Commentary for Monday, April 5, 2014 – Gold closed down $5.20 today at $1298.00 and considering Friday’s big close over $1300.00 today’s action was a let down. What really took the air out of the balloon was the weaker dollar. Would be momentum players probably got hammered today. The White House even issued more warnings to Russia and gold was still unimpressed.
Silver also closed lower down $0.03 at $19.89 and there is still a fair amount of action in 90% silver bags but all in all it looks like a quiet beginning to this week. Still sales of silver bullion to the public continue steady, not spectacular but moving along.
Platinum moved down a big $24.00 at $1426.00 and palladium was also missing in action down $23.00 at $767.00. Consider that the big South African mines are laying off workers and closing mine shafts the notion that the PGM metals are weak seems out of place. Now consider that the major US car makers are claiming record profits, sales soar and their stock moves higher. The above two factors should be enough to push platinum and palladium prices higher but fundamentals are being ignored.
The metals are somewhat weaker today after Friday’s gains and this lack of follow through is representative of the continued lack of buzz regarding gold. The bears still own this market for now and until someone puts a game changer on the table look for quiet to lower trading perhaps even through the summer. But there is something perhaps still under the radar regarding equities which might just be what the doctor ordered. I was watching CNBC this morning and there is some edge in their commentary as perhaps the stock analysts question multiples.
With stocks at all time highs and earnings not looking so rosy some may question whether this momentum play in stocks is sustainable. And because a crack earnings could create a flood of profit taking the sudden down sizing in stocks will support gold short to medium term.
This is interesting to me because I think we talked ourselves into the idea that all the financial fallout from the 2008 collapse was behind us and government solutions (quantitative easing) were the answer to future prosperity. I give the President a great deal of credit for avoiding a 2008 collapse but what if all this hysteria in stocks is premature? After all the jobs number is improving but really lagging what most thought would be on table at this point.
This is a partial quote by Alasdair Macleod (Ed Steer’s Gold & Silver Daily/Gata) “I have been revisiting estimates of the quantities of gold being absorbed by China, and yet again I have had to revise them upwards. Analysis of the detail discovered in historic information in the context of China’s gold strategy has allowed me for the first time to make reasonable estimates of vaulted gold, comprised of gold accounts at commercial banks, mine output and scrap. There is also compelling evidence mine output and scrap are being accumulated by the government in its own vaults, and not being delivered to satisfy public demand. The impact of these revelations on estimates of total identified demand and the drain on bullion stocks from outside China is likely to be dramatic, but confirms what some of us have suspected but been unable to prove. Western analysts have always lagged in their understanding of Chinese demand and there is now evidence China is deliberately concealing the scale of it from us. Instead, China is happy to let us accept the lower estimates of western analysts, which by identifying gold demand from the retail end of the supply chain give significantly lower figures. Before 2012 the Shanghai Gold Exchange was keen to advertise its ambitions to become a major gold trading hub. This is no longer the case. The last SGE Annual Report in English was for 2010, and the last Gold Market Report was for 2011. 2013 was a watershed year. Following the Cyprus debacle, western central banks, seemingly unaware of latent Chinese demand embarked on a policy of supplying large quantities of bullion to break the bull market and suppress the price. The resulting expansion in both global and Chinese demand was so rapid that analysts in western capital markets have been caught unawares.”
This is a short quote I found again in the Ed Steer work and comes from an outstanding article written by Chris Martenson – The Screaming Fundamentals for Owning Gold. The original can be found on his site (PeakProperity.com). I would recommend a look because it lays out amazing potential for gold including well thought out graphs. Within the work he raises the much talked about re-monetization potential of gold: The final reason for holding gold, because it may be remonetized, is actually a very big draw for me. While the probability of this coming to pass may be low, the rewards would be very high for those holding gold should it occur. Here are some numbers: The total amount of ‘official gold,’ or that held by central banks around the world, is 31,320 tonnes, or 1.01 billion troy ounces. In 2013 the total amount of money stock in the world was roughly $55 trillion. If the world wanted 100% gold backing of all existing money, then the implied price for an ounce of gold is ($55T/1.01BOz) = $54,455 per troy ounce. Clearly that’s a silly number (or is it?). But even a 10% partial backing of money yields $5,400 per ounce. The point here is not to bandy about outlandish numbers, but merely to point out that unless a great deal of the world’s money stock is destroyed somehow, or a lot more official gold is bought from the market and placed into official hands, backing even a small fraction of the world’s money supply by gold will result in a far higher number than today’s ~$1,300/oz.
In the old days you could walk into a good dealership, put down cash and walk away with product. This is still true with us and a few others but most of the volume business is done nationally using the internet. The gold and silver market is not government regulated like the stock market. Other than normal business licenses there aren’t any special requirements necessary to call yourself a precious metal dealer.
And the gold business has always had its share of dealers with no regard for your money. So don’t assume that nice dealer on the other end of the phone has your best interests in mind. The chances are literally 50/50 that you are talking to a “phone room” designed to part you from your money so let’s be careful.
To avoid problem dealers (there are at least two still out there) look for precious metal dealers who belong to ICTA (Industry Council for Tangible Assets) and the PNG (Professional Numismatists Guild). Dealers who are members of both organizations are held to a higher ethical, financial and professional standard. Look for memberships in both ICTA and PNG from any national dealer and avoid headaches.
The walk-in cash trade was just average today and the phones were just steady. Most of our sales were small to less than $50,000.00 with no whales. There was one very large silver bullion seller.
The GoldDealer.com Activity Scale is a “6” for Monday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 4) (Tuesday – 3) (Wednesday – 5) (Thursday – 4) (Friday- 4). The scale (1 through 10) is a reliable way to understand our volume numbers.
On the new GoldDealer.com site: Comex closing prices are posted on the home page and individual product landing pages. Live pricing on the site moves all bullion products up or down during the day. Products like the Mexican Silver Libertad are selling well.
We reworked the All Bullion Products link on the home page. It now includes our Bid (blue) and Ask (green) prices. Premium quotes vary with product and look like this – “spot plus $15.00” or “spot plus $50.00” and bullion products list them under the live prices on their respective landing pages.
This makes product comparison simple and GoldDealer.com is the only precious metal site on the net with this transparency. Live Chat is doing well and new customers like setting up their own encrypted accounts. We recommend upgrading old browsers to Google Chrome (free/secure) especially as our site becomes more advanced.
Sign up for our daily Gold Newsletter on the Gold Newsletter page if you are so inclined.
Email confirmation using a PDF File when buying or selling is functional and includes payment instructions. You can now see the 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).
Our four flat screens downstairs with live independent pricing (BullionDesk.com) are a big hit with the cash trade. This live stream moves all buy/sell prices so the cash buying or selling public can see the markets move on a real time basis. Our site uses the same pricing model so no more guessing.
Our best price guarantee (buying or selling) remains famous so call Kenny (1-800-225-7531) and get more money in your pocket. We guaranteed your satisfaction and include our No-Nonsense Policy (NNP) which clients consider a welcomed extra. And steering is also not allowed. Steering is the derogatory trade term used to talk you out of what you want (low cost bullion) and into stuff with big telemarketing commissions. Like us on Facebook and follow us on Twitter @CNI_golddealer. Thanks for reading and enjoy your evening.