Gold Settles into a Long 4th of July Weekend Commentary for Friday, June 30, 2017 (www.golddealer.com) – Gold closed down $3.50 at $1242.30 today. That final number should look familiar...
Gold Holds as the Dollar Weakens
Commentary for Tuesday, Feb 13, 2017 – Gold closed up $3.90 at $1328.10. Gold is firm today as traders try to figure out just how likely it is that President Trump gets everything he is looking for in the way of monetary expansion. His latest budget proposal includes the kitchen sink – infrastructure – military – tax rebates to the working folks – wow. This is not surprising – this president thinks big and deficits of a trillion dollars should not surprise. Whether he can get all this through Congress remains to be seen – but the dog and pony show is amazing and has already begun to rearrange the furniture.
Trump’s big talk has at least temporarily derailed the hawkish FOMC talk of a rate hike in March – the probability moving from better than 80% to something approaching 50%. This was not all Trump spending talk – the huge drop in the DOW scared everyone and gold did pick up some safe haven buying – but not much.
Firmness in prices of late – the market holding above $1300.00 was also helped by increased seasonal demand (China and India).
But for now gold’s prime mover remains the dollar. Our President is still relatively new and still full of surprises. His spending programs are not typical for a Republican and do not adhere to the typical Keynesian credo – spend when business is slowing and work on deficits when times are better. Trump proposes spending more money than any president in history at a time when the US economy is doing just fine – no recessionary forces to be seen.
The old playbook would say that this financial heresy is guaranteed to push the dollar lower over time and so support gold bullion. Just how this will work with a hawkish FOMC is beyond my paygrade but the show should be interesting to watch and fireworks will be featured.
Today the Dollar Index moved from 90.16 through 89.64 – strictly on Trump rhetoric but this is a short term picture at best. Tomorrow we will get a look at the latest consumer price index. I don’t expect much in the way of inflation news but you never know these days. A spike here would certainly refocus this conversation away from Trump and back to the FOMC and higher interest rates on the shorter term. This would push the dollar higher and gold lower.
Like I said – if you mix together the pushing of a huge Trump budget with an indecisive FOMC and add a little drama along the way you can expect at least fireworks.
From a technical standpoint gold sees a great deal of overhead resistance between $1300.00 and $1400.00 and the real physical market has typically lost momentum in this region. So I would not get too excited over this latest wrinkle (Trump spending talk) in gold’s price picture.
But be wary of the rising bottoms pattern which began in early 2016. This has been a tortuous path – nothing spectacular and some traders believe rising interest rates will turn this potentially interesting patter into just another sideways – waiting period – much like we have seen since 2013. But if gold gets its head back into the game and ignores FOMC threats pricing will likely stay within this higher range.
Wishful thinking – perhaps but keep in mind that President Trump likes spending big – really big and all those “tax” savings predicted by the Republicans are based on what they think will happen over the next decade – sounds good but not the most reliable way to bet the farm.
Public reaction in the physical market has been mixed – quiet this morning and by noon you could not get enough help at the counters. The mix was across the board – more than a few large sellers of both silver and gold most of which were bought up within a few hours.
This from Zaner (Chicago) – “With the dollar ranging down sharply and reaching a four day low to start early today the four day high in gold and silver was to be expected. Clearly the gold market is discounting news of strong profit gains at South African gold miner Harmony gold in its first half perhaps because of talk of positive Indian jeweler demand overnight. Fortunately for the bull camp the market is not facing definitive fears of higher rates again as Treasury prices have rebounded significantly from the prior session’s low. It is also impressive but not surprising to see the gold market divergence with equities as the temporary return of broad-based deflationary commodity conditions, brought on by massive stock market losses, has apparently passed for the time being. Another issue that the gold market appears to be discounting is the apparent tilt toward improved relations between North and South Korea. It is possible that gold is drafting a minimal amount of support from news that South Africa’s ruling party the ANC has decided to oust its head of state as that could result in a threat to South African gold production. While the US economic report slate today will once again be thin the trade continues to look forward to the Wednesday morning CPI report as anything hot from that report could bring back the dominating fear of rising rates from the Fed and a strengthening dollar. At least in the near term there might be little in the way of resistance in April gold until the $1334.80 level.”
Platinum closed up $2.90 at $972.70 and palladium closed up $4.55 at $984.65.
The GoldDealer.com Unscientific Activity Scale is a “4” for Tuesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Wednesday – 3) (last Thursday – 3) (last Friday – 4) (last Monday – 4). 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 increasing – it would indicate things are busier – decreasing numbers over a longer period would indicate volume is moving lower.
When buying or selling you will receive an email confirmation. This includes a PDF File to confirm your invoice or purchase order and includes forms of payment and bank wire instructions. When doing business please check to see if your current email has been entered into the new system and that your computer will accept our email (no spam). Thanks for letting us know when you move or change your email.
We believe our four flat screens downstairs with live independent pricing are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.
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. We will also wire funds into your account that same day for a small service fee ($25.00) if you are in a hurry.
In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s).
Like us on Facebook and follow us on Twitter @CNI_golddealer – have some fun.
Thanks for reading. As always we appreciate your business and enjoy your evening.
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 advisors. 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.