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Gold – Safe-Haven Fear Returns

Gold – Safe-Haven Fear Returns   

Commentary for Friday, May 29, 2020 (www.golddealer.com) – Gold closed up a surprising $23.60 today at $1736.90 as tensions continue to rise between the US and China and safe-haven buying comes back into view. Fed Chairman Powell’s talk today was basically reassuring but still focused on the work ahead. The gold market closed last Friday at $1734.60 so on the week we up a few bucks ($2.30) but this belays the unsettling nature of this pandemic.

While gold was not that enthusiastic earlier in the week things have changed going into the weekend. The trade generally now expects higher prices even in the short term. But I would not be surprised to see profit taking settle this renewed enthusiasm. In the bigger picture however – without a miracle virus recovery safe-haven demand will ebb and flow but not go away. And the possibility of much higher prices is not just wishful bullish thinking anymore.       

We were closed Monday for Memorial Day. Tuesday the gold market was weaker in overnight trading both is Hong Kong and London. The domestic market saw further weakness at $1730.00 and we finished the day down $29.80 at $1704.80. This drop in the price likely the result of factors which cool safe-haven demand.

The increased “opening up” of US business leads the charge – people feeling better about their future. But the drop is also concerning because the Dollar Index moved from 100.00 to 99.00 and provided no encouragement to the bulls. This cooling of safe-haven demand led into what became a sound round of profit taking. Still I would not be too concerned, expect a bumpy ride considering gold is up $430.00 this past year.  

That being said – the bigger picture favors the bulls, but the technical picture struggled with market momentum earlier in the week.

Favoring gold is the growing rift between the US and China which is developing into something beyond political posturing. The tension between China and Hong Kong has not recently supported gold but it is hard to imagine it will not sooner than later.

Tuesday’s action was also lackluster in that the bulls saw no reason to buy the dip. Gold again pushes below the important $1700.00 support – testing $1690.00 support on two occasions. Crosswinds continue – the Exchange Traded Funds push higher – Asian demand remains weak.

At the same time Citibank is looking for $2000 gold by 2021. They do not see a big break to the upside however, just a steady push fueled by cheap money. This supported by continued uncertainty over global economic virus damage and safe-haven demand.         

Gold pricing on Wednesday picked up a bit of support closing up $5.50 at $1710.30 but our normal business seems to have lost some buzz. Which brings me to a point. Yes, we are still closed to the walk-in traffic but you can buy or sell over the phone and through the mail.

And things are loosening up – we now offer what we call “special situations” and drive through service using our private parking lot. You must wear masks and gloves, stay in your car, and have an invoice written up before coming. But the process works and is safe so if you are within driving distance and this appeals to you call Harry at 1-800-225-7531 for an appointment.

We celebrated National Burger Day on Wednesday. I know, what does this have to do with the precious metals? Not much really but it did remind me of the good old days and boosted the staff’s sprits, reminding everyone that with God’s help we will beat this plague, get back to normal business and be able to enjoying little pleasures we may have taken for granted.

Thursday gold pricing presents no surprises but safe-haven was again in play as tensions flare between us and China and Wall Street sells off. Still there was simple price chop on both sides of $1720.00 and on the day gold closed up $3.00 at $1713.30 and $6.00 higher in the aftermarket. 

This from Zaner (Chicago) – “Global equity markets overnight were generally lower with the exceptions the Chinese markets which managed gains of less than 0.3%. Overnight economic news of importance included a wave of extremely negative Japanese readings ranging from retail sales, housing starts to industrial production. However Japan did manage to post a much better than expected consumer confidence reading for May which also bested the prior month’s result. From Europe Germany posted retail sales declines that were not as bad as feared while France managed to post a GDP reading for the first quarter that was not as weak as expected. However consumer spending in France for the month of April fell by 20.2% versus March and was much worse than expected. From Switzerland the KOF leading indicator report for May came in much weaker than expected. In the last significant European data point Italy saw its GDP for the first quarter fall by 5.3% versus expectations of a decline of 4.7. The North American session will start out with April personal income which is forecast to have a sizable decline from March’s-2.0% reading, while April personal spending is expected to have a sizable decline from March’s -7.5% reading. The April goods trade balance is forecast to have a modest uptick from March’s $64.4 billion monthly deficit. April wholesale inventories are expected to have a moderate downtick from March’s -0.8% reading. First quarter Canadian GDP is forecast to have a sizable decline from the previous 0.3% annualized rate. The May Chicago PMI is expected to have a moderate uptick from the previous 35.4 reading. A private survey of May consumer sentiment is forecast to have a modest uptick from the previous 73.7 reading. Fed Chair Powell will speak during morning US trading hours while President Trump’s news conference is expected to occur during the early afternoon.

With lower global equities, fresh warnings from Beijing to the US over the potential removal of “special status” for Hong Kong and another wave of negative European data that leaves gold and silver with a safe haven bid this morning. The Hong Kong situation will see fresh news at some point today with the President indicating he will announce his policy stance on relations with China. While not a front and center driving force this week, it should be noted that gold ETF’s increased their holdings for 25th straight session yesterday with net purchases on the year now climbing to 17 million ounces. With the consistent inflows to gold ETF holdings last month it was not surprising to see ETF holdings post a 6th straight monthly gain which according to Bloomberg is the longest monthly expansion since 2017. All things considered, the gold and silver markets managed to ride through US scheduled data yesterday without giving up gains, despite the fact that the data was not as disastrous as expected. In fact, we are surprised that gold and silver prices avoided a definitive reversal particularly with US equities looking beyond bad US jobs data to better economic times ahead. However, the markets will probably continue to draft support from US/Chinese tensions and perhaps in a less obvious manner the markets could see surprise support from US/Iranian exchanges in the Middle East. It is also likely that both gold and silver prices are benefiting from what has become a fairly significant slide in the dollar, especially with Citigroup yesterday indicating gains in precious metals are signaling the potential for a major sustained rotation out of the dollar. In fact, Citigroup has indicated that silver is currently one of their top picks and that comes on top of news coverage earlier in the week suggesting silver could perform as it did following the financial crisis when prices approached $50.00. Not to be left out of the precious metals investment wave silver ETF’s yesterday added 1.16 million ounces to their holdings bringing this year’s net purchases up to 121.7 million ounces. From a technical perspective, it would appear as if this week’s corrective setback balanced the trade and in turn reiterated very solid consolidation support sits under both gold and silver.

With the PGM markets failing to show definitive lift from ongoing gains in gold and silver, the markets not benefiting from Bank of America projections that South African mine supply will drop by 30% this year and prices not benefiting from Bank of America projections that both platinum and palladium will be in “deficits” this year, it is clear the bulls are absent. Therefore we continue to be bearish toward the PGM markets with the charts showing modest fresh technical damage this week and palladium in particular trading sloppy on very low trading volume. Obviously seeing another 2.1 million Americans apply for unemployment insurance and seeing a very significant decline in US durable goods figures for last month creates demand fears for both PGM markets. While the trade did see increased physical shipment flow from key export hubs recently, that increased activity is simply moving supply into position and is not indicative of a wave of better demand. Even more discouraging for the bull camp is the fact that both markets failed to rally alongside gold and silver and also failed to benefit from noted strength in US equities. Furthermore, with trading volume declining from last week’s highs and open interest flat-lining in palladium, we see further lower lows for the move especially with a failure to hold above $1893.50 in the September palladium contract at any point today.

We see the path of least resistance remaining up in gold and silver today, with the markets apparently able to remain strong without wide ranging macroeconomic uncertainty. However it should be noted that financial press coverage of both gold and silver continues to be decidedly bullish and more frequent and if it were not for the unrelenting gains in equities recently, both gold and silver might be trading significantly higher than current levels. In retrospect, this week’s lows should be viewed as very solid support/value with the markets now technically balanced and poised to work higher off this week’s ledge of support.”

Silver closed up $0.54 at $1844.

Platinum closed up $6.50 at $870.50 and palladium closed up $32.90 at $1934.50.  

We always appreciate your friendship and business. And if you have unusual circumstances talk with Harry, we may be able to help. Let us be careful out there – stay safe and trust that God’s blessings will protect us all. Richard Schwary            

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.

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Gold – Choppy and Uncertain

Gold – Choppy and Uncertain

Commentary for Friday, May 22, 2020 (www.golddealer.com) – Gold closed up $14.10 today at $1734.60. A reminder that we will be closed this Monday for Memorial Day.  

Gold was higher in overnight Hong Kong trading but sold off in London. The domestic open was higher as gold moved through $1738.00 and then turned sideways moving between $1730.00 and $1738.00. It was no surprise that with the trouble in Hong Kong gold bounced higher after Thursday’s weakness. Even though the dollar remained strong as the index moved from 99.4 through 99.81 and crude oil pushed through 33.00 a barrel. So gold is experiencing crosswinds as the upbeat “opening” US mood which might suggest lower safe-haven demand contends with the new Chinese crackdown over the political situation in Hong Kong.  

This past Monday was the poster child example of why these markets remain unsettled. News was released that indicates the results of a new vaccine by Moderna is promising on humans. US stocks soared and gold which was holding the $1760.00 level nicely dropped by $30.00 before trading closed. At the same time the Dollar Index moved from 100.5 through 99.5 which should have supported the metals but provided little cushion and made traders uneasy. At the same time crude oil which approached near zero just a month ago trended above $30.00 a barrel. 

Tuesday and Wednesday provided the usual upward bias but gold seemed sluggish, still pushing into the $1750.00 range with support around $1740.00. On the close Wednesday gold was up $49.00 this past month and $474.50 this past year. So, profit taking should be expected but with Germany using negative interest rates (and Trump suggesting a similar tactic) I think most traders expect higher prices in the short to medium term with expected volatility.

Not surprisingly gold sold off Thursday on the New York open – steep drop, as we moved from $1740.00 through $1715.00 before a covering round moved prices back to a reasonable $1720.50 close. The drop was likely prompted by improving US consumer sentiment as states open for business and follow through profit taking was the snow ball. This typically American optimism in the middle of this pandemic stems from a basic mistrust of government which has been around since we dressed up as Indians and dumped that tea into Boston harbor. We want to show some fight even as the possibility of a virus vaccine is still more of a promise than a reality. Good show America – but let us remember to wear those gloves and masks.    

This from Reuters (Friday) – “(Reuters) – Gold gained on Friday as intensifying U.S.-China tensions compounded fears of a slow recovery in a global economy already reeling from the coronavirus pandemic.

“China’s aggressive stance on Hong Kong security could exacerbate already tense relations (with U.S.) and a possible confrontation between U.S. warships and Iranian freighters headed for Venezuela are key concerns heading into the long weekend, prompting investor buying,” said Tai Wong, head of base and precious metals derivatives trading at BMO.            

U.S.-China friction came to the fore again over the source of the coronavirus and escalated further with China’s proposal to impose security laws on Hong Kong, drawing flak from Washington. The tensions compounded fears of a slower global economic recovery, pressuring equity markets but supporting the U.S. dollar, also considered a safe haven.                        

This from Zaner (Chicago) – “Global equity markets overnight were all lower with declines reaching as high as 4.2% in the Hang Seng. Prices were likely catching up to the US losses on Thursday but political uncertainty from signs of increased Chinese security presence in Hong Kong and deterioration of global economic sentiment all week long has provided plenty of selling impetus overnight in equities and commodities. Economic information overnight showed a significant contraction in UK retail sales (-18.1%) for the month of April, and anemic Japanese national CPI readings. The North American session will not feature any US economic numbers, and will be highlighted by March Canadian retail sales which are expected to have a sizable downtick from February’s 0.3% reading. Earnings announcements will include Deere before the Wall Street opening.

With China showing signs of cracking down hard on Hong Kong with new security forces and Hong Kong citizens organizing mass protests, it would appear as if that crisis has come back to a boil. In fact the Hong Kong stock market declined by 4.2% overnight and equities throughout the rest of the world were under pressure which in turn has provided a fresh safe haven bid for both gold and silver. The gains in gold and silver in the face of declines in palladium, platinum, copper and crude oil suggest a measure of safe haven speculation is indeed in place early today. Gold and silver should draft additional support from 20th straight increase in gold ETF holdings, with the silver ETF holdings exploding higher by 12.1 million ounces bringing this year’s net purchases up to a very significant 111.7 million ounces! Adding to the recent increase in bullish press coverage for silver, overnight the market was presented with a silver price forecast of $20.00 an ounce and talk of silver’s historic rally of 489% through the subprime crisis which put silver prices in the vicinity of $50. The press also continues to point out silver’s relative cheapness to gold and the likelihood that silver will benefit more than gold from Chinese fiscal infrastructure spending. However the gold market while showing expanded two-sided corrective action this week, remains in favor with spread action pointing to growing interest in longer dated contracts over upfront contracts. In fact June gold overnight touched and rejected a 2 1/2 month old uptrend channel support line at $1722.50 and would appear to be poised to finish the week on a strong note. While the silver charts look little vulnerable into the last trading session of the week, there would appear to be some measure of solid support at $17.125 with volumes seemingly picking up on DIPs this week.

With PGM markets negatively diverging with gold and silver early this morning, copper, crude oil and equities trading lower it is clear that industrial demand fears are in play. Clearly seeing China abandoned GDP targets, renewed Chinese domestic tensions in Hong Kong and spillover from yesterday’s unnerving US claims readings threatens the demand outlook for PGM’s from the auto sector. With the June palladium contract early today flirting with even number support at $2,000 and a failure seen with a further decline below $1984.60 traders should expect a measure of volatility today. In retrospect trading volume in palladium this week was the highest since the middle of March and that could increase the chance that $2,000 is a zone where some bargain-hunting buying will step in and support prices. The platinum market has also fallen back to critical support early and made a fresh 4 day low overnight in a fashion that leaves the charts vulnerable. Also like palladium, trading volume in platinum has surged this week increasing the potential of some bargain-hunting buying support this morning around the $850 level. The platinum market is clearly undermined by the deterioration in global sentiment from equities and the Hong Kong situation, but prices might also be seeing some pressure from a Citi 2020 platinum price target of $788 which is roughly $100 below the current market. In conclusion the bias in the PGM markets is pointing down to start but further significant gains in gold could revitalize both markets late in the day today.

As indicated already, there would appear to be a measure of divergence in the precious metals markets this morning with gold definitively stronger, silver minimally higher, palladium under significant pressure and platinum waffling around both sides of unchanged. Therefore the gold market looks to be the feature of the day with the market rejecting yesterday’s low at $1715.30 and respecting a 2 1/2 month old uptrend channel support line at $1721.20. In the event of significant trade barbs between the US and China or significant losses in equities, gold could retest $1750 today. Silver on the other hand has critical support at $17.125 and might have little in the way of resistance until $17.75 in the event that gold provides significant positive leadership.”

Silver closed up $0.32 at $17.66. Still plenty of action here and still a sleeper in my opinion.

Platinum closed up $19.80 at $881.70 and palladium closed down $85.20 at $1971.80. 

As always, we appreciate your friendship and business. And if you have unusual circumstances talk with Harry, we may be able to help. Let us be careful out there – stay safe and trust that God’s blessings will protect us all. Richard Schwary            

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.

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Gold Climbs – Virus Fears Up / Sales Down

Gold Climbs – Virus Fears Up / Sales Down

Commentary for Friday, May 15, 2020 (www.golddealer.com) – Gold closed up $15.30 today at $1753.40, at session highs on news that our April sales report was worse than expected. It closed last Friday at $1709.90 so on the week we are up $43.50.

This most recent price action points to technically bullish closes of higher highs and higher lows. But this week began with only quiet interest. This past Monday gold was choppy moving between $1710.00 and $1690.00 with opinions all over the place as to shorter term movements.

The latest CFTC reports professionals were looking for further consolidation as physical demand might falter at these higher levels. Money managers looked for further stock market consolidation and lower gold prices. The Dollar Index moved higher by a half point (100.25). MarketWatch reflected a cautious tone. “Federal Reserve Chairman Jerome Powell will talk to the Peterson Institute on Wednesday. A recent poll by Gallup found that 58% of the public has a good deal of confidence in the Fed chairman. This week, a parade of Fed officials struck a cautious tone, offering an uncertain outlook for the economy in speeches. Some traders are betting the Fed will push interest rates below 0% next year.”

Negative interest rates are unlikely, and Powell dismissed the idea on Wednesday but more interesting was his aggressive comments on the Fed’s economic response to the virus – “While the economic response has been massive, it might not be over.” 

Wednesday’s trading was similar as prices moved between $1700.00 and $1715.00 but the mood was different. Monday and Tuesday were steady but lacked any buzz, Wednesday began with excitement, and renewed talk concerning safe haven buying.

This safe-haven mode was confirmed with higher prices Thursday – John Miles – “Not surprisingly gold ETF holdings jumped for the 14th straight day with an addition of 342,648 ounces bringing this year’s net buys up to 14.8 million ounces. It should be noted that silver is also showing gains with gold today in a break with the divergence yesterday, but silver has not managed to break out of a recent consolidation bound by $16 on the upside. However silver ETF holdings yesterday did increase by a notable 3.1 million ounces bringing this year’s net purchases closer to 80 million ounces! For many gold and silver bulls, the potential for inflation has throughout history been a primary need, but in the current condition, raging deflation might actually feed prices higher, as that condition will (as reconfirmed by the Fed yesterday) push the Fed to “do whatever is necessary” to save the economy.”

Trump’s comments about China on Thursday also set the tone for higher prices. The Trump administration is said to be mulling avenues to punish or seek financial compensation from China for what it sees as withholding information about the virus. The President went so far as to suggest we could cut off our whole relationship with China: Fox Exclusive. This trade war idea is dynamite and cuts both ways. If the US blocks technology China will retaliate against companies like Cisco, Apple and forget about them ordering Boeing airplanes. 

So as this week’s rhetoric heated up so did prices. The reasoning being that recovery will be difficult and more relief money would be necessary. After the first 2 trillion the first 4 trillion became part of the conversation. And Powell’s response was “no problem”.

This “on again – off again” expectation is new but part of the darker specter we live with for the time being. One which has the power to create whirlwinds in the physical metals which delay production, increase premiums, and create price trends which look like ocean waves. 

The bad virus news or “on again theory” has been out for some time and gold has reacted as you might expect. If you look at the 10-year pricing chart you will see that today’s levels are approaching the old high’s seen in 2011 through 2013. So, the technical guys are looking for a break above $1800.00 suggesting that stocks will further weaken, and recovery might stall.  

A more conservative viewpoint or “off again theory” would claim that today’s gold pricing got carried away – virus recovery is solid; world government will maintain liquidity and a vaccine will soon be in production. So, gold will channel like it did a decade ago during the financial crisis ($1600.00/$1800.00) waiting to see signs that such optimism is warranted.

This pandemic is unique and does not relate much to the financial banking crisis of 2010. But the earlier financial crisis and today’s emergency are worth a small comparison. One which might suggest a better guess as to how long we will remain left footed.

A decade ago, the real estate crisis pushed safe haven buying as gold moved from $1200.00 to $1800.00. As things settled down uncertainty remained so prices bounced between $1600.00 and $1800.00 for 2 years. When people thought it was safe enough to come out from under the bed gold eventually returned to $1200.00 and order returned to the financial markets. 

The damage created by this pandemic has been massive so it is reasonable to assume the “uncertainty pricing channel” will be much longer, perhaps something like 4 years. Which would suggest traders will be dealing with unstable gold prices into 2023.

And this assumes no inflation surge and at least a stable stock market. These last two factors restrain and yet underpin gold’s current pricing model. If either goes wonky hold on to your hat as physical supply will once again become a big issue and premiums would go crazy.        

This from Zaner (Chicago) – “Global equity markets overnight were mostly higher with the exceptions the Shanghai markets and the Hang Seng. Gains generally settled into a range of 1.1% and 1.5%. Economic information of importance overnight came from China with industrial production in April up 3.9% which nearly doubled the amount of gain forecasted. Unfortunately for world growth Chinese retail sales for April on a year-over-year basis declined by 7.5% which was slightly better than expected and not anywhere near as disastrous as was seen in March. Not surprisingly Europe saw more deflationary price measures from Germany Italy and France with the headline reading from Europe German GDP figures which resulted in official recession standing. The North American session will start out with the New York Fed’s May Empire State manufacturing survey which is forecast to have a moderate uptick from March’s -78.2 reading. April retail sales are expected to have a sizable downtick from March’s -8.7 reading. April industrial production is forecast to have a sizable downtick from March’s -5.4% reading. April capacity utilization is expected to have a moderate decline from March’s 72.7% reading. March business inventories are forecast to have a modest uptick from February’s -0.4% reading. The March job openings and labor turnover (JOLTS) survey is expected to have a modest downtick from February’s 6.882 million reading. A private survey of May consumer sentiment is forecast to have a moderate decline from the previous 71.8 reading. The March Treasury International Capital (TIC) will be released during afternoon US trading hours and will be scrutinized for net changes in Chinese or Japanese Treasury holdings.

While the gold market came alive yesterday, and in the process pulled silver prices with it, there is slightly less global anxiety in place early today and that could temper gold bullishness somewhat. Fortunately for the bull camp, there are still a number of bullish themes in play with the dire economic words from the Fed Wednesday accentuated by signs of fresh US/Chinese trade threats. While not a major driving force for metals prices investment flow continues toward gold and silver in the background with inflows this week seemingly pointing to expanding interest in silver! Not surprisingly gold ETF holdings yesterday increased for the 15th straight session with net purchases to date rising above 15 million ounces. Silver ETF’s also added 1.1 million ounces bringing their purchases to date this year above 80 million ounces! Going forward, the uncertainty on the economic front will remain center stage, especially after yet another disastrous US job sector report yesterday. While there seemed to be a low chance of a quick US stimulus package earlier in the week, pressure continues to mount on US politicians and there would appear to be some movement toward compromise from the White House. For now, we think the stock market has lost its patience for a quick medical solution and without evidence of successful restart activity (meaning without infection flares) the equity markets could be in a corrective motion capable of fueling gold back toward the April highs. In another sign that the bull camp is strengthening and managing to spin headlines into its favor, the gold trade rallied straight through news yesterday that US intelligence had hard evidence that Venezuela has been purchasing Iranian oil (against sanction rules) with gold reserves. In other words, the markets did not seem to be concerned about extra gold flowing to the market and instead embraced the potential for a US action against Iran. While we favor the bull track to end the trading week, the gold and silver markets continue to tread a knife’s edge with safe haven buying currently holding the edge over the threat of physical demand loss selling.

The PGM markets also continue to walk a knife’s edge between hope for a wave of safe haven buying and fears of a physical demand selling wave. However, July palladium comes away from the Thursday action with further respect for the $1,750 support level. In fact, the ability to respect the $1,750 level in the face of a very negative PGM demand forecast from Norilsk Nickel was impressive as the large mining company projected worldwide palladium consumption to decline by 16% with demand for palladium from the auto industry declining by 20%. Recently the Russian mining company suggested the palladium market would face nearly a 1 million ounce shortfall, and the question now becomes has the deficit been shifted into a modest surplus? Going forward, we see platinum as a more viable safe haven instrument than palladium but a significant wave of safe haven interest to finish the trading week would probably bring palladium up from $1,700 toward near term resistance at $1,882.30. While it is a little deflating for the bull camp in platinum to see yesterday’s minimal rally in the face of a $20 rally in gold and a 50 cent rally in silver, we now expect platinum to respect close-in support and attempt to rise in the slipstream of gold and silver with silver showing very impressive catch-up action to gold.

The bull camp enters the last trading session of the week with fundamental and technical control albeit with less upside traction. In fact, the June gold contract clearly extended above a recent downtrend channel resistance line this week and is currently seeing a lengthening list of bullish fundamental storylines. Going forward we see fairly solid support at $1,733.20 with a more significant support and long stop level seen at $1,701.60. In the event global equities fall again today, China responds with trade barbs against the US and there are any concerning infection headlines from China June gold might finish off the week near $1,760. As for silver, upside traction appears to have accelerated again overnight and a number of intermediate trend signals have been shifted in favor of the bull camp with near term targeting now seen up at $17.00. Traders should remain bullish toward silver as long as it maintains above $16.15.”

Silver closed up $0.91 at $17.05 – last Friday we closed at $15.74 so action remains solid.

Platinum closed up $42.10 at $812.50 and palladium closed up $59.70 at $1852.60. 

As always, we care about you and appreciate your friendship. So, if you have unusual circumstances talk with Harry, we may be able to help. Let us be careful out there – stay safe and trust that God’s blessings will protect us all. Richard Schwary            

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.

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Gold’s Narrow Pricing Channel

Gold’s Narrow Pricing Channel 

Commentary for Friday, May 8, 2020 – Gold closed today down $11.90 at $1709.90. The Friday gold trade was choppy – on the open we sold off eventually touching $1705.00 before, once again reversing direction, reaching a high of $1725.00 and finally settling mid-range before the close. Last Friday gold closed at $1694.50 so on the week we are up a modest $15.40 attesting to the fact that gold, despite financial uncertainty remains in a kind of “holding pattern”. Perhaps with a slight downward expectation only because in the past 30 days it has failed now three times to move above $1740.00 and has failed to breakdown 3 times at its current support line of $1680.00.

This trading this week has provided a few more pluses for our shiny friend. The possibility of a trade war between the US and China over what China could have done to stop the virus and increasing gold ETF’s positions. So, pricing seemed more solid early in the week and at the same time the Dollar Index remained firm (99.71) and crude oil was stronger ($25.00). Reuters claims the US Treasury plans to borrow nearly $3 trillion in the second of 2020 – a record any quarter.

The negatives are still there but may be overlooked for the present because of this uncertain investment environment. Gold mines for example are reopening – China and India physical demand has not recovered so traders are wondering if “investment” demand will hold up as the world considers “reopening” on a limited basis.

To understand this pricing dynamic, it pays to remember the quintessential reason for anyone owning gold or silver bullion. These metals have value no matter what the circumstances and the more troubling the future the more important role they play in making sure you have money which has no third-party obligation. This is an old story among precious metal enthusiasts, but even old timers can become complacent.

I have never seen a time when owning gold or silver bullion makes more sense than it does today given worldwide problems created by the virus. That is not to say that everyone will make a fortune owning them – that really is not the point. The idea here is that the metals allow everyone, big player, or modest investor, to build a stone wall around a portion of their net worth. A wall that is not accessible to anyone or any reason.

A good case in point was the price action Wednesday – gold pushed decidedly lower once again challenging $1680.00. The weakness caused by weakness in the dollar – the Dollar Index pushing above 100.00 and traders are beginning to feel that gold was getting “heavy”.

Thursday’s action however argued for higher prices – gold again bouncing off $1680.00 support and closing up $37.60 at $1721.80. The reasoning being that unemployment numbers are miserable suggesting that world virus damage is greater than expected. Jim Wyckoff (Kitco) provides insight “At least one market advisory firm is now calling for a “commodity super-cycle” to begin to occur in the coming months. The firm believes the combination of major global economies coming back to life in rapid fashion, after the Covid-19-induced demand shock, and the recent huge monetary stimulus measures from the big central banks of the world will produce huge demand for raw commodities that will drive their prices sharply higher. The naysayers to this postulation say the 2008 financial crisis that saw similar—although not nearly as extreme conditions did not produce problematic price inflation at all, and in fact the world’s major economies struggled with inflation that was too low for many years. This longtime market watcher’s perspective on the matter: I lean on the side of problematic price inflation, thinking of the old saying, “no good deed (central bank stimulus) goes unpunished.”

As you can see, trying to decide if gold is too high or too low is difficult. No one really understands how these untested quantitative easing measures will play out because the amount of money generated out of thin air and pushed into the system is unprecedented.

With the collapse in US interest rates there is not much left in the FOMC fiscal arsenal. Our next step will be to discuss negative interest rates, guaranteeing no growth perhaps generationally. Let us hope our recovery is either “V” or “U” shaped and we can avoid the dreaded “L” shaped recovery suggested by Dr. Doom himself Nouriel Roubini.      

This from Zaner (Chicago) – “Global equity markets overnight were higher with one exception the Russian stock market. Gains overnight were largely under 1% with the Tokyo market forging a gain of 2.2%. Economic news of importance overnight came from Germany where March exports declined significantly more than expected on a month over month basis. In a very minor positive Japanese overall household spending in March was not as bad as expected but still declined by 6% on a year-over-year basis. It should also be noted that a Japanese bank services PMI reading for April registered a reading of only 21.5 relative to expectations of 22.8 and a reading last month of 33.8. Other critical economic news included German imports in March which fell 5.1% on a month over month basis and Spanish industrial output for March which declined by 12.2% compared to a decline last month of only 1.5%. The North American session will start out with April Canadian housing starts which are expected to have a sizable downtick from their March reading. The highlight for global market will be a historic April US employment situation report. April non-farm payrolls are certain to have their largest contraction on record, with the range of trade forecasts running from 10 million up to 30 million and what is thought to be “consensus” forming around the 21 to 22 million range. April unemployment is going to have a massive increase with a range of 12% to 18% and a “consensus” forming around the 15% to 16% area. April average hourly earnings are expected to have a modest uptick from March’s 3.1% year-over-year rate. April Canadian unemployment is forecast to have a huge increase from March 7.8% reading while their net employment has a severe contraction. March wholesale inventories are expected to have a modest downtick from February’s -0.6% level.

The gold market has extended yesterday’s surprise recovery and it is approaching 7 day highs in a fashion that suggests traders are anticipating a historic jump in US unemployment. While some suggested the gold market launched higher yesterday because of the disastrous US initial claims data that was probably not the primary driving force as gold prices waited nearly 1 1/2 hours following the report before the rally gathered momentum. However, it is likely that gold will catch some follow-through speculative buying today when the US releases yet another disastrous jobs related report which some think will see a non-farm payroll decline of 22 million. While several US Fed members have suggested negative interest rates in the US are unlikely, there is fresh chatter overnight of negative rates because of the jobs report this morning. From the investment front, gold should be underpinned by a 10th straight daily inflow of money into Gold ETF’s especially given news earlier this week that total world gold ETF holdings had topped 3000 tons. It is possible a key reversal in the dollar will provide fresh lift to the precious metals markets today especially if flight to quality interest in the Dollar fails to revive through the jobs report. Certainly the gold market is held back somewhat by more and more evidence that gold miners are beginning to plan restarts or are in the midst of restarting operations. Given yesterday’s volatility in gold, we suspect a similar session will be seen today with traders potentially seeing a trading range bound by $1,749 on the upside and $1,700 on the downside. While we would not expect silver prices to forge significant gains on the upside, it does appear as if the silver market has built a solid consolidation base on the charts and is performing as if overall global commodity demand is on the mend, and that could set the stage for a July silver return above the $16.00 level today. A critical downtrend channel resistance line is seen at $15.66 and trade above that level could spark a wave of stop loss buying.

The best hope for the Palladium bull camp in the near term is for a rising commodity tide to lift all boats as minors are starting to return to work, palladium ETF’s liquidated holdings yesterday and trading volume remains very low. While we think the big bull market in palladium has run its course, a steady ongoing improvement in global economic expectations should continue to foster a modest wave of commodity price reflation and therefore June palladium might retest first resistance at $1,899.30. In other words, even palladium looks to catch a positive lift from outside markets but we doubt the April/May downtrend has run its course. A downtrend channel resistance line comes in all the way up at $2054 with more likely resistance seen at $1,894.80. Like gold, platinum is likely seeing some headwinds from evidence that mining activity is resuming and it is likely that the jobs report today will provide at least some temporary pressure. All things considered, we are a little surprised in the lack of bullish reaction in platinum prices yesterday to a moderate risk on wave and more specifically to the rather pronounced gains in gold. Nonetheless, we give an edge to the bull camp and suspect a temporary trade above $800 is possible today.

It is difficult to take control away from the bull camp in the precious metals after yesterday’s rallies and more importantly, because the trend of improving overall economic/market psychology. However the bull camp appears to be catching an added assist from what appears to be a reversal in the Dollar. While gold did not rally directly off the large jump in claims yesterday, the trade generally thinks that same pattern will repeat today following non-farm payrolls. In conclusion we see the potential for a very wide trading range in June gold today and while we concede to the potential for some upside follow-through from yesterday’s strong action, we remain skeptical that the April and May downtrend pattern has been fully thrown off.”

Silver closed up $0.18 at $15.74.

Platinum closed up $7.20 at $784.70 and palladium closed down $14.60 at $1815.80.

As always, we care about you and appreciate your friendship. So, if you have unusual circumstances talk with Harry, we may be able to help. Let us be careful out there – stay safe and trust that God’s blessings will protect us all. Richard Schwary            

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.

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Gold Remains Choppy – Physical Supply Improving

Gold Remains Choppy – Physical Supply Improving

Commentary for Friday, May 1, 2020 – Gold closed up $10.30 today at $1694.50 and pushed higher by another $6.00 in the aftermarket. Our shiny friend still can’t make up its mind as gold challenged $1700.00 in the overnight London market and quickly corrected through $1687.00, before once again moving higher in choppy domestic trading.

The 30-day gold pricing chart is still the one to watch. In late March gold was trading around $1600.00 with plenty of buzz. As April turns into May gold has flattened out on both sides of $1700.00. I think the trade is suffering from “go-higher-itis” – just made that up but you get my point. We are obviously in a “generally higher trend” and the technical picture still belongs to the bulls. But when momentum slows professionals suspects the worse – profit taking and lower numbers. Being dogmatic in this virus situation is a bad idea but let us consider a few options. 

Delayed Delivery Update – time waiting before probable delivery has improved. We began this program with a 2-month time frame and now that the US Mint (West Point) has reopened and is producing both silver and gold eagles the deal looks more like a week or two. Still not for the impatient but this may serve as a reasonable substitute given the production problems.

The possibility of states opening for modified business and a reasonable DOW has created a bit of optimism. Thank God we have a promising vaccine from Oxford University, a new plasma therapy and perhaps a breakthrough drug from Gilead Sciences. Also consider that Fed Chief Powell had a chat Wednesday clarifying the FOMC role in this pandemic. He obviously left interest rates unchanged – but I think traders were more interested in when he thought our economy might reengage. His honesty held up which is good considering the circumstances and stocks moved higher. This kind news may subdue safe-haven demand. 

Still there should be caution because of conflicting reports. The WSJ claims there is no statistical relationship which suggests that the virus spread relates to how fast states “shut down”. German infection rates ticked up after reopening – a concern to US thinking. And half of sport enthusiasts claim they will not attend a mass event without a working vaccine.

This week the Dollar Index was a mixed bag – sometimes helping and sometimes hurting the price of gold. It began the week approaching 101.00 and then weakened touching 99.50 before moving back towards 100.00. If you are considering other reasons for the price of gold to change direction it has moved higher by $100.00 this past month and $400.00 this past year. Introducing the possibility of profit taking especially as price momentum slows.

And the Russian central bank is not in a hurry to restart central bank gold buying, most likely because the collapse in crude oil is seriously hurting their cash flow. The latest from Reuters was not upbeat – jewelry fabrication numbers and investment demand are moving lower with Asia and China leading the parade. Finally, the 10% increase in crude oil Thursday did not help gold.   

On the other hand, there are plenty of reasons why gold may top $2000.00 before year end. Consider the immense stimulus packages being released throughout the world attempting to cushion the virus aftermath. The promise of unlimited Quantitative Easing keeps speculators up at night wondering how warped this system might become. But fiat paper money and the inflationary consequences are lost in the virus dialogue. So is the payback plan.

It is these extremes which brings up the old argument of a new world currency. Not likely but who know these days. I’m surprised we have not seen rent strikes in big cities by this time. 

Still I am still not ready to jump out the window. But there is plenty to worry about and if this precarious cabal gets out of balance the world’s central banks will double down on gold bullion.

Keep in mind that before the virus disaster central banks had created a decade long “free money machine” in response to the 2008 financial crisis. That hat trick is now peanuts when compared to April’s 2.3 trillion dollar aid package with many expecting more of similar size.

Finally, be careful about getting reactionary to this week’s unemployment numbers. Yes, the unemployment numbers are higher than those of the Great Depression but remember that today’s US population is something like three times larger than the 1930’s. Just saying… 

This from Zaner (Chicago) – “Global equity markets overnight were almost all lower with the lone exceptions the equity markets in Shanghai. Declines in most markets were roughly 2% while the Australian market fell by nearly 5%! Some of the risk off psychology today might be coming from Pres. Trump’s aggressive attack on China for their liability from the virus that has clearly resulted in the worst economic condition ever. Overnight economic news was once again disappointing with CPI and Tokyo weaker than expected, Australian new home sales down a precipitous 21% and UK manufacturing PMI for April coming in slightly below expectations. However on the positive side of the ledger UK nationwide house prices on a month over month basis actually gained 0.7% and price measures on those housing sales were up a surprising 3.7% relative to year ago levels and bested expectations and the prior month’s gain. In another longer-term positive economic development UK consumer credit contracted by 3.8 billion pounds which indicates a sharp reduction in purchases/activity but will put consumers in a better position to make purchases when conditions from the virus allow. The North American session will start out with April Markit manufacturing PMI reading with the US expected to hold steady with the previous 36.9 reading while Canada is forecast to have a moderate decline from the previous 46.1 reading. The April ISM manufacturing index is expected to have a sizable decline from March’s 49.1 reading. March construction spending is forecast to have a moderate downtick from February’s -1.3% reading. Earnings announcements will include Exxon Mobil, Chevron, AbbVie, Honeywell, Colgate-Palmolive and Clorox before the Wall Street opening.

In retrospect this week’s action in gold clearly showed shifting fundamental focus with the market early in the week not benefiting from conditions that recently fostered hope for improved global physical demand. The market did get a fleeting reaction to the uber-aggressive Federal Reserve promises but even that bullish impetus waned quickly. However some of the poor action in gold has probably been the result of news that Venezuela has been liquidating gold from its national reserves in transactions with Iran. On the other hand that move is probably more psychological than physical as gold holdings by Venezuela were only thought to be 102 tons. For today’s action it would appear that all commodities are seeing selling pressure from weakness in equities and what appears to be a deterioration of economic sentiment from a wave of headlines predicting extending lockdown rules. In additional bearish news overnight several small gold mining companies have indicated they are planning to ramp up production and Eldorado gold maintained its previous gold production forecast to be as high as 550,000 ounces and the trade has generally thought production losses would continue and that actual production losses would be confirmed. Unfortunately news from the demand front is the main dominating negative to end the trade week with the World Gold Council projecting Indian gold demand cratered by 36% in the March quarter. To add yet another bearish force, the charts have obviously been damaged further with this morning’s action and prices would appear to be on a direct path back to the mid-April spike low down at $1666.20. The silver market has also damaged its charts in the early action again today and outside pressure projects the path of least resistance to be down today with a potential slash down to $14.71 in July silver if early risk off becomes a rout. Minimally supportive news for gold was seen with a 5th straight build in gold ETF holdings which brought holdings back to 12 month highs. Unfortunately for silver bulls silver ETF’s reduced holdings by a minimal 5731 ounces.

Like gold and silver, the palladium market has forged what appears to be a major reversal signal on its charts with a large range up attempt definitively reversed and follow through down action in place early today. The palladium market should see ongoing pressure from disastrous US auto sales figures for the month of April (although some more recent weekly figures showed some promise). While it is possible that palladium saw some support on Thursday from the reversal of long platinum short palladium spread trades that support shouldn’t be sustainable or significant in scope. In the short term, the charts favor the downside with some form of credible consolidation low support seen at $1,875 but we also can’t rule out a knife down trade to $1,750. While the reversal action in platinum was not as severe as the rest of the precious metals markets on yesterday, the charts were damaged again overnight, risk on sentiment from the potential drug breakthrough was extremely short-lived and broad based sentiment this morning is problematic for all commodities. A background bearish development for platinum that is becoming more significant is recent aggressive liquidation’s in platinum ETF holdings with several daily reports registering 5 digit outflows from the funds. Uptrend channel support in July platinum is seen down at $768.25.

The fundamental and technical pictures in gold, silver and nearly all commodities favor the bear camp to start the month of May. Furthermore risk off psychology is likely to accentuate internal bearish supply and demand conditions for gold in particular. While the markets have long accepted the reality of plummeting Indian gold demand, the WGC made those expectations official overnight and June gold looks to be on a direct track to retest $1666.20. Since it is Friday and there appears to be potential for aggressive political wrangling between the US and China and the gold market in the last positioning report showing a net spec and fund long of 308,673 contracts, it is possible gold will even fail at the mid-April spike low. Obviously the silver market is tied to the gold market but it appears as if the market is not as vulnerable on the charts but given the outside market influences a return to the spike low from April down at $14.71 is very likely today.”

Silver closed down $0.04 at $14.86.

Platinum closed down $39.60 at $769.90 and palladium closed down $68.60 at $1883.50. 

We care and appreciate your friendship and business. So if you have unusual circumstances talk with Harry, we may be able to help. Let us be careful out there – stay safe and trust that God’s blessings will protect us all. Richard Schwary            

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.

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Gold – Another Crazy Week or Not?

Gold – Another Crazy Week or Not?

Commentary for Friday, April 24, 2020 – Gold closed down $9.80 today at $1723.50. It pushed higher on the open ($1740.00) until profit taking set in and gold touched lows on the day ($1710.00) before bouncing higher so call the action choppy. But most of the background noise remains bullish and my bet is that traders are expecting higher numbers next week. Gold closed last Friday at $1689.20 so today’s close ($1723.50) makes for a weekly gain of $34.30. This despite a strong dollar. The Dollar Index (100.41) is up 4% since this year.

Gold has certainly had the kitchen sink thrown at it this week. Between February and April oil has tanked but this past Monday prices collapsed. Moving from $25.00 to $5.00 a barrel rattling Wall Street and paralyzing world markets. The “why” is simple – the “now what” is not.

Unimaginably lower oil prices are the result of virus created work stoppages and shutdowns around the world which destroyed a 20-year pricing pattern based on world crude oil consumption which no longer exists. This is scary stuff but manageable if producers move immediately to stop production and Wall Street does not panic.

This “dark side” of such an oil drop is that it unnerves every market. This uncertainty threatens stocks and could create another liquidity sell off in the metals.  

Sales of existing homes fell by 8.5% in March, unemployment continues to rise and everyone’s nerves are shot. Trump has made the “reopening” a business a state decision which is good news. But California or New York are still dealing with an uncertain future.

Still as of Tuesday there are 20 states which are scheduled to safely reopen in some modified form. This alone could dissipate some of the current gold “buzz”. So, are things settling down?

Nope. Trump moves to temporarily “shut down” US immigration for health reasons or perhaps to protect national interests. And news of North Korea’s Kim Jong Un problems with recent heart surgery surfaced. Introducing the possibility of regime change and tension on the peninsula. Trump also raised the ante in the Far East – “I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea.”

The collapse of oil is a double-edged sword but initially it should have resulted in lower gold prices. But just as traders were placing their bets – stocks and oil rebounded on Wednesday. Gold traders were once again emboldened, and prices jumped higher – up $50.50 ($1728.70). 

Gold remains technically bullish moving from $1550.00 in March through $1700.00 by mid-April. But as prices flattened out – trading on both sides of $1700.00 some caution was introduced into this trade. Is the safe opening of commerce a possibility? And could this new tactic slowdown higher gold prices?

But as stocks and oil rebounded the gold “caution sign” was thrown out the window and the bulls once again slept comfortably on all that short-term profit.   

So, for now let us call gold extremely volatile. Capable of much larger daily price swings of $50.00 or even $100.00, with a lot of folks looking for $2000.00 by year end.

So, are these higher prices the result of physical safe haven buying or speculative and greedy paper traders? This commentary by Allen Sykora (Kitco) may surprise some. Long-term investors are the ones boosting gold, not futures traders. “Longer-term investment buying such as exchange-traded funds has been the main fuel pushing gold prices higher in recent weeks, with Commodity Futures Trading Commission (CFTC) data showing the net-bullish posture of money managers in the futures market has not changed much so far this month, analysts said. Money managers trading in the futures market have been “hardly involved at all” in the price rise, commented Commerzbank analyst Carsten Fritsch. “For five weeks now, their net-long positions have remained virtually unchanged at a comparatively moderate level,” Fritsch said. “The price rise…was not driven by speculation, in other words, which also means there is no need for any correction on the part of this group of investors.”

The fuel behind this optimism and the “cure” for our financial predicament is more and yet more “liquidity”. The Federal Reserve will continue to pour huge amounts of money into this system to prevent the kind of collapse foreshadowed in the oil industry. The Fed balance sheet is already over 6 trillion dollars and counting. The result will be inflation, obviously supporting the precious metals but some thinkers are now suggesting that this contagion will be far reaching. Perhaps turn into a generational thing so it may be time to ignore short term gold pricing and begin to consider a decade perspective, with a much higher price perspective ($5000.00+). Six months ago, I would have said this is nonsense but now I am not so sure.   

As you can see this ride is brutal and could get worse depending on the damage during this “shutdown”. A shutdown is imperative to save lives, but if it lasts through the summer it is difficult to say how the metals will react on the shorter term. The good news is that apparently the virus has problems living in warmer weather – let us pray for a hot summer. 

There is plenty of “guessing” out there, so it is no surprise that the Bank of America forecasted a $2000.00 to $3000.00 gold price in 18 months. Driven by central bank buying, increased safe-haven demand. Let us also add to this list decreased gold mine production as workers were laid off to protect against the virus spread.

This from Zaner (Chicago) – “Global equity markets overnight were lower with declines generally between 1% and 2%. Overnight economic news of importance included UK retail sales which declined by more than expected, German IFO business climate, current assessment and expectations readings for the month of April which all came in much weaker than expected. The North American session will start out with March durable goods which are forecast to have a sizable downtick from February’s 1.2% reading. A private survey of April consumer sentiment is expected to have a modest downtick from the previous 71 reading. Earnings announcements will include Verizon Communications, American Express, Freeport-McMoran and Portland General Electric before the Wall Street opening.

The bullish pulse has extended into the Friday morning trade in gold and to a lesser degree in silver. However it would appear as if gold and silver today will be battling some outside market adversity with the dollar forging a fresh upside breakout early and commodity prices under initial pressure. Fortunately for the bull camp the early declines in the crude oil market are not severe and the US finally passed the latest stimulus package ($494 billion). From a classic physical demand perspective, the gold market is likely to be negatively impacted next week by the lockdown in India as that will likely prevent gold purchases on the 2nd most culturally auspicious buying day of the year (on Sunday). In another slight headwind for gold, the EU support package continues to be delayed by political differences but that headwind could be offset if the focus in Washington quickly shifts forward to yet another stimulus package. It should be noted that the headlines overnight have carried stories of several mining companies planning to restart mining operations in the coming weeks (May 18th). While supply has been a source of supportive headlines lately we see the focus of the market locked onto the potential for ongoing investment demand mostly prompted by the ongoing cycle of government stimulus programs. In fact overnight RBC capital markets indicated allocations to gold bullion investments will continue to increase but they also suggested would be investors “buy breaks”. Not surprisingly gold ETF’s increased their holdings again for the 24th straight day bringing total gold holdings up to 95.2 million ounces. Unfortunately for the bull camp in silver, Silver-ETF’s reduced holdings by 1.9 million ounces reducing this year’s net purchases down to 63.1 million ounces. In the end, China reduced another key interest rate overnight, Germany saw a huge decline in business sentiment and extending lockdown dates clearly increase the odds of even more central bank and government stimulus around the world. In fact with US equities trending into positive territory (as of this writing) and the gold charts strong we see resistance at $1764.20 taken out and support respected today at $1738.30. Unfortunately for silver bulls the silver market failed to hold what appeared to be a very definitive upside breakout/reversal up move on the charts and the market is having difficulty tracking tightly with gold gains early. However we think the bull camp still holds a thin edge as long as the May contract holds above $15.18.

While it is possible that the palladium explosion on the upside yesterday was the result of news that GM was planning to return some workers to auto plants, we would suggest the explosive market action yesterday clearly overstates that potential demand improving development. Nonetheless, it is possible that the palladium contract into the low on Tuesday had built up a moderate net spec and fund short position and that likely prompted short covering impetus yesterday. Certainly we see the overall global trend of the coronavirus threat to be leveling out (very slowly), and that could take some PGM selling interest to the sidelines. Obviously the economic carnage remains in place with big ticket vehicle sales so slow that demand for PGM inputs will be slashed this year and that should serve to keep June palladium within the early March trading range bound by $2,020 and $2,250. In the platinum market, we see the positive gold leadership as a sign that July platinum is capable of taking out the April high up at $838.20 in the coming trading sessions. Support moves up to $766.70 and initial resistance and a pivot point today is seen at $814.30.

The problem with feeding gold and silver prices consistently higher on the back of global stimulus headlines is the difficulty in getting politicians to move swiftly and in a straight line on additional programs. Nonetheless, the bull camp holds control with a new contract high likely in June gold if it appears that a combination of risk on in equities and strength in crude oil prices can sustain into the close today. In the near term, we continue to see an upside target of $1,800 in June gold with similar upside targeting in May silver slightly less impressive up at $16.30.”

Silver closed down $0.10 at $15.25.

Platinum closed down $14.20 at $773.40 and palladium closed down $15.70 at $2013.80.

We appreciate your friendship and business, we also care, so if you have unusual circumstances talk with Harry directly maybe we can help. Let us be careful out there and trust that God’s blessings will protect us all. Richard Schwary            

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.

Posted on

Gold – Comforting or Confusing?

Gold – Comforting or Confusing?

Commentary for Friday, April 17, 2020 – Gold closed down $31.20 today at $1689.20. It closed last Friday at $1736.20 so on the week we are down $47.00. This pricing pattern suggests a flattening of the curve and normally I would be concerned about not holding important support at $1700.00. But not in this case as I expect traders will continue to buy the dip as the cup of confusion is part of everyone’s day under this virus threat.

So, a solid technical picture shorter term following the $1600.00 consolidation we saw in late March. The 30-day picture supports this trend which has moved from $1500.00 towards $1800.00 since mid-March. A price surge pushed by Wall Street fears and safe haven buying. This despite increased premiums created by production delays in most world mints.

Keep in mind however these higher gold prices have introduced sellers – not big players – but usually seldom seen 100-ounce gold trades are becoming more common across our counter. Many looking for a trade into silver bullion products.

Silver bullion production remains a challenge, but new 10-ounce bars are showing up in the US system. My bet is that private mints are making “sweetheart” deals with a few – for special consideration. I’m not saying, just saying.

One-ounce product is impossible in quantity even with high premiums. But I expect this condition will correct itself as private producers clear their backlog.

The big plus silver has going for it now is that in the 2010 bull market as gold pushed above $1800.00 the price of silver also surged moving towards $50.00.

In this current bull market gold is threating old highs but silver is missing in action. The good news is that silver is lagging gold to such a great degree that is must be considered undervalued.

Adding to the general confusion the US Mint at West Point has temporarily stopped 2020 production of Gold and Silver American Eagles because of employee exposure to the Coronavirus. So, for now these popular bullion choices will remain difficult to find and high premiums will remain in place as the secondary market competes for what is still available. 

There is still a lot of uncertainty in the stock market, even with the 2 trillion-dollar infusion by the Federal Reserve. So, the question remains – have stocks put in a “bottom” and are they ready to jump higher on a plan to reopen American? Or are we simply looking at a “relief rally”.

This is over my pay grade, but the answer will either help or hurt today’s gold pricing. If Wall Street can claw its way back into something resembling stability gold will settle down.

Evidence overseas suggests that as the number of virus cases decrease and more people get back to work, they are not in a spending mood, which has implications for the stock market. 

If the damage created by this virus creates more havoc in stocks gold will likely continue its upward bias in a typical “choppy” pattern. But not all professionals are convinced, a view well presented by Gary Wagner (Kitco) who sees a complicated technical pattern suggesting that a “correction could occur at any point, for any reason, most importantly when it’s least expected.”

This complicated picture is further amplified as gold tries once again to find its feet above 1700.00. This region is often called “no-man’s land”. That pricing range between $1600.00 and $1800.00 last seen between the famous 2011 and 2012 consolidation.

Still gold’s price climb has been impressive, up $200.00 this past month and up $450.00 this past year. A sure sign that folks worldwide are nervous. This always sounds good to the bullish trade but a “nervous market” always introduces the possibility of wild price swings. When all the crowd runs in one direction they can collectively and quickly change their minds.

Keep in mind that gold bullion demand in both China and India has moved substantially lower (50%). The result of higher prices and government fiddling – in another attempt at convincing the population to monetize the huge amount of physical gold in private hands. Both countries have a 5000-year history of not trusting paper currency, so I am not optimistic.   

The IMF is also throwing gasoline on the fear fire claiming that this medical emergency will create havoc not seen since the Great Depression. The virus is certainly the worst health threat in my lifetime but this parallel is lost on me. Our government in the Great Depression did nothing to help business, in fact their tight-fisted policies closed banks and made the situation worse. Today our Federal Reserve and all other world governments are pumping huge amounts of fiat paper money into banking and public sector to keep things as liquid as possible. Inflation yes, depression mimicking the Great Depression – no.

On the brighter side Trump released guidelines for reopening the US economy on Thursday. What a monstrous decision – if they are right it saves some economic grief and helps Americans focus on the possibility of recovery. If Congress gets this wrong, it could reverse the predicted “generally lower” trend in the number of sick people.

A nice reader asked if it was possible to see $5000 or even $10000 gold? He was not interested in the investment possibilities but was worried about the possible damage to financial systems this might imply. Of course, it is possible to see such crazy numbers, but I think this unlikely.

Skyrocketing gold prices do not necessarily mean that financial systems are in peril. The dynamics would likely be a repeat of the 1970’s as inflation moved toward 10%. The dollar moved lower – long term lending dried up – real estate deals were financed by owners not banks. And the government fought back with higher interest rates which stopped the rush into gold.

Finally keep in mind that today’s negative interest rates worldwide suggest that folks with money will look for asset classes which produce better results. The 20% rate of return on gold bullion this past year should continue to attract new buyers looking to diversify. And everyone would receive the added benefit of no “third party” exposure – a big plus in today’s climate.   

This from Zaner (Chicago) – “Global equity markets overnight were all higher with German and French markets posting gains in excess of 3%. The markets are upbeat off positive news from Gilead sciences regarding positive virus treatment news. However some optimism is being seen from the beginning of an effort to restart activity in the US especially as that news followed announcements from Germany to restart some activity next week. Overnight economic news saw Chinese GDP for the first quarter down 6.8% which is weaker than expected. Chinese retail sales for March fell by 15.8% while industrial production declined by 1.1%. As would be expected car registrations for March throughout Europe fell precipitously with the biggest month over month decline seen in Italy of 82%. The North American session will be highlighted by the Conference Board’s March reading on leading indicators which are forecast to have a sizable pullback from Februarys’ 0.1% reading. St. Louis Fed President Bullard will speak during morning US trading hours. Earnings announcements will include Procter & Gamble, Schlumberger and Kansas City Southern before the Wall Street opening.

After disappointing the bull camp yesterday the gold market has seen selling pressure intensify this morning despite what appears to be a risk on day unfolding in equities. In fact the bull camp has to be extremely discouraged in the action this morning as physical demand hopes should have improved following hope for a virus treatment overnight and from the US attempt to restart its economy. However disastrous Chinese economic data overnight has clearly rekindled demand concerns in the world’s biggest gold consuming market especially with the news suggesting the Chinese economy was more deeply damaged than anticipated. In fact some economists see the Chinese economic data today as a sign that the recovery from the widespread quarantines will be harder and longer than expected. From the supply-side of the equation prices are probably seeing some pressure from news that Barrick gold thinks they will still be able to meet annual gold production targets but that news was partially offset by reports that many global mining companies have slashed spending on projects due to the global economic environment. Certainly gold prices should see minimal support from news that gold ETF’s added to their holdings for the 19th straight session with year to date purchases of 11.1 million ounces. Even more impressive is the fact that silver ETF’s yesterday added 5.78 million ounces bringing this year’s net purchases up to 65.4 million ounces! However the charts are damaged and risk on has been discounted in favor of ideas that global economies are unlikely to see “V” recoveries. Fortunately for the bull camp June gold will likely found some psychological support around the $1700 level but those getting long for positions probably have to risk the trade to a price below $1669. In a similar fashion silver has damaged its charts again and might not see solid support until $15.11. Therefore those looking to get long for a position trade probably have to risk those positions to $13.98.

Not surprisingly the PGM markets remain tethered to the action in gold with noted weakness in gold again this morning exerting fresh selling pressure. Unfortunately for the bull camp, daily trading volume in palladium has generally been below 1,000 contracts this week and palladium appears to be vulnerable to classic physical commodity market selling following extremely negative Chinese industrial activity/GDP readings overnight. Unlike gold and silver, the PGM markets are not seeing inflows into ETF instruments, in another sign that the PGM markets are not in widespread investment vogue. Near term downside targeting in June Palladium is seen at $2,045.70. Not to be left out, the platinum market also damaged its charts yesterday and has already given up a large portion of this week’s rally. However, we continue to see resiliency in the bull camp in platinum but we also think the bull camp can’t stand up to the pressure in gold today. Unfortunately, the platinum market became short-term overbought early this week and might now need to fall back to the midmonth consolidation down at $757.30 to find solid support.

The bear camp has managed to turn the head of the precious metals markets down this week and more downside work is expected today as the markets have decided to embrace disappointing physical demand prospects even though there appears to be some promise on the virus treatment front and there are emerging restart efforts throughout the US. However, in the event of a noted and sustained risk on vibe from equities, the depth and duration of the slide in precious metals prices might be metered. Therefore longer term traders should be looking to enter fresh longs on a June gold dip to $1,701 and on a dip to $15.11 in May silver.”

Silver closed down $0.32 at $15.24. High premiums are not going away anytime soon but if you are less selective as to product there are some deals out there.

Platinum closed down $8.00 at $781.30 and palladium closed up $10.20 at $2159.40. 

We appreciate your friendship and business. More blessings and thanks for reading.           

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.

Posted on

Gold – Let’s be Careful Out There

Gold – Let’s be Careful Out There 

Commentary for Thursday, April 9, 2020 – Gold closed up a whopping $70.80 today at $1736.20 and then just as quickly dropped in the aftermarket almost $60.00 moving back to into the $1675.00 range. In overnight Hong Kong and London trading gold was choppy to firm but on the New York open moved dramatically towards $1700.00 before settling in on both sides of $1680.00. The surge is most likely a combination of terrible economic news (job losses) and safe haven buying as the virus continues to create fear – the quick correction a result of the paper trade playing this market like a violin. 

Gold closed last Friday at $1633.70 and today at $1763.20 making for a weekly gain of $129.50 but if you consider the aftermarket, we are looking at higher by $46.00.  Over the same period the dollar was lower by a point supporting this upward trend. Gold prices are up $60.00 this past month and more than $400.00 this past year so the bullish technical picture remains in place.  

A reminder – we will be closed for Good Friday – commodity markets are closed, banks, FedEx and the post office are open. Update on Delayed Delivery – we did not have a “best guess” when this program began. Soon afterwards the mints suggested a 2 month wait so this program is not for the impatient. Lately our real experience indicates that a 2-month time frame holds up for silver bullion but in many cases is shorter for major gold coins.

The popular silver bullion coins like 1-ounce rounds, 10 and 100 ounce bars remain delayed because the major mints of the world are shut down but this situation is improving and as production capacity improves and worldwide transportation recovers there will be little delay and premiums will be lower. If you have placed a delayed delivery order you can sell your position at any time during the wait at our posted bid and receive your money immediately.

So now that most everyone is looking for higher gold prices is it time to slow down and reconsider those premiums? Recall that my usually pessimistic side was on display suggesting that higher and higher premiums, charged in the secondary market would evaporate as soon as the sovereign mints get back to normal production quotes.

Still, you can see the reasons in favor of higher gold and silver prices regardless of premiums – and this holds sway. The massive quantitative easing programs across the globe will alleviate some financial stress but to what degree remains unknown. And these “free money policies” will eventually lead to more inflation and set the stage for all-time highs in gold.

The above “inflation argument” is all over the place and it may be true, but I always question overly optimistic news when it comes from a seller of any free market product.

I got a nice note from a reader claiming that my contention that “inflation” was not a problem was simply buying into a government coverup. He is right since our friendly Uncle changed the way inflation is figured many moons ago by taking out the volatile aspects of his famous index.

If you want a more accurate picture, consider visiting John Williams’ Shadow Government Statistics (Google) and you will find the inflation number is more like 10%. And if you listen to my wife who is a price hawk, she will take the “over”. The point being is that until Americans act to protect themselves it does not make much difference which number we use.

MarketWatch – “So how much money is there? Too much to ignore. Federal Reserve Chairman Jerome Powell vowed to “provide as much relief stability as we can.” In the past month, the Fed has dropped interest rates to zero, begun buying Treasurys and mortgage debt, and started an array of lending programs. On Thursday, the Fed said it would provide an additional $2.3 trillion in loans, including those for mid-sized companies and aid to states and cities.”

So, the obvious result of this huge infusion of fiat currency will be real inflation which cannot be ignored and will push gold and silver prices much higher. The question is when will we see this next step and is it possible for the Fed to unwind this monster when things get back to normal?

Of course, it’s hard to be too negative on higher gold and silver prices in the meantime – the current financial uncertainty mandates that even the average player have both as a financial hedge. But as you already know I’m not a big fan of the Armageddon Syndrome. Ask yourself, for example if things are that bad financially why are stocks reasonably stable?

If you are looking for an outlier as to short-term gold pricing, perhaps the coronavirus disaster turns out to be more recoverable than expected. This is a stretch, but it could account for stocks holding up. Trump claims 19 vaccines are close or already in testing. An improving outcome would suggest that the worst is behind us by the summer could keep gold prices from running.

On the pessimistic side, gold ETF holdings are up 11% year to date so many are worried. Clearly spec money is betting on higher gold prices. If this scenario continues to play out, I still don’t expect a linear moon shot with pricing. This market will likely develop into a more volatile trade as the paper trade moves in and out taking short term profits. Gold would stay north of $1600.00 supported by bargain hunting as traders continue to “buy the dip”.

It is during this time and you can expect the return of the “gold will be $5000 by next week” crowd – the ridiculous telemarketers that show up to make a fast buck before going back to selling “guaranteed profit options” in a hard to find sleazy boiler room soon to be shut down by the Federal Trade Commission.

This pathetic angle has already shown up in the form of TV ads touting skyrocketing gold prices overnight and the usual “make a fortune story”. They feature a wife and husband or morally worse – grandparents claiming they are protecting their grandkid’s financial future. These are the same jokers who use a loss leader to get your name and interrupt your dinner selling certified gold bullion coins at ridiculous prices. So, stay alert especially if you are new to this trade. 

This from Zaner (Chicago) – “Global equity markets overnight were generally higher with the exceptions markets in Japan and Spain which were fractionally lower. The markets continue to be cheered by signs that the infection rate might be plateauing in the US but the optimism toward stimulus from Washington present at the beginning of the week is beginning to be tempered by signs of a reemergence of political bickering. Economic news overnight included a sharp drop in New Zealand electronic credit card retail sales for March, a significant exodus of foreign money from Japanese bonds and a UK industrial production reading for February which was not as bad as feared. Furthermore German exports for February were better than expected but that was offset by a much bigger than expected drop in German imports. From Italy industrial output was not as weak as expected for February and there were indications that Saudi Arabia and Russia were still at odds over today’s widely expected global oil production agreement. The North American session will start out with a weekly reading on initial jobless claims which is expected to have a sizable downtick from last week’s record high 6.648 million reading. Ongoing jobless claims are forecast to have a huge increase from the previous 3.048 million reading and post a new record high. The March producer price index is expected to have a sizable downtick from February’s 1.3% year-over-year rate. The March core producer price index (excluding food and energy) is forecast to have a modest downtick from February’s 1.4% year-over-year rate. March Canadian unemployment is expected to have a sizable uptick from February’s 5.6% rate along with a huge decline in their net employment. February wholesale trade is forecast to have a minimal downtick from January’s -0.4% reading. A major private survey of April consumer sentiment is expected to have a sizable downtick from the previous 89.1 reading. Fed Chair Powell will speak during morning US trading hours while San Francisco Fed President Daly will speak during the afternoon.

The gold market appears to be poised to finish the holiday shortened US week on a firm track, with early gains putting prices back above the key psychological $1,700 level. The market might be deriving some lift from growing realization that mining lockdowns could extend longer than expected and perhaps more importantly for the bulls it could be difficult to wind operations back up when the restrictions are lifted. In South Africa alone 450,000 miners have been sent home with the press taking note that once an all clear is seen from the virus, the deep mines could take an additional 3 – 4 weeks before returning to production. Currently workers and the government are suggesting all miners will need to be tested before returning to work and other measures will be required. Estimates are already projecting South African mining production to fall by 20% this month but those estimates are apparently based on a restart date of April 17th and that seems unlikely at present. Not surprisingly gold ETF’s added to their holdings for the 13th straight day yesterday bringing this year’s net purchases to 9.06 million ounces. It should also be noted that silver ETF’s added 8.1 million ounces of holdings yesterday bringing this year’s net purchases just shy of 50 million ounces (the 2018 global deficit in the silver market was 31 million ounces). Globally gold ETF’s saw net inflows of $8.1 billion in March with the purchase of 151 tons and that in turn put the holdings at a new all-time high of 3185 tons. The World Gold Council expects the inflows to continue because of the virus uncertainty and also because of record global stimulus. Some traders are beginning to make comparisons to the 2008-2011 rally where quantitative easing was thought to be the force behind a $1,000 rally. However the current situation has seen exponentially larger quantitative easing compared to the sub-prime crisis and US interest rates have been brought down to near zero! As indicated already the early rally would seem to project a return to this week’s highs but prices could see a temporary setback following what is expected to be another very concerning US initial unemployment claims report. While the silver market is not showing as impressive gains as gold in the early going today, the charts are positive and support at $15.17 looks to be firm and we can’t rule out a trade today above $16.00.

Despite evidence that South African mining output is likely to fall by at least 20% this month, palladium prices remain locked in this week’s relatively narrow trading range. However it would be a little surprising to see palladium failed to gain some ground in the event that early noted strength in gold and silver extends significantly. While palladium at times Wednesday showed signs of strength, ultimately the market failed to impress and only saw trading volume yesterday of 609 contracts and therefore we continue to think that prices are vulnerable to a slide back below $2,000. While the World Gold Council highlighted record quarterly inflow to Gold ETF instruments, interest in palladium ETF’s has been very low and that suggests the PGM markets are not poised to participate in a reflation wave like gold and silver. However with trading volume in futures extremely low, a little buying might be met even less selling interest and that could allow some volatility to surface. While the platinum market flared sharply higher yesterday, it ultimately failed as if it forged a temporary blow-off top. On the other hand we continue to think platinum offers an interesting long look, as it remains cheap and is likely to track along with gold in the weeks ahead. However, to keep the charts bullish in July platinum, probably requires respect of this week’s low of $718.80 with a closer in pivot point today seen at $725.70.

While we continue to see the path of least resistance in gold pointing to the upside, we recognize the potential for wide $50 per ounce daily swings as the ebb and flow of physical demand is being altered by the hour. However, over the long run, exploding global money supply should be setting the foundation for a bull market that could see gold prices reach above $2,000 later this year. Near term support is $1,682.80 and in the event of a break above $1,710 early today, gold is likely to finish the week on a very strong note. In the silver market, we see critical support today at $15.11 with potential upside targeting at the $16.00 level.”

Silver closed up $0.85 today at $16.00 but like gold experience heavily selling in the aftermarket – down $0.70 at something around $15.25.

Platinum closed up $15.00 at $744.60 and palladium closed up $14.80 at $2138.50.    

We appreciate your friendship and business. More blessings and thanks for reading.           

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.

Posted on

Gold – Stable on the Week

Gold – Stable on the Week 

Commentary for Friday, April 3, 2020 – Gold closed up $8.00 today at $1633.70. Last Friday gold closed at $1623.90 so on the week we have lost $9.80 which suggests a more stable market, which is a blessing considering the growing virus threat.

Don’t get the idea that just because most dealers have little for immediate delivery that there is a shortage of precious metals. There is a shortage of production because the virus has shut down many world mints. And there is a shortage now of silver coming out of Mexico, the world’s largest producer because the virus has shut down both the country and the mining industry.

Also keep in mind that it will take time for anything close to “normal” world delivery to take place because the supply chain has been damaged. Typical air transport may not be available as pilots try and cope with space restrictions and possible quarantined airports. The same problems exist with both truck and train transport – not as bad but still impacted.

Still most real players in the gold game today are looking for $1700.00, maybe higher depending on how the “fear” factor plays out. Fear however comes and goes, and quickly.

As you all know the medical community is talking about possible vaccines with a time horizon of 12 months. If true, this will eventually take some of the urgency out of the daily trade once it becomes clear that “stay at home” orders are effective in slowing the virus spread.

And sooner than later the “shortage” in gold and silver bullion will dissipate – this will do wonders for the physical world. Believe me once the public sees that they can buy and get delivery in a reasonable time the phones will quiet down.

Demand will continue to be widespread, but the urgency will dissipate, lowering premiums and we can get back to the old paradigm that a 10% physical gold holding makes insurance sense.

As the world comes back into focus stocks will reassert themselves and we will be better able to assess what went wrong and how we can improve our response time to the next emergency.

During this transition the dollar will remain strong – which will compete with the price of gold during this perhaps lengthy march back to “normal”. In early March the Dollar Index was 95.00 and moved through 102.00 by mid-month. We have now settled around 100.00 – still very strong and in my opinion another impediment to much higher gold prices on the short term. 

Even with today’s uncertainty level – the typical assumption regarding the price of gold should be approached carefully. We have enjoyed a cheap money and inflationary policy since the 2008 real estate fiasco – and yet the expected inflationary wave did not materialize. And no one could have envisioned the Fed dropping interest rates to zero and putting together an unprecedented 2 trillion-dollar bailout package in short-order.

So, we have again doubled down on the fiat currency “fix” suggesting once again that inflation will soon become a problem. In this case it was the reasonable course considering that in America today 4 out of 5 people are asked to “stay at home” to combat this virus.

Still, consider outside factors which work against this “inflation” scenario. The price of crude oil in early 2020 was $60.00 a barrel and by late March we were looking at $20.00. Suggesting just the opposite, deflationary wave.   

So, forgive my usual assessment – the world is not coming to an end. Even with this threat, yet to peak in the US I would suggest that metal prices – plus or minus typical premiums might remain more consistent that everyone is suggesting. They are doing what they usually do – acting as a reasonable safe haven in troubled times. Finally, for those reading with a spiritual side it is a good time to recall Paul’s words in Romans 8:28 – “And we know that all things work together for good to those who love God, to those who are the called according to His purpose.”       

This from Zaner (Chicago) – “Global equity markets overnight were generally lower but declines were mostly below 1%. Economic news released overnight included Japanese bank services PMI reading that the came in better-than-expected but 12 full points below the prior month. Australian retail sales for February were up 0.5 and were better than expected but those figures were before the brunt of the crisis settled into place. Also out from China overnight were Caixin services PMI readings for March which came in at 43 versus the prior number of 26.5. Throughout Europe services and composite PMI readings for March were all worse than expectations and mere fractions of the prior month’s results. However composite European retail sales were better than expected in February versus the prior month and year ago levels. The North American session will begin with the highlight for global markets, the March US employment situation report. March non-farm payrolls is expected to have the first negative monthly reading since September of 2010, but estimates have ranged from a 100,000 increase to more than a 1 million decrease. March unemployment is forecast to have a sharp increase from February’s 3.5% reading which March average hourly earnings are expected to hold steady at a 3.0% year-over-year rate. The March ISM non-manufacturing index is forecast to have a sizable downtick from February’s 57.3 reading. Earnings announcements will include Constellation Brands before the Wall Street opening.

The shifting sands of the gold and silver markets has continued into the final trading session of the week with a slight headwind this morning presented from a higher dollar and a bit of risk off psychology. We also think that gold and silver will have an initial negative knee-jerk reaction to this morning’s US March nonfarm payroll reading from physical demand concerns. However if the jump in US unemployment is really shocking that could prompt a compacted surge in prices as was seen following claims yesterday. In other words the latest focus of gold and silver has generally been classic physical commodity market demand views and yesterday’s optimism has reversed course this morning and should be challenged further. However this week has seen a series of strong demand headlines from both the Australian and US Mints which have seen strong demand for gold and silver coins and bars. In Australia the Mint reported March gold sales of 93,775 ounces versus only 22,921 ounces in the prior month with silver March demand at 1.73 million ounces versus a mere 605,634 ounces in the February. Gold ETF’s also added to holdings for the 9th straight day with 149,813 ounces purchased bringing the year to date purchases close to 8 million ounces. The US Mint saw the fastest purchasing pace in 3 years in March with the purchase of 142,000 American Eagle coins and that in turn has ramped up the premium of coins over the price of gold! Unfortunately silver ETF’s saw a 2nd straight day of reduction in holdings and that brought down purchases on the year to 41.2 million ounces. However it should be noted that the global annual silver deficit in 2018 was only 30 million ounces and therefore the year to date purchases by silver ETF’s are still very material to prices. While Bloomberg is suggesting gold will see support from news that gold refineries in Switzerland are set to restart operations after being idled for 2 weeks, we are suspicious of the claim that dealers have not placed large orders because of those shutdowns and will now place those orders. Another story that we are suspicious of has been talk that demand in North America and Europe has called into question the availability of getting physical gold bars from New York but there are signs that buyers are scrambling to secure supply from Australia. Storage facilities in New York have made it clear their operations will not be disrupted and that they hold more than enough supply to meet demand. Going forward gold and silver will continue to battle the entrenched threat against cyclical/physical demand with that pressure periodically overcome by surges in investment demand. Therefore we give the bear camp an edge today with support/target levels seen at $1612.40 and $1609. Surprisingly the downward bias in silver is not as clear as in the gold market to start today but slight erosion in prices is possible with targeting seen down at $14.34 and then down at $14.26.

The palladium market damaged its charts yesterday and failed to get a physical commodity market lift and that has to be disconcerting to the bull camp. However, trading volume in palladium futures has slowed to a minor trickle with barely 1,000 contracts traded on Thursday and that could make it difficult for the market to attract enough buying interest to ignite another major run as was seen from the March lows. It should also be noted that recent open interest in palladium has declined to just 7,600 contracts compared to the 2020 high of 26,000 contracts, and therefore the bull market might be dying of old age. On the other hand, the palladium market has traded wildly without direct fundamental cause, and those pressing the short side of the market should beware of sudden turns. In the platinum market, it is also seeing extremely low trading volume with the trade yesterday failing to post 8,000 contracts traded which is 1/7th of the trading volume seen 3 weeks ago. The platinum market has additional technical problems beyond those seen in palladium as it has consistently held a larger net spec and fund long and therefore any sign of a failure below $701.20 today could result in a weekending stop loss selling wave.

Not surprisingly the gold and silver markets are facing yet another key junction today as expectations for a historic monthly jump in US unemployment figures (and tremendous losses in nonfarm payrolls) could result in fear of physical demand losses. However like the claims report yesterday, seeing historically concerning readings from the jobs report could also inspire a wave of safe haven/speculative buying gains. In short, gold and silver face a critical junction this morning with the Bears holding a slight edge for the pre-report action and also because of ongoing favor for the dollar and US treasuries. Aggressive traders might be short early cover and get long ahead of the 730 numbers and then reverse after a post jobs report rally.

Silver closed down $0.16 at $14.44.

Platinum closed down $11.90 at $714.10 and palladium closed down $15.70 at $2134.50.   

We appreciate your friendship and business. More blessings and thanks for reading.           

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.

Posted on

Gold – What’s Next?

Gold – What’s Next? 

Commentary for Friday, March 27, 2020 (www.golddealer.com) – Gold closed down $26.20 today at $1623.90. It closed Monday of this week at $1567.00 so in the past 5 trading days we are up $56.90. You can see price volatility still rules. Most already know that LA Country has closed our walk-in traffic. We continue to buy and sell over the phone and through the mail. Also consider an email (info@golddealer.com) and include your phone number. Hours for now are 9:00 to 4:00 for which gives the employees time to catch up on paperwork before going home.  

Premiums on ordinary bullion coins and bars are silly and only reflect the reality of buying popular items on the secondary market because private and world mints are either shut down or behind in their production schedules. Higher premiums are a reality of the free market is better than no market because it gives you options.

If you must have the product or are afraid future prices may be higher just pay the price and don’t worry too much about it. If you are right, you will be laughing all the way to the bank if they remain in business. If you just can’t get your head around temporary significant premiums simply pass and wait for better opportunities – they always appear sooner or later.

If you are curious as to what most people are doing, it’s straight forward – they are buying anything that is available even at these prices and that is why major dealers quickly sell out.

How long will this last is a good question? The reason dealers do not like to speculate about “how long” is because there are many variables. For example, how long will the mint be closed? Or when mint production gets up to speed will the typical transit system hold up delivery?

So, it makes sense to understand that these unusual conditions will last until the US Mint begins to deliver the backlog of paid orders large dealers already have in place. When that happens premiums will drop like a rock and we will be back to sensible trading.

Here is a real time example. Yesterday I could buy new silver 1-ounce rounds from a reliable private manufacturer at a stiff premium under the following conditions. Minimum order size – wire the funds in advance – promised delivery 2 months out. This is typical and I took the deal!

As far as gold’s pricing pattern, the 30-day picture remains the most interesting. A month ago, gold was trading at $1650.00 and by mid-March had dropped to less than $1500.00 in what was most likely a liquidation pushed by the need for immediate cash as stocks tanked.

At that time, it looked like the longer term $1500.00 support line would hold up as the FOMC massively increased cash liquidity in the hope of stabilizing the US economy.

And just when traders thought it was safe to come out from under the bed gold bounced dramatically higher moving towards $1650.00. I think this crazy swing created a short squeeze which surprised everyone. And this short squeeze is still the reason most popular bullion products are in short supply. Manufactures cannot find enough raw material to satisfy demand. And continued public demand for what remains available keeps premiums high.

From a strategy standpoint I would discount the “doom and gloom” forecast by those who seem to thrive on the Armageddon scenarios. Are we in trouble – you bet – but our economy is ready to bounce back when solutions are in place and the public is reassured. 

As far as gold’s pricing in the short to medium term – I think prices will remain very choppy. Swings of $50.00 or more, perhaps daily will become common. And be careful of those who claim a short-term bottom is in place. This situation is clearly unstable which does favor the bullish scenario but that does not mean gold will make all-time highs overnight.

The reasoning is simple – the world still does not fully understand the ramifications and long-term changes (if any) that might be brought about because of this coronavirus. It is this uncertainty that creates large swings in the metals. Even just the promise of a vaccine will settle this market down quickly. It is still the longer-term inflationary consequences from massive cash infusions seen now around the world that will eventually push gold to all-time highs.           

This from Zaner (Chaicago) – “Global equity markets overnight were mixed with Chinese markets up fractionally, the Japanese market up 4.3% and the rest of the world posting declines from 2% and a 5% decline in Australia. Overnight economic news included Japanese consumer prices which were in positive territory but were softer than expectations. From Europe French March consumer confidence surprisingly was better than expected but slightly below February. From Italy, business confidence readings for March came in softer than expectations and more than 10 full points below the prior month. Also from Italy consumer confidence for March came in better than expected but still nearly 11 points below February! The North American session will start out with US February personal income which is expected to have a modest downtick from January’s 0.6% reading. February personal spending is forecast to hold steady with January’s 0.2% reading. A monthly private survey of March consumer sentiment is expected to have a moderate decline from the previous 95.9 reading. Atlanta Fed President Bostic will speak during afternoon US trading hours.

The gold market has started out under pressure with the entire overnight trading range in negative territory. While we doubt renewed strength in the dollar is the primary pressure behind the initial weakness in gold that combined with a revival of physical demand fears (due to worsening US infection rates and lower global equity market action) has resulted in a poor start to the last day of the trading week. We see the potential for key decision in gold today as the market might have to decide whether it is a physical commodity facing the ebb and flow of classic demand, or if it is a safe haven instrument that would appear to be facing another serious spike in market anxiety into what could be a very significant weekend for the virus situation. On the other hand, it appears as if gold has at times managed to shift its focus between safe haven and physical commodity status and forge gains, therefore we would not take the early action today as a signal of the day’s trend. In fact even with the retrenchment from this week’s highs over the prior two trading sessions, gold is still capable of posting the biggest weekly gain since the subprime crisis. While not a near term definitive impact on supply further mines have been shuttered and there are reports that South African gold shipments into London have been canceled due to grounded airplanes. It should be noted that gold and silver ETF’s continue to see inflows in a fashion that signals underlying investor interest remains in place. Yesterday gold ETF’s purchased 168,519 Troy ounce equivalents bringing this year’s net purchases to 6.15 million ounces for the 4th straight day of inflows. The investment flow into gold is given an added twist with SPDR Gold seeing very significant inflows over the last 4 days and the fund is likely to post the largest weekly percentage gain in over 10 years. The holdings by SPDR gold shares are nearing the psychological 1,000 ton level with the all-time high posted back in 2012 at 1,350 tons. Silver ETF’s added 1.84 million ounces to their holdings bringing the net purchases this year to 29.3 million ounces and that was also the 4th straight day of inflows. Traders should take note that net purchases on the year by silver ETF’s would have effectively doubled the world supply/demand balance deficit seen in 2018! We see buying support at $1,602 in June gold with the market vulnerable to aggressive liquidation. However we still expect to see new contract highs next week and a possible test of $1,720. As for the silver market the bull camp has to be very discouraged in the markets action but disastrous US jobs related data on Thursday is problematic for industrial commodities like silver and copper.

While we suspect that the PGM markets are likely to trade off forces other than classic fundamentals (as they have for the last year) the trade is presented with a slight negative following news from Anglo-American that they will attempt to keep most of their South African mines operating. However Glencore has indicated it is closing operations on 2 different continents but that is offset by an ongoing pattern of platinum and palladium ETF liquidations. In fact, the palladium ETF liquidation yesterday was the 11th straight day of liquidations. Certainly the futures markets are of a different mind than investors in ETF’s as palladium continues to hold a scorching rally of $683 an ounce for this week. However the North American auto industry will remain idle for several more weeks, while Europe and India’s auto industries are also shutting down and that will continue to have a negative impact on physical demand prospects over that timeframe.

We have to give the edge to the bear camp in the precious metals markets to start the last trading session of the week particularly with gold performing poorly since this week’s highs and the market seemingly discounting what feels like an anxious condition into the end of the trading week. Critical support in April gold is seen at $1615.20 with a significant failure seen with the inability to hold $1611 today. Traders should expect big pivots for the gold market today on the opening of the NYSE and then again in the last hour of trade as the market sees positioning for the weekend which will likely accumulate a number of major virus headlines for what could be a wild Sunday evening opening trade.”

Silver closed down $0.14 at $14.50.

Platinum closed up $3.00 at $740.00 and palladium closed down $29.40 at $2226.80.  

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