Commentary for Thursday, Feb 6, 2014 (www.golddealer.com) – Gold finally closed up $0.30 today at $1257.80 after reaching highs of $1265.00 in earlier trading on comments from ECB President Mario Draghi that the European Central Bank remains “ready to take decisive action” when needed to help the European economy. Some believed Draghi may have lowered rates in light of recent deflationary signals but both the ECB and the Bank of England decided to leave rates unchanged.
This leaves gold rather underappreciated given that stocks have stabilized as the conversation continues over US employment and the still rather mixed signs of economic recovery. I think the US economy is doing just fine considering but is suffering from an information hangover caused by a continuing paranoid reaction to the notion that we could actually be making progress. Perhaps there has not been enough pain in stocks and people are feeling guilty. At any rate a 5% pullback is not the end of the world. So gold continues to look at equities and wonders if the recent correction is over (gold flat case) or if there is more downside (gold higher case).
Silver was also quiet up $0.12 at $19.90 as the public continues to buy 90% silver bags, 1 oz rounds and Monster Boxes. The somewhat slowdown in physical delivery to the CNI Building will be corrected Monday with plenty of everyone.
Platinum closed down $4.00 at $1375.00 and palladium was up $3.00 at $710.00. Talks between miners and management concerning South African platinum production have broken down with no commitment on either side as to when they will resume. The paper market yawned and in fact since strike talks began platinum has fallen $88.00.
From Peter Hug (Kitco) – Technical Market – Metals continue to be range bound overnight on very little fresh news. Yesterday, traders attempted the push to resistance at $1,278, but were shy of the target by a couple of bucks. As momentum waned, selling again pushed the levels back to the $1,255 support. The ECB and the Bank of England left rates unchanged as the recent calming of the emerging markets allowed them to hold back from firing, at least in the case of the ECB, their last bullet, before rates are at zero. The market continues wafting and awaits another set of numbers or “event” to push the tide. Many are looking at tomorrow’s unemployment numbers, but I am skeptical of giving the number too much weight due to the brutal weather influencing mobility. The silver/gold ratio has achieved approximately 50% of our objective. The ratio of 65-1 last week suggested a long silver/short gold spread and this morning the tic shows the ratio at 62.8-1. If the emerging markets settle and the equity markets gain legs, the metals complex, specifically gold, will come under resumed downward pressure which should result in a more bullish silver/gold ratio. A continuation of the equity meltdown and emerging market issues will be a better long gold/short silver play. So, are the equity/capital markets going through a corrective pause or is there something bigger that may spark capital market chaos? I picked the Denver Broncos, so my guessing skills are questionable.
Activity with the walk-in cash trade and phones has slowed somewhat but we continue to see little in the way of large selling.
The GoldDealer.com Activity Scale is a “4” for Thursday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Friday – 6) (last Monday – 6) (last Tuesday – 7) (last Wednesday – 4) (Thursday – 4). The scale is 1 through 10 and we believe this is a reliable way to “sense” real bullion business.
On the new GoldDealer.com site: Comex closing prices are posted (upper right hand corner of the home page) and are included on individual landing pages. Live pricing and the change function works: you can now compare the Comex close with live product pricing for a true value picture. The All Bullion Products link lists all products and includes all Bid (blue) and Ask (green) prices. For some reason visitors overlook the link All Bullion Products so we reworked the link and when you hover over it with your cursor the text is highlighted.
Premium quotes look like this – “spot plus $50.00” or “spot plus $3.00” and bullion products have them listed under the live prices. This makes product comparison easy and GoldDealer.com is the only site on the net with this transparency. For example click on the link Austrian Silver Philharmonics and under Our Live Buy Price and Our Live Sell Price you will see: our Buy Premium Spot + $15.00 and our Sell Premium Spot + $50.00 – Easy.
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The four flat screens downstairs with live independent pricing (BullionDesk) is a big hit with the cash trade. This live stream moves all the buy/sell prices on each product so the cash buying public can see the markets move on a real time basis. The site uses the same pricing model so no more guessing.
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