold has the potential to move higher as investors continue to react to sharp drops in gold prices. He noted that every $5 break lower in oil prices should be supportive for gold.

“Instead of gold tying itself to crude oil prices, it’s responding to breaks in oil with rallies in gold as gold traders think that the risk to world economies is quite high if oil prices continue to work lower,” he said.

Our Patented Employee Survey – Gold’s Direction Next Week?

Of course it’s not really patented but we do have some fun along the way. This is what the GoldDealer.com employees think – 7 believe gold will be higher next week – 4 think gold will be lower and 1 thinks it will be unchanged.

Our Patented Customer Survey – Gold’s Direction Next Week?

Like the employees our customers were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 transactions – unscientific but worth considering because these people took action: 43 people thought the price of gold would increase next week – 44 believe the price of gold will decrease next week and 13 think prices will remain the same.

Precious Metal Closes & Dollar StrengthJan. 18 – Jan. 22

The walk-in cash business was again slow today and so were the phones.

The GoldDealer.com Unscientific Activity Scale is a “ 4” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – Closed) (Tuesday – 4) (Wednesday – 5) (Thursday – 4). The scale (1 through 10) is a reliable way to understand our volume numbers. The Activity Scale is weighted and is not necessarily real time – meaning we could be busy and see a low number – or be slow and see a high number. This is true because of the way our computer runs what we call the “book”. Our “activity” is better understood from a wider point of view. If the numbers are generally increasing – it would indicate things are busier – decreasing numbers over a longer period would indicate volume is moving lower.

When buying or selling you will receive an email confirmation. This includes a PDF File to confirm your invoice or purchase order and includes forms of payment and bank wire instructions. When doing business please check to see if your current email has been entered into the new system and check to see if your computer will accept our email (no spam).

Thanks for letting us know when you move or change your email.

We believe our four flat screens downstairs with live independent pricing (BullionDesk.com) are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.

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. We will even wire funds into your account that same day for a small service fee ($25.00) if you are in a hurry.

In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s).

Like us on Facebook and follow us on Twitter @CNI_golddealer. Sal is now in charge of our Facebook page and he is a self-proclaimed expert on gold conspiracy theory. He would be happy to respond to even the most ridiculous conspiracy assertion on our Facebook page so why not join the fun?

Thanks for reading, as always we appreciate your business and enjoy your weekend.

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 advisors. 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.

Leave a Reply