Gold Weakens Over Employment and the Stronger Dollar

Gold Weakens Over Employment and the Stronger Dollar

Commentary for Friday, Dec 5, 2014 (www.golddealer.com) – Gold closed down $17.40 today at $1190.10 reacting to the latest good news from Uncle Sam.

This from Jim Wyckoff (Kitco) – “U.S. non-farm payroll employment rose by a much-higher-than-expected 321,000 jobs in November. The market place had expected a rise of around 230,000. The overall unemployment rate was unchanged at 5.8%. Gold sold off and the U.S. dollar index rallied sharply on the surprisingly upbeat U.S. economic news. The stronger jobs report leads to speculation the U.S. Federal Reserve may now move to raise interest rates sooner than many had reckoned.”

OK – now let’s look at dollar strength and let me make another point about my short-term bottom theory even though gold was weaker on the jobs news. The Dollar Index hit its highest level since March of 2009 moving into nose bleed territory (89.31) – the previous day’s close was 88.60 so a good jobs report encourages the Fed’s resolve to raise interest rates.

Of course this is bad for the price of gold because we look at gold relative to the dollar. But what about the other world currencies which are struggling against the mighty dollar? Gold in terms of these currencies may begin to look like a safe-haven bet.

And what about oil – this from Steve Austin – “Back in 2005, the US had to import 60 percent of its supplies from abroad. By 2014, however, the USA only needs to import 30 per cent of its oil consumption. The oil revolution is paying off: too much oil is now on the market, causing prices to drop.”

As of this writing WTI Crude is $66.81 a barrel – low enough to shutter marginal US producers so the cries of continued lower prices in oil may soon fade. Also consider that cheap oil has punished the Russians by a far greater degree than sanctions.

So in my book gold is not yet a disaster looking for significant lower ground. Even on today’s news it sold off into the $1187.00 area and then recovered – moving higher above $1195.00. Could it go lower – of course because the general long term technical trend is lower. But recently we have seen a consolidation of prices around current levels ($1200.00) – and so some are beginning to think there is more to gold’s price support than simple consolidation.

Like I said yesterday it’s still too soon to call that short term bottom but if a roaring jobs report and the threat of higher interest rates do not push gold into significantly lower territory I think we should be smiling especially as the DOW closes in on 18,000.  

Silver closed down $0.33 at $16.19 and there were a few spurts of physical buying today. Whether you are a big fan of cheap silver or not the psychology behind lower prices can be depressing. One of the most common questions we are asked across the counter is simple – if there is a silver shortage why aren’t bullion prices moving higher?

The genesis of this question lies not in whether there is a shortage but in why recent buyers are not making money – at least not yet. And trying to explain why silver is cheap can be a fool’s errand. But one of the most compelling reasons behind why today’s investor should move forward in an accumulation program regardless of price can be seen clearly in this latest Coin World article which goes beyond price and looks carefully at the demand which exists for one of the most popular of all silver bullion products – the US Silver Eagle Monster Box.  

This from Paul Gilkes (Coin World) – American Eagle silver bullion coin sales record expected to be shattered before year’s end – Investment demand still at unprecedented levels – The United States Mint’s sales record set in 2013 for silver American Eagle bullion coins is expected to be eclipsed before the end of 2014.

With three and a half weeks left for calendar year 2014 production, United States Mint sales of American Eagle 1-ounce, .999 fine silver bullion coins are projected to shatter the sales record set in 2013. Through Dec. 2, 2014, the U.S. Mint recorded sales of 42,209,500 – just 465,500 coins shy of the record 42,675,000 coins sold in 2013.

Sales of the American Eagle silver bullion coins have been averaging more than 3.7 million coins per month. Should that pace continue through the end of December, calendar year 2014 sales would exceed 45 million coins.

Although expecting to strike 2014-dated coins to meet investment demand, the U.S. Mint still contemplates offering 2015-dated American Eagle silver bullion coins sometime during the first two weeks of January.

Calendar year 2014 sales include two monthly sales totals above 5 million coins — 5,354,000 in March and 5,790,000 in October. The highest monthly sales total recorded by the U.S. Mint since the American Eagle silver bullion coins were introduced in November 1986 is from January 2013, when 7,498,000 coins were sold.

January is traditionally the strongest sales months for the American Eagle bullion coins, as that’s the month when the new year’s coins are usually introduced.

Platinum closed down $25.00 at $1220.00 and palladium was off $1.00 at $800.00.

The week of Dec 1 through Dec 5 – Precious Metal Closes – Dollar Strength and Oil Prices

               Gold             Silver             Platinum                Dollar Index     

Mon    $1218.00         $16.65             $1241.00                     $87.98

Tues    $1199.30         $16.40             $1217.00                     $87.95

Wed    $1208.50         $16.35             $1227.00                     $88.99      

Thurs  $1207.50         $16.52             $1245.00                     $88.73      

Fri       $ 1190.10        $16.19             $1220.00                     $89.48                   

           Palladium        Rhodium         Oil

Mon    $808.00           $1244.00         $68.99

Tues    $803.00           $1224.00         $67.73

Wed    $796.00           $1190.00         $67.43

Thurs  $801.00           $1175.00         $66.63

Fri       $801.00           $1175.00         $65.69         

Our Patented Employee Survey – Gold’s Direction Next Week?

Of course it’s not really patented but we do have some fun along the way. This is what the GoldDealer.com employees think – 5 believe gold will be higher next week – 4 think gold will be lower and 4 believe it will be unchanged.

Our Patented Customer Survey – Gold’s Direction Next Week?

Like the employees our actual customers were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 transactions – unscientific, yes, but worth considering because these people actually took action: 40 people thought the price of gold would increase next week – 38 believe the price of gold will decrease next week and 22 think prices will remain the same.

The walk-in cash trade was swamped from about late morning to early afternoon and then the entire downstairs when quiet. The phones moved from relatively busy to slow although there were an unusual number of questions.  

The GoldDealer.com Unscientific Activity Scale is a “3” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 6) (Tuesday – 6) (Wednesday 3) (Thursday – 2). The scale (1 through 10) is a reliable way to understand our volume numbers. The Activity Scale is weighted and is not necessarily real time – meaning we could be busy and see a low number – or be slow and see a high number. This is true because of the way our computer runs what we call the “book”. Our “activity” is better understood from a wider point of view. If the numbers are generally increasing – it would indicate things are busier – decreasing numbers over a longer period would indicate volume is moving lower.  

You should now be getting email confirmations which include a PDF File when buying or selling so you can confirm your invoice or purchase order. This information also includes the various forms of payment and bank wire instructions. So when you buy or sell please check to see if we have your current email and that your computer will accept our email (no spam).

About shipping information – when buying or selling your rep will walk you through your current mailing information. Thanks for keeping us up to date if you have moved.

Our four flat screens downstairs with live independent pricing (BullionDesk.com) are a big hit with the cash trade. Live pricing moves all the buy/sell product prices on a real time basis. Yes – you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. When buying from us remember if you exceed $10,000 in cash (the real green kind) a Federal Form is necessary.

In addition to our freshly ground organic coffee offered visitors throughout the day we have added cold bottled water, cokes and Snapple. We have also added fresh fruit in a transparent attempt to disguise our regular junk food habits.

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Our holiday schedule this year – Christmas (Closed Thursday the 25th and Friday the 26th) – New Year’s (Closed Jan 1st and 2nd).

A gentle reminder – each year during this holiday season the packages delivered to all 50 states slow down because Santa has control of the air traffic.

We appreciate your business – thanks for reading – enjoy your weekend and there is 20 days left until Santa comes down the chimney!  

Disclaimer – The content in this newsletter and on the GoldDealer.com website is provided for informational purposes only and our employees are not registered financial advisers. The precious metals and rare coin market is random and highly volatile so it may not be suitable for some individuals. We suggest before deciding on a course of action that you talk with an independent financial professional. While due care has been exercised in development and dissemination of our web site, the Almost Famous Gold Newsletter, or other promotional material, there is no guarantee of correctness so this corporation and its employees shall be held harmless in all cases. GoldDealer.com (California Numismatic Investments, Inc.) and its employees do not render legal, tax, or investment advice.

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