Commentary for Wednesday Aug 21, 2013 (www.golddealer.com) – Gold closed down $2.50 at $1370.60 after recovering from an early trading day sell off over possible outcomes from the Fed meeting in Jackson Hole. So gold in the short term seems range bound covering a whopping $13.00 over the past 5 trading sessions. The sale of existing homes is now at its highest level since 2007 as some analysts wonder if slowly rising US interest rates will prove troublesome. This has to be fanfare because 30 year money is still at 4.4% which is cheap by any historical standard. I think this latest meeting of Federal Reverse members will produce no surprises especially because the Fed Chairman is not attending and the jury is still out as to his replacement. The current members remain “comfortable” with the US recovery status, granted not what they had hoped for but still better in many ways.
So expect no changes anytime soon but employment numbers will be out soon and if there was a big improvement it would lend credence to their belief that the bond buying program will be modified perhaps by September.
Silver closed down $0.11 at $22.95 and we are back to not much action one way or the other even though we are now trading solidly above $20.00. It almost seems the interest in silver bullion needs a wider range of price changes before the public gets excited.
Platinum was down $6.00 at $1518.00 as more trading houses claim platinum will out perform gold this year. Palladium closed down $2.00 at $747.00.
An example of how dicey this market remains is the reaction to housing sales this morning. Big pop in numbers and in slow motion gold gets weaker because traders believe that an improvement in real estate equates to assurance that the Fed will begin tapering in September. I am not saying the pundits who claim gold bottomed at $1200.00 are wrong but would like a little more time to see if this market continues to shake out. I was watching CNBC on the market open and saw they place a good deal of importance on stocks which sell office supplies to the public and small business which accounts for about 70% of the jobs picture. These stocks appear weak and so they are not convinced the recovery “numbers” are robust.
They are right but the gold market remains focused on whether the Fed will taper or not so any hint of an early move will send gold lower. My best scenario fits a more conservative picture in that gold will probably stay range bound perhaps ready to challenge the important $1400.00 level but will not be in any hurry. Waiting for what you might ask? The most obvious answer being the continuation of physical demand from both India and China. As soon as the most recent strength in gold is placed into the wider view the demand for physical is the only thing that makes sense.
And unlike the US and European market the demand from both India and China is super price sensitive. It is not whether these two sources will buy but for how much. And so the flow of real gold continues from the Western powers to the Eastern powers and believe me once they have the big stack it won’t be for sale cheap.
Both walk in business and phone orders were steady today but not compelling until later in the day when the entire phone bank lit up and everyone was in a hurry. This is the perfect example of the buying public being either all in or all out.
My informal talk with other real bullion dealers today confirm however that the physical market remains sluggish. If you read the internet hype about “roaring anything or shortages” this is just another gasp from commissioned telemarketers attempting to rob uninformed buyers in a market which is really just sleepy.
The CNI computers place my almost famous LA Physical Trade Business Number again at “3”. 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).