Commentary for Tuesday Oct 8, 2013 (www.golddealer.com) – Gold closed down $0.60 today at $1324.20 on day 8 of the government shutdown. The back and forth in Washington does not seem to bother the Chinese gold import plan: July 113 tons and August 110 tons. Also note that Chinese gold imports for August of 2012 were 52 tons.
The gold market remains froggy almost tense at a time when bullion should be a money substitute. Today’s close ($132mmm) puts us back to mid-September numbers so the trading range is closed with $1290.00 on the low end and $1360.00 on the high end. There has been a significant pop to both the high side and the low side but this does not look like paper probing to me it looks like a knee-jerk reaction in a market which remains confused. The physical action at the CNI Building is also weird in that I would expect large buy orders given this state of financial confusion but this is not the case. So for now keep your powder dry and watch this market and Wall Street parry back and forth. Peter Hug (Kitco) sees a 5% correction to the downside in gold no matter what deal is struck on the hill. But this might be premature so “stay alert and watch” might now be the best tactic because the dollar looks choppy the last few days.
Silver was also uneventful down $0.04 at $22.29 with no shortages and one ounce silver rounds are hot now outselling the US Silver Eagle.
Platinum was up $1.00 at $1402.00 and palladium closed up $9.00 at $714.00.
Yesterday’s newsletter question: I was having my first cup of coffee Friday morning when an early customer asked me what I thought of the idea that there was not enough real physical gold available to cover all of the promised positions. Reader’s response: (1) http://jessescrossroadscafe.blogspot.com/2013/10/owners-per-ounce-of-silver-and-gold-at.html There are 48 owners of every actual real physical oz of gold at the Comex and 13 for silver. (2) A very long answer to your question on 10/7, can be found on the FOFOA blog. “All Paper is a short position on Gold”. http://fofoa.blogspot.com/2009/03/all-paper-is-still-short-position-on.html. Wow! Both responses are worth reading and especially if you argue over the real value of physical gold and silver.
This Brett Roi’s piece in Market Watch (The Wall Street Journal) was interesting: Why Uncle Sam is hording gold – The Treasury says it won’t tap its gold stockpile, even to avoid a default – The Treasury has considered that option, among the many others, and rejected it. “Selling gold would undercut confidence in the U.S. both here and abroad,” a spokeswoman said, “and would be destabilizing in the world financial system.” She was quoting an official position laid out last year in a letter to Senator Orrin Hatch, but so far apparently little noticed on Wall Street.
And I really liked Peter Hug (Kitco) headline: Mr. Bernanke: This is Why We Hold Gold. To most Peter’s comment would not create a blip on the financial radar but to real bullion holders it speaks volumes. Regardless of price (up or down or sideways) there is something comforting in the actual holding of real gold bullion. There always has been but of course sometimes it is a lifesaving necessity (in times of war for example or fiat currency collapse) and sometimes it becomes very profitable (like this past decade) but sometimes it just allows us to sleep at night when no one knows for sure what tomorrow will bring. I actually like the last thought best of all but unless you are a real gold advocate this point might go unnoticed.
The latest telemarketing ploy to part you from your hard earned money by silver bullion fakery: Silver Special – Purchase 4 and Get 3! Only while supplies last. Now don’t laugh because this is a common ploy and sometimes my job is explaining to the uninformed where they went off the rails listening to those commissioned salespeople: so a few more red flags when you are cruising around the internet. Avoid sites which will not give you pricing upfront. Some telemarketers claim transparency but will not offer information without your name, telephone and email.
These sites are lead generators and will guarantee unsolicited calls in the middle of supper with an offer which is at the very least phenomenal according to the caller. Real bullion dealers have no problem offering up front pricing without commitment. So what about the latest Purchase 4 and Get 3 Offer? You can buy silver bullion at spot as long as you buy something else of higher value. If this sounds appealing I want you to read a book about Victor Lustig the famous 1920’s hustler who sold the Eiffel Tower twice. Let’s be careful out there and remember my credo: ask a lot of questions before you write the check and figure the weight premium yourself.
The new $100 bill is being released today and is the latest attempt to slow down counterfeiters. This bill was supposed to be out 2 years ago but printing with the new holograms turned difficult. If you see the new notes and are lucky enough to get one with a low serial number or an obvious mistake keep it flat and in mint condition as they will bring a premium to collectors.
Walk in cash trade and phone business are average to slow but the volume numbers are holding in there so it would seem we are doing less individual deals but larger totals.
My almost famous LA Physical Business Number is as follows (note the change to a running weekly tally): (Mon: 6 – Tues: 6 – Wed: _ – Thurs: _ – Fri: _ ). For those who have asked this scale is based on combined volume numbers and anything over “5” is relatively busy. Phase One of our new golddealer.com web site will soon be complete and includes a new look along with live pricing. It will also include Live Chat and you will be able to set up your own customer account. Look for further interface improvements before year end which makes accounting, shipping and tracking easier (check to see if we have your email in the new system) and we now offer the choice of USPS or FedEx Ground.
If you visit CNI in person look for the new flat screens with live feed and graphs (gold, silver, platinum and palladium). This will drive all our bullion products and we have programmed the premium spreads on each line to make your choices easier. As usual cash is always available. There is nothing like this on the West Coast and offers visitors complete transparency before purchase or sale.
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Written by California Numismatic Investments (www.golddealer.com).