Commentary for Monday Sept 9, 2013 (www.golddealer.com) – Gold range was quiet today closing up $0.10 at $1386.80 which was unexpected considering all that is going on with Syria, Federal Reserve “tapering” and new debt ceiling talks. The dollar is a bit weaker and oil is firm. Still the world moves on with more positive news from China and as their penchant for physical gold continues.
Silver was down $0.18 at $23.66 and our physical selling remains steady the public choosing US Silver Eagles, 100 ounce bars and 1 ounce rounds. As popular as the US 1 ounce Silver Eagle has become it may surprise you to find that sales of the generic silver round are also hot and actually exceed Eagle sales from time to time.
Platinum closed down $12.00 at $1484.00 and palladium was also lower by $14.00 at $682.00. For some reason palladium bullion sales have moved higher so move them from the quiet list to the active list for now.
For the sake of brevity I have made this posting smaller: Eleven Countries with Soaring Inflation – Jon C. Ogg (24/7 Wall St): 11. Brazil – Inflation rate: 6.3% 10. South Africa – Inflation rate: 6.3% 9. Russia – Inflation rate: 6.5% 8. Vietnam – Inflation rate: 7.5% 7. Pakistan – Inflation rate: 8.3% 6. Indonesia – Inflation rate: 8.6% 5. Turkey – Inflation rate: 8.9% 4. India – Inflation rate: 9.6% – Population: 1.22 billion – India is truly the biggest inflation worry of the world because of its large population. A recent all-time low in the rupee only makes the situation more worrisome. India’s equity market has performed as badly as its currency, and international investors have pulled out of India. India’s new central banking head said in the past decade that too much quantitative easing could create unforeseen problems. The nation’s growth rate has been running well under historical norms at a time when its inflation rate has been too high. Meanwhile, the national infrastructure cannot support the current population, let alone a growing one. India even has tried to restrict the purchase of gold to keep its currency from devaluing, and its dependence on foreign oil means that at least some of its inflation risk is out of its hands. Currently, India’s projected current account deficit is one of the world’s largest, at 4.5% of 2013 GDP. For international investors, India may present an even greater opportunity than China. Unfortunately, that opportunity is on hold. 3. Egypt – Inflation rate: 10.3% – Population: 85 million – Egypt is a nation where things have gone from bad to worse, and it may only be the tip of the iceberg. While the Arab Spring has rocked many countries, in Egypt there already have been two regime changes, the recent one a military coup. The ongoing civil unrest and violence had many businesses withdrawing personnel. Tourism has all but vanished, and the country’s ability to import much of its needed goods has been met with lower and lower purchasing power of the Egyptian pound. Egypt’s growth rate was barely 2% as of the first quarter of this year, and that was before the latest round of national violence and bloodshed that dominated the news over the summer. The inflation rate was more than 10%, while the unemployment rate was well into double-digits. Egypt will have to take some serious measures to stabilize its leadership, and then its economy, before the outside world is interested again. 2. Argentina – Inflation rate: 21.1% (unofficial estimate) – Population: 43 million – It may be that Argentina’s economy has become too difficult to measure accurately. The government has released dubious official figures, and currency controls are making matters even more questionable. Argentina risks some of the same inflationary woes of the 1980s, and it appears as though official consumer price calculations may not be made public until late in 2013. The government claimed consumer prices rose 0.9% month-over-month in July, while outside sources estimate the inflation rate at more than 2%. Unofficial estimates of the yearly inflation rate cited by the Economist are more than 20%. Nationalizing (stealing) the foreign-owned oil outfit YPF does not exactly help encourage businesses interested in investing in the nation, particularly considering the high local taxes. Import restrictions and currency control restrictions are not helping matters either. Its national statistics put GDP growth rate at 3.0% year-over-year in the first quarter, and the unemployment rate was listed as 7.2% for the second quarter. 1. Venezuela – Inflation rate: 42.6% – Population: 28 million – Venezuela is supposed to be living in a post-Chavez economy, yet things are no better than when he was alive. There have been national shortages of toilet paper and other key personal hygiene products. There is even a black market for its paper money, called the bolivar, which likely makes the government’s official numbers even worse than they appear. Venezuela’s oil business is perhaps the only reason the nation remains relevant to the rest of the global economy — some 95% of exports being tied to oil demand. Years and years of saber-rattling against the United States have driven many Westerners’ business ambitions deeper into the ground as well. The inflation rate was already incredibly high in 2012 at close to 20%, but in one year the inflation rate has doubled. Venezuelan leaders should consider bringing in experts to create serious fiscal reform, or the nation will have to prepare for even worse times ahead.
Walk in cash business was steady and the phones were also steady but not hurried. This is a bit weird to me in that with all the news about Syria this weekend and firm oil prices I would have expected more action. Still we see summer like conditions but remember September is traditionally active for the metals so this slowness could be a harbinger or bad news but then you have currency pundits like Chuck Butler (Everbank) who thinks quantitative easing is assured regardless of the numbers: “So. Friday was all about the Jobs Jamboree, and what did it bring us? A lot of garbage bad numbers and stuff that doesn’t make sense. On the outside, the U.S. created 169,000 net jobs in August. That’s less than the forecast of 180,000, and the Unemployment rate fell to 7.3% from 7.4%…OK. I’ll be about as kind and gentle I can with these numbers and those that present them. Front and Center, how can the markets put in faith in the BLS’s numbers? I submit for your inspection, that July’s number of 162,000 was revised down in the secrecy of dark, to 104,000. ARE YOU KIDDING ME? Now, remember, last month when the 162,000 number was announced, the markets felt all giddy and bought dollars. But when the sheets are pulled back we see that they had nothing to feel giddy about. Now, that’s what I call being cheated, but it’s the markets’ own fault. Why do they continue to put faith in the BLS numbers? It’s a survey that’s full of hedonic adjustments, that’s all.”
That is what makes the QE call so difficult because Wall Street also predicts a change in the Fed’s bond buying program even though their numbers appear skewed. Any change in this program will bring lower gold short term so keep your powder dry. The CNI computers place my almost famous LA Physical Trade Business Number again at an active “5”. 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).