Commentary for Tuesday, Aug 13, 2013 (www.golddealer.com) – Gold closed down $13.50 today at $1321.20 so pulling back from yesterday’s gains but still solidly above the important $1300.00 level. India announced another hike in fees (10%) for input gold which makes the third increase this year as the government struggles with the falling rupee. Gold purchases within India are not good for their trade balance and weaken their currency. But the rank and file people on the street keep buying and neighboring countries see a curious spark in purchases (remember what I said about smuggling). China will likely eclipse India as the largest importer of gold this year and I hope the stories about China imploding have abated.
Silver was unchanged today at $21.33 with active sales but nothing important so if your neighborhood dealer claims delivery of silver bullion product is 6 weeks out ask him if he is getting delivery from the moon.
Platinum closed up $1.00 at $1499.00 and palladium was also higher by $1.00 today at $739.00. The ice on these two products I mentioned yesterday has not melted but we are hopeful.
This from Allen Sykora (Kitco): Adrian Day: Gold Prices May Have Bottomed; Fundamentals Positive – Gold “may well have bottomed” earlier this summer when it dipped below $1,200 an ounce, says Adrian Day, president of Adrian Day Asset Management. “Since then, gold has moved sharply over $1,300,” he says. “But it remains well below its high, even though fundamental factors are still positive, particularly the easy monetary policies being pursued around the world. For all the talk of tapering, Federal Reserve…policy remains very easy, and there is unlikely to be any shrinkage in the Fed’s balance sheet or meaningful tightening in the foreseeable future. In my opinion, the market severely overreacted to the rather mild discussion of cutting back on bond buying, and since then, various Fed officials, including Chairman Ben Bernanke, have been scrambling to undo the damage by reassuring the market that monetary policy will remain easy.”
Allen Sykora is an accomplished trader and Adrian Day knows something about gold having been around for many years. But the reason I am quoting them is not because of their expertise but because this is a great example of how reluctant even balanced commentators are when it comes to calling a bottom. This gold bull has been so damaged it ignores even positive metrics and so obvious and powerful information like gold moving higher against a stronger dollar or renewed physical demand seems unconvincing and like a play from a weak hand. This metal mind-set that things cannot possibly get better and must get worse is what defines a bear market.
Adrian Day is a forward thinker and so is not afraid of being wrong and in fact might be the first to call a real bottom for gold. Forward thinkers however are the first to catch fire with the public if they are wrong and there is plenty of technical evidence which argues against gold even with this latest run at higher prices. For my money I would remain uncommitted and see if gold confirms the latest bullish trend above $1400.00.
Anything else would be the usual “back and forth” action of an undecided and confused market trying to reinvent itself. Why? Gold needs no reinventing and will reassert itself in time so the crew who belabors the notion that gold is dead should get out their history books. But climbing out of this hole is going to be a great deal harder and take more energy than was required to fall into the shaft in the first place.
It will take more than confirmation of further Federal quantitative easing because gold is now in competition with the stock market. Granted stocks seem to have stalled and if there was a big pull-back this would be positive for gold, but I think this highly unlikely and European numbers continue to improve. Adrian Day might be right and if he is I will once again take my hat off to him for being on the right side of the gold market. Not an easy thing to do in this market.
This from Ansuya Harjani (CNBC/Daily Finance) – Is Sentiment Towards Gold Shifting Again? Gold has staged a big comeback in recent weeks, rebounding more than 13 percent since hitting a near three-year low late June, raising the question of whether investor sentiment towards the embattled yellow metal is about to shift again. The precious metal, which traded close to a three-week high of $1,336 on Tuesday, has been supported by short covering and robust physical buying especially from China. Latest data from the China Gold Association (CGA) on Monday showed that the country’s gold consumption rose 54 percent in the first half of the year, compared to the year-ago period. Separately, in a sign that investment demand may be returning, holdings in the world’s largest gold ETF, SPDR Gold Trust (GLD), rose by nearly 2 metric tons to 911.13 metric tons on Friday, representing the first increase since June 10. “There is a clear conflict between physical and speculative demand right now, but as things stand, China’s buying spree has been the bigger influence right now and has driven leveraged funds to cover shorts,” said Chris Weston, chief market strategist at IG Markets, noting that if gold moves above $1,348, it could test the $1,370 level and then $1,400. According to Barry Dawes, head of resources at Paradigm Securities, there’s a strong case for buying gold, citing tighter supply in the physical market. “The physical demand for gold is robust and we’re seeing premiums in Asia that you don’t see in other parts of the world,” Dawes said. “The physical market for gold is now really tightening up and the shenanigans being played by hedge funds and bullion and investment banks may just be coming to an end.” Victor Thianpiriya, commodity analyst at Australia and New Zealand (ANZ) Banking Group, who sees gold ending the year at $1,300, disagrees that the physical market will face any meaningful tightness in the near-term, noting that a slowdown in Indian consumption will free up some supply. India imported $2.9 billion of gold and silver in July, down a third from the same period a year earlier, according to Reuters. – Watch Out for Tapering – Another headwind for gold, according to some gold bears, is the U.S. Federal Reserve scaling back its monthly bond buying program, which will likely result in higher Treasury yields, dampening the attractiveness of gold — an asset which pays neither interest nor dividends. “For the moment, with the Fed remaining concerned about low inflation and therefore keeping asset purchases in place, bond yields are likely to move lower in the short term, supporting gold’s move higher. Ultimately, we still expect the program to be tapered off by year end and we believe this will most certainly result in a weaker gold price,” Daniel Hynes, head of commodity strategy, at CIMB wrote in a research report. “The days of a bull run in gold are over,” he said. But Peter Elston, head of Asia Pacific strategy and asset allocation at Aberdeen Asset Management, disagrees the end of U.S. monetary stimulus will be negative for gold. “The big question is [how] all this extraordinary loose monetary policy is going to end. The likelihood is: it’s going to be a crash [back into deflation] or inflation taking off. Both of which will be good for gold. If we have deflation, that’s going to mean more central bank support,” Elston said. “You are getting to the point where gold is starting to look interesting again,” he said.
Walk in and phone trade today was typical “summer days” being steady but nothing really interesting. The walk in cash buyers still favor silver bullion and we are buying a few more coin collections (Ken Slater) from out of state. Even though prices have been generally up there continues to be some selling especially for cash across the counter. 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).