Daily Gold Newsletter Archives

Posted on June 11, 2021 by Richard

Gold – Narrow Ranges/Mixed Sentiment

Commentary for Friday, June 11, 2021 (www.golddealer.com) – Gold closed down $16.80 at $1877.40 and silver closed up $0.11 at $28.13. Last week’s volatility in both gold and silver has been replaced with tight trading ranges this week. Most likely because trading conversation has been split over shorter term direction. The possibility of the Fed “tapering” seems to be losing steam. Yet pandemic news, while upbeat, may present a mixed bag supporting gold with new variants affecting China, India and now the UK. The physical market remains active and yet gold pricing has turned flat since mid-May trading between $1880.00 and $1900.00. So, bargain hunters are still in place. Year over year gold is higher by $150.00. Last Friday gold closed at $1889.80 / silver at $27.88 – on the week gold lost $12.40 and silver is up $0.25.

The good news is that delivery on 2021 US Gold and Silver Eagles is getting better (still not “normal” but improving). And we are finally receiving early .9999 fine silver round orders. The bad news is that “any new orders” are still 4 to 8 weeks coming from the manufacturer. My guess, however, is that delays will soon shorten.

Should you decide to use our Delayed Delivery Program please talk with your service rep and understand how this program works. It is handy if you want to lock in the price “now” and insist on new product – but is not for everyone. Just like us – you must pay upfront to “lock in” prices and you can’t “change” your mind. So, unless God has blessed you with patience, please ask your rep for other options and thank you for your understanding.

This past Monday gold opened quietly with a slight downward drift, but traders eventually bought the weakness, and it finished the first day of the week in the green. This most likely because the Dollar Index came off Friday’s highs (90.5) and is now trading considerably lower (89.2). Reuters claims gold is listless because investors are waiting on inflation data this week and perhaps a clearer picture as to what the Fed intends to do with interest rates.

Treasury Secretary Yellen said over the weekend that Biden should push press forward on his now $4 trillion dollar infrastructure bill even if it does produce inflation. China has increased their gold reserves by 7.5% month over month and increased their reserves 10% this past year.

Still the fear of both rising interest rates and treasury yields may cap significant gains in the metals until the inflation picture comes into focus. For now, we have the classic standoff between the Federal Reserve and the financial community.

The Fed has done a good job at balancing monstrous pandemic spending considering the world’s economic system has never been so exposed. But there are many cross currents with the present situation. Can the Fed unwind without creating a turbulent stock market? Has federal largess created more permanent dependency? Is the inflation genie already out of the bottle?

At the center of this discussion is the possibility of FOMC “tapering”. Meaning when will they begin to turn the financial spigot off? “Keep in mind, that the Federal Reserve chairman indicated that they would begin to discuss tapering after “several” robust gains in non-farm payroll readings. Therefore, the Fed discussions of tapering are pushed further into the future and gold and silver should see one less headwind”. (Zaner)

There is something to the argument that gold at $1900.00 has developed an affordability perception. But this is only because the inflation argument has not sufficiently developed. If inflation continues down its current path this pricing issue will go out the window. Gold still holds a sold 9-week up trend but needs to develop fresh buzz to push above $1900.00. Today gold closed up $7.00 at $1896.80 and silver closed up $0.12 at $28.00. Sleepy but interesting.

On Tuesday gold flirted with $1900.00 in the European trade, but domestically it was choppy and pensive. First, pushing towards $1905.00 – then selling off to $1885.00 before a modest recovery and finishing slightly in the red for the day. This looks like the paper trade is testing both sides of the aisle for weakness or strength. Reuters notes – look for a focus on US inflation data, the ECB policy meet on Thursday and SPDR Gold Trust ETF holding falling by 0.6%.

The Dollar Index holding above 90.00 contributes to this jitteriness – although the index is flattening out. On the other hand, Treasury yields are slipping which of helps the bullish gold scenario because it hints that the paper trade believes the Fed will not soon taper. “It’s a tug of war between bulls and bears (for gold) at the 1,900 level,” Phillip Streible, chief market strategist at Blue Line Futures in Chicago, said, noting that declining bond yields are the “best” near-term tailwind, while the strengthening dollar and equities are headwinds.”

“A development that might provide support to gold was seen from the London Bullion Market Association overnight with their analysis indicating that gold vault holdings reached a value of $580.1 billion, with silver’s vault holdings rising for the 9th straight month to 36,440. An additional underpin for gold and silver prices is seen from a rising chorus of inflationary projections with both Chinese and US monthly inflation readings to be released directly ahead and many indicate that is the driving force behind the increase in physical gold holdings as measured by the London bullion exchange.” (Zaner)

I think no one wants to really argue with gold’s positive technical picture but at the same time these higher levels present a solid deck of overhead resistance. So, both the bullish and bearish trade are searching for fresh news which might offer confirmation of their views. On the day gold closed down $4.60 at $1892.20 and silver closed down $0.28 at $27.72.

The gold pricing for Wednesday drifted lower in the European trade but pushed back into the green domestically as traders bought the dip. Still the numbers do not impress considering that the Dollar Index has again dipped below 90.00 and Treasury yields are at monthly lows. There could be some buzz created over Thursday’s European Bank meeting as everyone will be listening for “inflation talk” and anticipating monetary policy adjustment – if any.

“Apparently, a lack of definitive direction from the dollar has allowed currency related selling of gold and silver, but it is also possible that a 12% gain in Indian gold prices in terms of the rupee is discouraging gold demand in India. As-a-consequence, Indian gold prices have traded at a discount to world pricing, which is not surprising considering that India remains under significant lockdown due to its ongoing infection problem.” (Zaner)

I think traders respect this market but without a significant change in the bullish or bearish scenario will look for tight trading ranges. Challenges of higher numbers have been met with liquidation selling. Still, any real weakness attracts bargain hunters. The reason this dynamic is so difficult to shake is because each side makes a reasonable short-term argument.

At the same time, the Fed’s colossal spending spree may foreshadow real problems. While the “Armageddon Line” has not be adopted by most, a few credible sources believe current spending is so dangerous it could seriously alter or destroy our financial landscape over the next decade.

I am not a big fan of this dark scenario if you consider the economics and growth of Wall Street and e-commerce during the pandemic. We will likely walk away from this pandemic bruised yet encouraged. But this dark scenario has enough followers to keep the bullish gold core unified and expecting problems – facts or not. Most of these good people are fundamentally suspicious of government intervention in the extreme. So, for now let us keep our sails trimmed, hope for a good outcome, and prepare for at least some economic disruption. This has always been my favorite “middle ground” scenario when you are not quite sure who is telling the truth. Gold on the day closed up $1.00 at $1893.20 and silver closed up $0.27 at $27.99.

Gold trading on Thursday revisited a favorite theme. The overnight foreign market dipped (1870.00) and the domestic market bought the weakness pushing prices back into the green. The European Central Bank (ECB) kept its monetary policy unchanged which figures – they are in the same spot as the US and the Consumer Price Index rose 0.6% in May. “The key takeaway (from the inflation data) is that this market is firmly believing that the U.S. Federal Reserve is not going to change stance anytime soon and the (accommodative policy) playbook for gold remains,” said Edward Moya, senior market analyst at OANDA. Some pricing pressures remain for gold, but ultimately the belief that “runaway” inflation, which could trigger a Fed policy tightening, is unlikely and that should keep gold supported, Moya said, adding that the Fed’s policy meeting next week could act as a near-term catalyst to push gold prices higher. (Reuters).

Weekly jobless claims dropped to their lowest level in 15 months as the pandemic winds down. What will happen to gold pricing next depends on how you see this recovery. If you believe that rising inflation numbers are “transitory” – meaning they are tied to economic recovery, the idea of runaway inflation supporting higher gold prices is not in your play book. On the other hand – if you believe massive monetary expansion has created “systemic” or rising inflation which will not go away and come to plague our financial system buying the metals makes sense.

The Dollar Index remains steady around 90.00 today. One in five global central banks plan to purchase gold this year and gold ETF holdings increased yesterday. (Zaner)

I expect that bearish sentiment is not widespread because of gold’s recent technical picture. But sentiment is lagging in typical “what have you done for me lately” fashion. And safe haven demand, while steady is not “crazy” in typically slow summer months. This makes sense if you consider that trading ranges are getting closer which tends to produce a sleepy kind of trade. Platinum is now trading at an $800.00 discount to gold. The new (2021) Perth Mint platinum Kangaroos won’t last long – talk with Alex about availability. On the day gold closed up $1.00 at $1894.20 and silver closed up $0.03 at $28.02.

Gold pushed slightly above $1900.00 in overnight Hong Kong trading but saw profit taking in the London trade and continued lower in the domestic trade Friday. These profit taking rounds have become familiar as our shiny friend struggles with numbers above $1900.00. Today’s lower prices was a reaction to a rising dollar. The Dollar Index moved less than 90.00 to 90.50 in a matter of hours. I think the consensus at this point is that the trade is getting comfortable with the idea that inflation is transitory. This position is short sided, but the trade points to the fact that gold ignored both yesterday’s CPI inflation number (the largest jump in more than a decade) and the continued weakness in Treasury yields (1.44%).

This argument over the nature of “inflation” has been the dominate theme this week and its likely this discussion will continue to waver between two realities. This past month the Dollar Index has touched 90.5 on two occasions and sold off both times. So, my bet is that next week we may see some softening in the dollar with would support gold. But unless the index breaks down again at 90.00 it is likely that any short-term rallies will be met with bearish selling.

Yesterday both gold and silver ETF’s saw positive inflows. A shift in these numbers may further undermine bullish sentiment. But keep in mind significant cross winds continue to threaten both sides of the metal’s argument. Russian gold production is lagging but South African production is extraordinarily strong. At the same time consider that the pace of US growth continues to disappoint. This makes a powerful case for more Fed support and underpins gold pricing.

Still, we may be in for a quiet summer unless everyone begins to worry about rising inflation. On the day gold closed down $16.80 at $1877.40 and silver closed up $0.11 at $28.13.

Platinum closed up $5.10 at $1149.90 and palladium closed up $3.00 at $2777.70.

My Brothers and Sisters, we always thank you for your business and fellowship. If you have unusual circumstances, need cash or are looking for a special visit – talk to Harry. Many on our staff have now received the vaccine as we continue to enforce rigid safety standards between people and product. Be careful, this virus remains a danger. At the same time trust that God will soon get us back to normal. Richard Schwary

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Posted on June 4, 2021 by Richard

Gold – Volatile Uncertainty

Commentary for Friday, June 4, 2021 (www.golddealer.com) – Gold closed up $18.60 at $1889.80 and silver closed up $0.42 at $27.88. The gold market surprised to the upside today as most expected further downside action as seen on Thursday. The primary bullish driver was a weaker dollar but a slide in US factory orders and a slight miss in US non-farm payrolls helped refresh the bullish scenario. So, for now gold’s technical picture remains in the green but yesterday’s significant drop is still making this trade a bit on the heavy side. Last Friday gold closed at $1902.50 / silver at $27.99 – on the week gold lost $12.70 and silver has lost $0.11.

This past Monday was Memorial Day and US markets were closed.

Gold opened steady on Tuesday but sold off on positive economic news, an upbeat stock market after the long weekend and profit taking after this 5-month drive to higher ground. The sell-off looked at $1890.00 before traders bought the dip and the market finished the day almost unchanged. Surprisingly, the Dollar Index was marginally lower, but Treasury yields are rising as Wall Street again worries that solid economic news will embrace inflation. This may prompt the Fed to consider raising interest rates sooner than expected.

This is an old story but still carries trading weight. I think there is no chance of rising interest rates this year and perhaps even next, especially with President Biden’s massive $6 trillion dollar budget still in the works. Also keep in mind that other world central banks may not have this option if economic recoveries are poor. So, the Fed will watch other banks carefully and hope all fiat currencies move in the right direction (lower). Raising US rates will make America less competitive, hurt this Wall Street run, and make paying back massive debt more difficult. The Fed’s balancing act is not coming to end as the pandemic fades – it becomes more important.

Zaner (Chicago) – “While the August gold contract did not hold the upside breakout initially the market did forge the highest trade since January 7th and should be supported as a result of initial weakness in the dollar and surging crude oil prices. In fact, crude oil prices with the overnight rally reached up to the highest level since October of 2018 and that smacks-of-inflation especially when combined with surging grain prices. We suspect that gold and silver garnered some lift from favorable Chinese PMI readings which in turn prompted economists to suggest that exports from China will continue to propel their economy forward. Both gold and silver ETF holdings increased in the last trading session documented, but gold holdings on the year have declined 5.6%, while silver holdings on the year have gained 5.5%. From a technical perspective, the gold market came away from the month of May with the strongest gain in 10 months and the market continues to display positive follow-through momentum. In a surprising development, gold and silver prices in India ticked higher from improved spot demand but also because recent price gains have sparked fresh interest in both gold and silver prices before they become more inflated.” On the day gold closed up $0.40 at $1902.90 and silver up $0.09 at $28.08.

The gold pricing for Wednesday was tight in overnight trading but developed a small upward bias in the domestic trade. This may be a traditional pause in pricing in that for now numbers above $1900.00 present great overhead resistance. But the technical picture remains solid, and I think this good news overrides trader caution at least for the present. With the Dollar Index moving again above 90.00 this morning I would expect sluggish gold pricing.

This from Zaner (Chicago) – “The gold and silver markets start the Wednesday trade under moderate pressure, with strength in the dollar likely providing the brunt of the weakness. On the other hand, the markets overnight saw a slight uptick in US treasury yields and a significant decline in Perth mint gold sales in a possible sign that pricing near $1900 might be discouraging retail demand. On the other hand, European Producer prices came with a gain of 1% which should contribute to inflationary support of the precious metal markets. In fact, energy and grain prices overnight remain very strong adding to the interest in inflation sensitive instruments from the food sector. In other words, outside market forces continue to signal the chance for inflation, at-the-same-time that other scheduled price readings like ISM manufacturing prices paid and the PCE from last week continue to register their own form of inflation. While gold ETF holdings yesterday increased by 179,811 ounces silver ETF holdings were reduced by 131,938 ounces.”

Some analysts are saying the slowdown in gold sales from the Perth Mint is indicative of consumer resistance to $1900.00 gold. I wonder, the Perth Mint has set records for months of recent production and we have no trouble selling physical gold bullion coming across our counter. Still, the pricing territory above $1900.00 introduces the possibility of an all-time high challenge not seen since August of last year. So, some trepidation is to be expected. Gold on the day closed up $4.60 at $1907.50 and silver closed up $0.11 at $28.19.

Gold on Thursday broke down in early trading over several factors, some of which were foreshadowed earlier in the week. The ADP payroll numbers were the beginning of the bad news – employers significantly beat expectations hiring with both hands. At the same time the Dollar Index soared moving higher by half a point (90.45). The ISM nonmanufacturing Purchasing Managers Index came in hot (64%) suggesting solid economic growth. And finally, gold Exchange Traded Funds sold off yesterday suggesting a lack of longer-term conviction.

As gold’s bullish trend cooled, paper traders took profits and moved to the sidelines testing support at $1870.00. The problem with this breakdown is that gold moved through short term support at $1880.00 so computer models will now consider $1840.00.

The premise of lower gold prices is based on the Fed’s response to growing inflation. If the FOMC once again stands pat and does not at least threaten to use some of its inflation fighting tools traders will likely buy this dip and this standoff will continue.

Still today is a great example of what I have recently suggested. Gold moving back to all-time highs will be challenging and test conviction. However – such roadblocks in this still developing story are good for the metals. They will pare down the bullish sentiment, get rid of weak hands and leave a more committed core in this country and in the rest of the world. Gold and silver bullion have never been a choice of the majority – for that to happen the dollar would have to collapse and that serves no one’s interest. For now, ignore the “noise”, buy weakness, and watch the inflation numbers – like everyone else. Tomorrow’s employment numbers may also add to this turbulence so buckle up – but enjoy the ride as pandemic numbers continue to decrease! On the day gold closed down $36.30 at $1871.20 and silver closed down $0.73 at $27.46.

Gold opened flat on Friday but soon rebounded from two-week lows after the created jobs number missed for last month and the dollar weakened. Those hiding under the bed from yesterday’s drop will welcome this “relief” rally and look for more bullish news next week.

While today’s jump in the price of gold is modest – it is psychologically important. It provides a needed boost to the short-term technical picture. The weaker dollar makes gold more affordable to holders of other currencies, while the 10-year yields also move lower. “Part of what we’re seeing in terms of the strength in gold are inflation expectations and those are partly based on the stronger economic data, like higher jobs growth, broader recovery in the U.S., parts of Europe and China is still doing well,” said Jeffrey Christian, managing partner of CPM Group. “Gold prices will probably continue to trade between $1,855 and $1,920 an ounce levels.” (Reuters).

The jobs miss is an overreaction – it was only mildly off. But this suggests an underlying credibility problem with the Fed. It was still a miss – so it once again introduces the idea that they still have a developing mess on their hands and raising interest rates would make matters worse. At this point I think Christian’s viewpoint is the most playable lie – look for moderation within recent trading limits. This implies gold has solid recent support below $1900.00 (traders buying the dip theory). At the same time the middle ground allows the paper trade to take profits on rallies (a long-standing trend). Finally, keep in mind even with these crosscurrents gold still threatens all-time highs and is in the green $100.00 this past month.

On the day gold closed up $18.60 at $1889.80 and silver closed up $0.42 at $27.88.

Platinum closed up $1.90 at $1163.20 and palladium closed up $15.20 at $$2837.90.

Posted on May 28, 2021 by Richard

Gold – Fresh Inflation News?

Commentary for Friday, May 28, 2021 (www.golddealer.com) – Gold closed up $6.80 at $1902.50 and silver closed up $0.07 at $27.99. The gold trade finished the week choppy, but firm as fresh inflation news supports the still in place bullish trend. I suspect volatile price swings as the summer progresses but for now there is a new enthusiasm in both the paper and physical trade. Based on the reality that the Fed will be patient to action – inflation or not.

This is a position they espoused months ago but few took them seriously because at that time inflation was not as issue. As long as the FOMC keeps interest rates low and continues to buy bonds gold should hold its footing waiting for these dynamics to shift. Turbulence, one way or the other, will likely be initiated by the dollar.

The Dollar Index lost 10% of its value this past year but could bounce back given strong economic numbers coming out of the pandemic. Still there are many who believe the inflation genie is out of the bottle so the bullish scenario gains momentum. Last Friday gold closed at $1876.70 / silver at $27.47 – on the week gold was higher by $25.80 and silver up by $0.52.

A friendly reminder that we will be closed Monday for Memorial Day. As we salute and honor those who have died in the performance of their military duties.

Gold on Monday opened choppy but firm as the Dollar Index dipped below 90.00 as traders once again consider another run at last week’s 4 ½ week highs. Technically these numbers are encouraging as gold moves above its 200-day moving average and bond yields remain tame. I think traders are off to the races this week with a lighter step and expectation.

Continued inflation worries, economic uncertainty and India’s COVID-19 tragedy underpin this market – so traders expect another shot at $1900.00+ gold – perhaps even this week. People selling cryptocurrencies and buying gold continues with support from recent CNBC coverage and the news that Hong Kong will restrict crypto exchanges to professional investors.

I would however argue for some caution here for four reasons. First, the Chinese are worried about rising industrial material prices. If they intervene it could dampen this growing metal’s enthusiasm. Second, the dollar is famous for comebacks. Three, the possibility of a dramatic economic recovery as the pandemic wanes weighs on the price of gold on the shorter term. And four, Bitcoin is up 15% this morning so its relationship to gold remains questionable.

Watch the dollar/inflation news for gold’s short-term direction. The Dollar Index has lost 10% of its value this past year. This past month gold is up $100.00 but the index will likely have to make new lows to continue the run. Still, our growing debt makes the best case for gold appreciation. On the day gold closed up $7.90 at $1884.60 and silver closed up $0.42 at $27.89.

Gold opening flat on Tuesday but jumped higher in later trading as the Dollar Index made fresh daily lows (89.55) as Treasury yields slid to 11-day lows. There are other distractions – new homes sales fell 6% and there appears to be conflicting news about consumer confidence. Most remain optimistic on the state of the economy at the present but are beginning to worry about the future. Perhaps this is the result of the growing inflation concern even though the Fed assures everyone that current jumps in specific commodity prices are the result of transitory forces within the economy and are not growing inflationary trends.

This from Reuters – “Gold should benefit directly from suggestions that the Fed will stick with its ultra-expansionary monetary policy, and indirectly via the weak dollar, said Commerzbank analyst Daniel Briesemann in a note. Fed Board Governor Lael Brainard and other officials in separate remarks all backed the U.S. central bank’s current easy monetary policy view. The dollar hit 4 ½ month lows, making gold less expensive for holders of other currencies. Gold could receive support from higher Chinese physical demand if China has been importing more gold from Switzerland and Hong Kong due to commercial banks there being granted higher import quotas for April and May, Briesemann added.”

Gold’s technical picture continues positive, both gold and silver Exchange Traded Funds are moving higher and there is an expectation that inflation will steady or underpin current trading ranges. But gold must still move above $1900.00 with conviction – this is no small order.

I expect this fight for higher ground will turn into an old-fashioned slugfest as they used to say when I was a kid. Especially if the Fed is right about inflation trends or the dollar does not cooperate. Keep your powder dry and let us see how this 4 ½ month peak resolves growing cross currents. On the day gold up $13.50 at $1898.10 and silver closed up $0.15 at $28.04.

The gold pricing for Wednesday was firm despite a rising Dollar Index. The bull trade should also be encouraged that gold has held up after the Chinese overnight took the first steps to quell speculative trading in commodities according to Zaner. Today’s action above $1900.00 is not spectacular but few expected fireworks at these 5-month highs.

Not many would dare short this market because the psychological picture now favors the stronger bullish scenario. And the technical picture continues to improve – a big plus.

But traders are by nature cautious and always suspect a Greek gift so it’s likely the paper trade will tiptoe around these encouraging numbers. But keep a sharp eye out for any change in the wind. Like I have been saying – moving higher in both gold and silver will bring perhaps dramatic price changes – one way or the other.

But for now, the metals continue to breath fresh air – and real enthusiasm.

This from Reuters – “Gold prices firmed above the key $1,900 level on Wednesday, boosted by weaker U.S. Treasury yields and expectations that the U.S. Federal Reserve will maintain a dovish monetary policy stance. “Some of the economic data has been slowing down, and that’s likely to keep Treasury yields grounded, which has been the primary driver in sending gold prices higher,” said Edward Moya, senior market analyst at OANDA. “The market is probably going to have to deal with a slight rebound in the dollar here…but we are still going to see gold prices continue to rise and $1,950 level seems like a very short-term goal.” Gold on the day closed up a modest $3.20 at $1901.30 but moved down $7.00 in the aftermarket which might suggest a rather pensive mood. Silver closed down $0.19 at $27.85.

Gold on Thursday drifted lower in a mild round of profit taking, prompted by upbeat US economic data, rising Treasury yields and a Dollar Index which has moved from 89.60 through 90.00 since yesterday. Price weakness in other commodities many also be a contributing factor in that this diminishes the rising inflation argument. And finally, some believe the gold market may now be overbought because this higher pricing run is two months old.

I am not convinced bullish sentiment will fade easily. Everyone and their brother will be lined up to see if traders buy this dip and push prices even higher based on the inflation argument. Gold ETF inflows continue higher, and China is buying with both hands.

Still there is talk that the Chinese – now cracking down on commodity speculation – may add gold to their list – but I don’t believe the rumor.

At this point there is no reason to believe government debt worldwide will not continue to grow. If this dynamic remains in place gold’s primary bullish argument (inflation) will tag along. On the day gold closed down $5.60 at $1895.70 and silver closed up $0.07 at $27.92.

Gold pushed lower on the Friday open approaching $1880.00. But quickly reversed itself likely because the personal consumption expenditure, another key inflation index rose 3.1% year over year. So higher than expected and a confirmation of the also rising Consumer Price Index (CPI).

Keep in mind these combined figures are significantly higher than the 2% Federal Reserve target, yet the Fed refuses to reduce the pace of their bond buying program or move rates higher. This still evolving picture supports firm, perhaps even higher gold prices.

Reuters points out that investors are now eyeing the release of President Biden’s first full budget since taking office. And he will seek $6 trillion in federal spending for the 2022 fiscal year.

This from Zaner (Chicago) – “While gold and silver prices showed divergence yesterday, it appears as if inflation prospects have brightened again, with a significant surge in grain prices yesterday, an upside breakout in crude oil this morning, and analysts suggesting that China might not be able to squelch surging commodity prices. In fact, some traders are suggesting that the Chinese attempt to talk down commodities prices has backfired, with corn prices at times yesterday locking limit up! However, gold and silver are likely to remain off balance today because of the blip up in US interest rates on Thursday and from periodic strength in the Dollar.”

Still, today’s price action in gold was muted by the rising Dollar Index (90.13). So, it’s easy to see that the bullish inflation scenario is not sufficiently developed to blow through overhead resistance at the higher end of this most recent climb from $1780.00 through $1900.00. On the day gold closed up $6.80 at $1902.50 and silver closed up $0.07 at $27.99.

Silver closed today up $0.07 at $27.99. The silver trade seemed sleepy today.

Platinum closed up $3.40 at $1180.80 and palladium closed up $21.90 at $2824.20.

Posted on May 21, 2021 by Richard

Gold – Turning Choppy?

Commentary for Friday, May 21, 2021 (www.golddealer.com) – Gold closed down $5.10 at $1876.70 and silver closed down $0.58 at $27.47. Today’s gold pricing will be disappointing to the bulls – most were looking for a $1900.00 challenge. We got off to a good start but manufacturing data came in hot so traders of course revisited the idea that the Fed may be forced to soon “taper”. And gold remained in negative territory despite the third monthly drop in US existing home sales. I can’t argue with the logic, but I wonder if today’s action relates less to possible FOMC action and more to profit taking in a market which for now sees overhead resistance going back to last August as “a bridge too far”. Last Friday gold closed at $1837.90 and silver at $27.35 so on the week gold was higher by $38.80 and silver higher by $0.12.

Gold on Monday provided a good reminder to be careful about “group think”. It opened steady – pushed above $1850.00 and sold off ($1844.00) to the usual bearish chorus of “too much overhead resistance at $1850.00”. And then pushed quickly into the $1860.00 range. This most likely was just a short covering rally coupled with lower weaker Treasury yields – which does not mean much but intuitively it looks like gold wants to rally higher.

Whether it will or not likely depends on the dollar – the Dollar Index today has not been substantially weaker which supports the shorter-term bullish scenario. But for gold to really gather steam the index will have to break down at 90.00.

Reuters claims gold hit a 3 ½ month high because of the dip in US Treasury yields and persistent inflation worries. “Higher than expected (U.S.) consumer price inflation and weaker retail sales was really the potent combination for gold,” said Ole Hansen, head of commodity strategy at Saxo Bank. “Higher inflation has been the key source of inspiration for renewed demand that we have seen in gold, especially during the last couple of weeks.”

Federal Reserve Vice Chair Richard Clarida comments that the economy has not made the progress needed to begin tapering asset purchases again helps the current bullish scenario. Some veteran commentators believe the weakness in the crypto currencies is a plus for the metals.

In the last analysis gold must show strength above $1850.00 before traders will take this rally seriously but they are watching carefully as both gold and silver challenge their 200 day moving averages. On the day gold closed up $29.60 at $1867.50 and silver closed up $0.91 at $28.26.

Gold opening choppy Tuesday but quickly challenged $1875.00 before prices moved back to unchanged just as quickly. I would not say the paper trade are turning into convinced bulls, but they are closely watching now that inflation worry is at least part of the conversation.

And with this most recent uptrend in place, they will continue to test overhead resistance while at the same time keeping an eye on the dollar. It is surprising that gold did not hold earlier gains given the index dipped below 90.00 and housing starts fell as builders contend with shortage of materials and labor (MarketWatch). This must bolster inflation concerns in some, but such is the power of rising Treasury yields as traders remain suspicious of FOMC interest rate intentions.

Physical dealers are impressed with this current upward trend because they are struggling with immediate delivery of larger orders. But the most promising bullish trends for gold and silver are the downside breakout of the dollar (6-month lows) and renewed safe-haven buying in the exchange traded funds and physical market. Both metals have a steep hill to climb in moving towards old highs – so expect volatility and buy weakness if you like the inflation argument.

This from Neils Christensen (Kitco): It didn’t take much to drive hedge funds back into gold and push prices above $1800.00. Hedge funds once again see value in gold as money managers increase their bullish bets on the yellow metal and cover their bearish positions, according to the latest data from the Commodity Futures Trading Commission. The threat of rising inflation, coupled with economic uncertainty following disappointing employment numbers is prompting investors to find safe-haven assets again, analysts said. For many, gold’s push Monday to its three-month highs above the 200-day moving average means that momentum is just starting to pick up.” On the day gold closed up $0.30 at $1867.80 and silver closed up $0.05 at $28.31.

The gold pricing for Wednesday began mildly bearish moving from $1870.00 towards $1850.00 but in early trading reversed itself and surprisingly challenged $1890.00. There are several factors including wobbly stocks over inflation fears and a weaker dollar – the Dollar Index has moved lower by almost a full point since last Thursday.

There is also an interesting twist in this story as China has moved to ban the cryptocurrencies. For some time now there has been talk that these new forms of computer created money have attracted investors looking for a gold replacement. Whether this holds water or not the collapse in Bitcoin today corresponds to the spike in the price of gold. I think this jump was more of a knee-jerk reaction than anything else – but it does suggest a nervous market.

Gold’s surprising move from $1780.00 through $1890.00 this past month has refocused bullish sentiment and presents a strong short-term technical picture at this 4-month high. Still, it faces a very tough overhead battle moving towards the magic $1950.00 level we saw in August of last year. The bullish pluses – safe-haven demand is returning pushed by inflation fear and perhaps developing world turmoil. The “fear factor” is not back but we did get a taste as Bitcoin prices crumbled in early trading. For now, let us say that “growing concern” is creeping in around the edges of this financial conversation. This alone is not enough to create all-time highs on the short to medium term, but it is enough to support current trading ranges. Folks are still trying to figure out the extent of the collateral damage created by this massive relief money. Gold on the day closed up $13.50 at $1881.30 and silver closed down $0.30 at $28.01.

Gold on Thursday drifted lower in overnight markets but again pushed as high as $1880.00 domestically before settling into the $1878.00 range. The Fed minutes released yesterday suggested that some Fed officials believe it might be time to discuss “tapering” – if the recovery presented no problems. Just this discussion was enough to push Treasury yields lower this morning, but surprisingly gold trading remained passive. Still “passive” is a “plus”, under normal circumstances talking about less asset purchases would pressure gold lower.

This Reuters however suggests that economic recovery may not be as easy as hoped. “Pandemic Mindset” persists among global consumers. People in the world’s leading economies remain overwhelmingly nervous about returning to life as normal, even after having been vaccinated against COVID-19, a survey released on Thursday found.”

This from Zaner. “While it is premature to assume that gold is benefiting from the travails in bitcoin, if that relationship develops that could provide significant rotational buying interest in gold. In a very positive classic physical demand development, Chinese gold imports (according to Bloomberg) almost tripled last month from the prior month with April imports at 111,911 kg the highest reading since December 2019!”

Gold watchers believe that inflation is becoming a problem which will eventually push gold to all-time highs. But this timeline is very uncertain and dicey – coming out of this unprecedented pandemic. So, expect turbulent times and prices. At the same time, gold and silver bullion have always presented an independent insurance policy providing the slightly cynical with peace of mind. Not because the metals are infallible but because physical bullion is under their complete control. For now, that works! On the day gold closed almost unchanged up $0.50 at $1881.80 and silver was higher by $0.04 at $28.05.

Gold pushed higher on the open Friday threatening $1890.00 but reversed direction on better-than-expected manufacturing data and moved into negative territory. “The US economy saw a spectacular acceleration of growth in May, the rate of expansion of business activity soaring well above anything previously recorded in recent history as the economy continued to reopen from COVID-19 restrictions. The service sector saw an especially impressive surge in growth, beating all prior records by a wide margin, accompanied by another solid expansion of manufacturing output,” said Chris Williamson, chief business economist at IHS Markit in a statement.”

Unfortunately, this trading pattern is nothing new – information which suggests a spectacular pandemic recovery feeds the bearish gold scenario because traders begin to doubt the Fed will continue their big spending plans and begin “tapering”. I still cannot figure out why this is the case. I appreciate the worry that higher yields create but the Fed has been very clear – it will not alter their loose money course until the economy and employment have fully recovered.

So, today’s reversal is perplexing in the face of higher inflation both here and in Europe and the reality that we all have a great deal of work to do just to stay ahead of the COVID problem.

Still, these are typical problems in a financial world trying to get on its feet while the pandemic still threatens. I would not call gold pricing “stuck” at current levels. We are still technically solid short-term, central banks are adding to their gold reserves, gold and silver ETF numbers are moving higher, and the metals should draft support from problems in the crypto world.

But today’s price reversal suggests that something more decisive will have to change or gold could settle into a prolonged channel on both sides of $1800.00. We certainly have enough fundamental buzz to support $1800.00 – regrouping next week (my guess – traders will buy the dip) and taking another shot at $1900.00. But not enough to make all-time highs.

It would be easy to figure higher prices if inflation pops or the dollar breaks down but while you are waiting consider a counterintuitive idea – deflation. This idea too has been around for a long time but gets less traction these days. Deflation would create significant stock market weakness – maybe even initial weakness in gold but would eventually reinvent safe haven demand.

The David Lin (Kitco) conversation with Chris Vermeulen (TheTechnicalTraders.com) is worth noting. “Overall, the stock market, it’s lost a lot of its winds out of its sails as well. We’re seeing half of the sectors that I follow are in a downtrend. That means, the market is definitely limping along here. There’s not a lot of power behind it. If you look at the NASDAQ…it looks like it’s forming a bear leg here and could very easily head lower. Overall, the stock market to me, is in a risk-off mode. You don’t really want to be in stocks right now. Everything is turning bearish. We’re seeing gold, utilities, bonds are holding up fairly well,” he said. Vermeulen noted that when defensive assets like utilities and gold are holding up well relative to the rest of the stock market index, it means that institutional capital is rotating away from risk-on to risk-off assets.” On the day gold closed down $5.10 at $1876.70 and silver closed down $0.58 at $27.47.

Silver closed today down $0.58 at $27.47. Silver bullion business remains surprisingly steady.

Platinum closed down $35.40 at $1167.80 and palladium closed down $95.20 at $2775.30.

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 metal and rare coin markets are random and highly volatile so they 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 May 14, 2021May 14, 2021 by Richard

Gold – Inflation Interpretation?

Commentary for Friday, May 14, 2021 (www.golddealer.com) – Gold closed up $14.10 today at $1837.90 and silver also closed higher – up $0.31 at $27.35. Gold and silver trading this week seemed a bit confused – tossed about by higher inflation rates being denied by the Fed along with their assurance that interest rates would not change anytime soon. I am in the minority but probably worry too much about inflation. CNBC notes this morning that treasury yields fell after weaker retail sales missed – so the broader financial market does not seem “worried” and for the most part by the Fed explanation that “inflation” today is what CNBC commentor Mike Gallagher calls “perhaps a little bit misleading”. Last Friday gold closed at $1831.10 and silver at $27.46 so on the week gold gained $6.80 and silver gained $0.11.

Gold on Monday pushed higher on the open ($1845.00) before profit taking settled the trade as the Dollar Index reached a 2 ½ month low. These firm prices are also the result of Friday’s continued momentum as the inflation talk heats up between the public and the FOMC. As gold’s technical picture continues to improve the chart watchers expect even higher prices.

The disappointing US Jobs Report for April is given credit for today’s dollar weakness. It suggests that our pandemic and economic recovery may not be as strong as predicted and so interest rates will remain low and supportive of gold prices.

Economic pessimism is not new here folks – some asked months ago why the Fed continues to buy $120 billion in Treasury debt monthly if the anticipated recovery is in the bag.

I think most dealers are a bit too optimistic this early in the game, likely prompted by the lack of physical product. And it is true that some bullion products are simply not currently available from manufacturers. But remember there are equally good bullion replacements.

On the shorter-term gold pricing between $1850.00 and $1900.00 presents another challenge to this developing rally. And I do not expect overhead resistance to melt away – it is never that easy in the precious metals business. Especially with DOW competition setting a record high today. Gold is up $100.00 this past month so profit taking should present turbulence.

Sustained numbers above $1850.00 would require a breakdown in the dollar which is already approaching a yearly low – so not likely. To sustain higher numbers ETF and hedge fund numbers must join the party. On the day gold closed up a modest $6.40 at $1837.50 and silver closed up a sleepy $0.02 at $27.48.

Gold opening Tuesday with a positive bias but experienced the profit taking ($1840.00) I talked about Monday. The weaker dollar softened the price drop in gold and traders bought the weakness as it closed almost unchanged. I believe this positive price action is because “inflation worry” will not disappear as the Fed continues to pour money into this closed system.

This bullish sentiment however is still presented with challenges. Gold’s impressive $100.00 gain this past month is a natural for profit taking creating choppy trading weeks. And the tough overhead resistance in place since last September is worrisome. Still sentiment continues to improve. But it is not all blue sky, the case for an oversold market is in the rear-view mirror.

Reuters points out that Wall Street’s main indexes fell today on inflation fears. The notion that the Fed will tighten sooner than later as inflation fear grows has been floating around now for months. But I do not think this holds much water because pandemic concerns will override inflation fears likely into the next year.

Especially if our economic bounce back disappoints. But inflation red ink in stocks might just translate into lower gold prices which is counterintuitive but historically accurate. Just because inflation numbers begin to creep higher may not automatically translate into higher gold. You could easily see sell offs in gold to raise fast cash for margined stocks.

And the inflation scenario is subject to interpretation. The Colonial Pipeline cyber-attack is a good example. This mess began as a ransomware problem – Colonial was careless. But it turns out the shutdown created higher gas prices and shortages despite this reasonable explanation. Yet these higher prices will surely suggest to some that inflation is right around the corner.

This from Zaner – “Overnight Chinese inflation data was mixed with factory prices hot and consumer prices contracting on a month over month basis. Therefore, gold and silver missed out on an opportunity to foment inflationary conditions and provide consistent buying to precious metals. However, the inflation readings in China (like the US payroll data last week) allow for the Chinese central bank to leave rates lower for longer. On the other hand, the Chinese government has from time to time attempted to control prices and the current situation might not be any different. Yesterday gold ETF holdings increased by 45,674 ounces while silver holdings declined by 1.3 million ounces.”

For now, I think it is best to look for turbulence in stocks and the metals because money will remain historically cheap for years. The Fed’s unabridged largess in the trillions of dollars has created what academics might one day call “The Great Pandemic Speculation”. Unending cheap money which eventually led to excess, poor judgment, and crazy leveraged choices which paraded around for a long time under the guise of respectable investments.

The good news is that both gold and silver remain undervalued relative to other already inflated asset choices. And best of all people who would not normally consider the metals are in the early stages of paying attention. On the day gold closed down $1.60 at $1835.90 and silver closed up $0.18 at $27.66.

The gold pricing for today Wednesday is counterintuitive – but logical when seen from the “what will the Fed do now” standpoint. Gold opened higher – pushing towards $1850.00 waiting for the latest US consumer price data. The expected forecast according to Reuters was 3.6% but the actual number came in even hotter at 4.2%. I would have assumed much lower numbers but even the higher anomaly should have been anticipated. The Fed has been holding everyone’s hand for some time how claiming rising inflation will be “transitory”. This number however was the largest increase since 2008 and it rattled both Wall Street and the metals.

If this rise were even modest gold would have held early gains, but it was large enough (transitory or not) to once again suggest that the Fed will be forced to raise interest rates. This pushed the Dollar Index higher and took the wind out of the bullish gold price scenario.

It should be clear that the conversation about higher interest rates will not soon go away. But I think – at this stage at least – it is more academic than practical. The Fed has many ways of “tapping the brakes” on this expansion, settling the “fixation” on short term yields and talking most down from this imagined ledge. The “bigger picture” always prevails. The FOMC are masters at what they do, or the dollar would still not be the world currency of choice. There is nothing wrong with the current system as it is just stressing – not collapsing.

Anyone can argue that current US financial policy will eventually deliver damaging inflation and higher gold prices. But I have always believed that real physical gold and silver in your hand are financial essentials in a modern world – inflation or not.

Creating large sums of fiat currency does not necessarily led to immediate disaster. Japan is the poster child of this modern reality and has been using this corrupted model for decades. The result, a mountain of debt and zero growth. Still, you could argue is not a fiat currency problem, but a dilemma faced by many industrial countries as birth rates slow and the population ages.

Twenty years ago (2002) the price of gold was $300.00. During that time gold prices moved to $1800.00 in 2010 and $2000.00 in 2020. Granted the price ride was volatile and likely not for everyone but given our current slate of troubles do you think the price of gold will be higher or lower 20 years from now? This reasonable argument becomes more powerful if you appreciate that both gold and silver bullion have been real money for thousands of years. They both always represent a “stand alone” insurance policy in the unlikely case that I am wrong about how smart the Fed is at controlling its own future, and you are called upon to do that yourself. Gold on the day closed down $13.30 at $1822.60 and silver closed down $0.43 at $27.23.

Gold drifted lower on the open Thursday but bounced off the daily lows ($1810.00) and pushed towards $1825.00 as the Dollar Index flattened out and Treasury yields slowed according to Reuters. “Dips in gold remain a buying opportunity. We are in a fundamentally strong underlying condition of going through recovery in the economy along with a very low interest rate environment that creates inflationary pressures in the market,” said David Meger, director of metals trading at High Ridge Futures. “It would not be surprising to see this (gold) market pull back and consolidate a bit before the next wave to the upside.”

It is interesting that gold has not benefited much from inflation talk. Instead, old prices are almost always tied in one way or the other to dollar strength. The battle now raging between Israel and Hamas is the worst seen in this region in decades and surprisingly gold is napping.

If you consider that gold’s recent highs were created over the uncertainty and fear of a newly spreading pandemic about a year ago. And prices have been generally trending lower since the vaccine rollout, meaning the fear factor is moving lower.

The forces that created this latest $1850.00 updraft are related to the pandemic, but the price drivers are focused on a different dynamic. The massive liquidity created by the central banks used to keep world economies afloat and limit economic and human damage should create another form of fear factor – inflation. For now, however, inflation is held in check by just the threat of rising interest rates which creates a stronger dollar.

The consistent thing which creates gold and silver buzz on the short term is the physical shortage problem which remains a great conspiracy source – real or imagined. I do not see much price downside at current levels but for gold and silver to make new highs this standoff needs to be resolved. On the day gold closed up $1.20 at $1823.80 and silver down $0.19 at $27.04.

Gold pushed higher on Friday from the open as US retail sales disappoint and the Dollar Index lost a half point (90.34). The Fed downplayed an imminent rise in interest rates despite a sharp rise in inflation according to Reuters.

This from Zaner (Chicago) – “The action in the gold and silver markets continues to be confusing as the markets failed earlier in the week in the wake of the hottest monthly inflation reading in decades. On the other hand, gold and silver have consistently tracked higher in the face of softening US rates and weakness in the dollar. Surprisingly, both gold and silver ETF holdings increased yesterday but silver ETF holdings will probably finish the week with a net outflow. We suspect that the precious metals markets (and almost all the markets) are garnering lift from a chorus of optimistic Federal Reserve comments yesterday which included assurances that the Fed would not preempt inflation and instead focus on jobs. In fact, several Fed members this week have reiterated the Fed’s belief that current inflation will be transitory. Apparently, the gold market is unfazed by reports overnight that yet another key auspicious period for gold buying in India has been foiled by lockdown. For now, the bear camp is left with the potential that surging infections in India could “breakout of India” and spark another wave of infections throughout Southeast Asia. In the end, despite all the negative demand news flowing from India, a jump in trading volume on this week’s dip in prices and a lack of definitive interest in gold and silver ETFs, the markets look to finish the week on an up note. However, the weakness in the dollar is not significant and interest rates have merely ticked down slightly from 30-day highs and US retail sales could be a very key pivot point for prices early this morning.” On the day gold closed up $14.10 at $1837.90 and silver closed up $0.31 at $27.35.

Silver closed today up $0.31 at $27.35. With more rumors about big price jumps just around the corner from credible dealers. Don’t you just love the coin business – or not.

Platinum closed up $16.20 at $1220.80 and palladium closed up $30.00 at $2891.60.

Posted on May 7, 2021 by Richard

Gold – Higher and Higher?

Commentary for Friday, May 7, 2021 (www.golddealer.com) – Gold closed up $15.60 at $1831.10 and silver closed unchanged at $27.46 and silver closed unchanged at $27.46. Gold extended its late week rally today and is having its best week since November of last year after an unexpected drop in US jobs growth in April hastened a retreat in the dollar and US Treasury yields according to Reuters. I am not concerned that silver did not follow suit considering Thursday’s large jump in pricing. Physical availability of both metals is still lacking.

US jobs growth slowed in April amid labor shortages – which will get the attention of those looking for further confirmation of rising inflation. The idea here is that labor shortages suggest that employers will raise the wage ante in an effort to build their workforce in anticipation of the post pandemic recovery. Last Friday gold closed at $1767.30 and silver closed at $25.85. On the week we are up $63.80 in gold and $1.61 in silver.

Unfortunately, the delay for some bullion products is getting longer. Especially 2021 US Gold and Silver Eagles and .9999 fine silver rounds. Best guess – 4 to 8 weeks coming from the manufacturer. Should you decide to use our Delayed Delivery Program please talk with your service rep and understand how this program works. It is handy if you want to lock in the price “now” but is not for everyone. Just like us – you must pay upfront to “lock in” prices and you can’t “change” your mind. So, unless God has blessed you with patience, please ask your rep for other options and thank you for your understanding.

Gold Monday was surprisingly active in the overnight Hong Kong market. And this enthusiasm carried over into the domestic trade as gold jumped towards $1800.00. Considering last week’s action was quiet this sudden interest should get everyone’s attention and further enhance gold’s positive technical picture.

It is curious that the reasoning behind today’s 1% jump in the price of gold is not readily apparent this morning. The Dollar Index and treasury yields are somewhat lower but not enough to explain a $30.00 jump in price especially after a quiet weekend.

It is possible that persistent inflation talk has moved from something vague and out of focus to something more tangible as world central banks continue pouring fiat currency into a closed system. But this scenario has been around for more than a year and has failed to sound the alarms to date because the Fed continues to use the word “transient” when it comes to inflation.

Neils Christensen (Kitco) suggests gold might be caught in the middle of opposing views. Treasury Secretary Yellen is downplaying inflation fears as President Biden proposes nearly $6 trillion to support American families and rebuild the nation’s infrastructure. While Berkshire Hathaway’s Warren Buffet is seeing very substantial inflation.

The magnitude of India’s Covid catastrophe is overwhelming. And has depressed physical demand in that country as premiums move lower. Perhaps this tragedy has once again underlined the fear factor that drove gold to all-time highs when the pandemic was in its early stages. Yet, the World Bank is not excited about gold prospects this year but likes both silver and platinum.

Michael Matousek (US Global Investors) suggests in a Reuters comment that strong economic data can push gold higher as it means inflation will go higher. “We need to see gold get above the $1,800 level and sustain it for a little bit, and then it could be off to the races for $2,000.” His admonition about overhead resistance is important – we saw this pattern fail 2 weeks ago.

This jump in price could be a knee jerk reaction in an oversold market. Gold did settle on the close which has been typical. Or a fine example of “pile-on” paper trading in a fidgety momentum market. I agree with Matousek – look for sustaining price confirmation before making the case that this may be the beginning of an inflationary ride. On the day gold closed up $24.10 at $1791.40 and silver closed up $1.09 at $26.94.

Gold drifted lower on the opening Tuesday – reversed direction at $1780.00 and moving towards $1800.00 despite a gently rising dollar. But once again failed to break through, and finally gave up half of yesterday’s gain. This technical struggle is the main worry on the short term.

Yesterday’s notion that gold moved higher over an inflation scare is still in place but faulty in my mind. Get used to plenty of mixed signals and plenty of scenarios. Treasury Secretary Yellen’s comments about rising interest rates now seem to defy Powell’s position but were all that was necessary to rain on today’s improving technical picture. It may be more helpful to simply watch gold’s chart pattern and realize that on the short-term – uncertainty rules.

Today’s failure to move above $1800.00 does detract from the inflation scenario. Even though physical demand continues to impress as Perth Mint posted their strongest gold sales since March of 2012 and smaller operations have been backlogged for months.

Gold remains threatened by dollar strength. With US infection numbers lower the pandemic recovery looks good, consumer confidence solid, and America is eager to move on from this nightmare. All of this bodes well for dollar strength, which challenges higher gold prices.

If you are a traditionalist today’s monetary policy is a train wreck although not many would argue that such draconian measures were necessary under the pandemic. But the question remains – can the US and other central banks make this Rube Goldberg work?

My glib observation notwithstanding – the cartoonist Reuben Garrett Lucius Goldberg was also an engineer and Pulitzer prize winner. Famous for drawings which illustrate machines performing simple tasks in indirect and convoluted ways. My point – maybe Powell and his friends do not have a problem with Goldberg thinking and are proud of their convoluted but workable plan. A plan that would unwind this monster, avoid inflation, and present a happy ending. I sure hope so but would insist on a small gold insurance policy just in case. On the day gold closed down $15.60 at $1775.80 and silver closed down $0.40 at $26.54.

Gold drifted lower in early trading Wednesday but once again pushed into the green as the dollar stabilized – approaching a two-week peak. Today Yellen was busy unwinding her hawkish comments of yesterday – there is still talk among the FOMC rank and file that it may be time to consider “tapering”. This fixation on what the Fed might do remains a drag on gold prices.

It is fair to say that gold has a positive short term technical picture but is vulnerable in the absence of fresh news as the $1800.00 over resistance is formidable.

Gold ETF numbers are moving higher. Bloomberg’s recent interview with Sam Zell may be seminal. Sam is 79 years old and has been part of the “anti-gold” investing public all his life – his choices made him a billionaire. He now sees inflation reminiscent of the 1970’s in his businesses and is buying physical gold for the first time.

Still this market continues to punch at shadows – one day worrying about interest rates, the next day about rising inflation. Add to this volatile mix falling demand in India because of their pandemic disaster. Or China’s explosion of raw material prices as this manufacturing giant comes back to life and it is easy to see why gold prices remain unpredictable. Gold on the day closed up $8.30 at $1784.10 and silver closed down $0.04 at $26.50.

This is interesting from Paul Gilkes, Coin World (Apr 27, 2021) – Bullion coins WOULD BE EXEMPTED from taxation on capital gains and losses if proposed legislation is passed by Congress – Rep. Alexander X. Mooney, D-W.Va., is seeking to legislatively amend the Internal Revenue Code of 1986 to clarify that gain or loss on the sale or exchange of certain coins or bullion is exempt from recognition. On March 29, Mooney introduced H.R. 2284, which was subsequently referred to the House Ways and Means Committee for further consideration.

The proposed Monetary Metals Tax Neutrality Act of 2021 would amend the tax code by exempting from recognition any gain or loss from the sale or exchange of “gold, silver, platinum, or palladium coins minted and issued by the [Treasury] Secretary at any time, or refined gold or silver bullion, coins, bars, rounds, or ingots which are valued primarily based on their metal content and not their form.’’ If Mooney’s proposed legislation is approved by both chambers of Congress and signed into law by President Biden, “the amendments made by this section shall apply to sales or exchanges after December 31, 2021.”

Gold Thursday opened flat but surprised – pushing above $1810.00 as the Dollar Index lost half a point. MarketWatch – “The precious metal’s rise above the key price mark is “quite something for gold,” Ross Norman, chief executive officer at Metals Daily, told MarketWatch. “Over the last three weeks, it has attempted these levels five times unsuccessfully, which further reinforces the strength of the resistance level,” he said. “The key issue – the nominal 10-year Treasury yield has been edging lower and the real yield looks like it is headed back to -1% again.”

This is the kind of fresh news gold needs to rally its base. And there is no arguing with higher prices as gold is at a 10-week high and silver at a 9-week high. But keep in mind that overhead resistance is fearsome between $1800.00 and $1850.00 and then again between $1850.00 and $1900.00. To accomplish this long climb gold will need a weaker dollar (not likely during the pandemic recovery) or a real inflation scare. Inflation talk has been more of a consideration lately but is still dancing around the edges of the gold price conversation.

Is inflation a big deal or a small deal? It is always a big deal for gold but until recently has been ignored. It is now getting more attention, which obviously fuels higher speculative prices in the metals. I suppose this issue has been buried in part because today’s “inflation” is confusing in that the Fed continues to call higher prices “transitory”.

This from Zaner (Chicago) – “Unfortunately for the bull camp gold and silver have not displayed significant interest yet in inflation, but this morning lumber prices hit new all-time highs, copper prices are at 10-year highs, corn, soybeans, and wheat are at 8-year highs, soybean oil is at 13-year highs, coffee is at a 4-year high, hogs are at 7-year highs and various stock market components are at all-time highs.”

A technical or momentum price updraft like today will need a weaker dollar or inflation scare to sustain pricing. Both are possible even likely – given time. But neither is fully developed. And without these two key changes gold will be subject to large price swings both up and down. Today’s higher pricing should not be a revelation – it is just higher pricing. On the day gold closed up $31.40 at $1815.59 and silver closed up $0.96 at $27.46.

Gold on Friday again surprised as the market opened flat ($1820.00) and then jumped $20.00 pushing above $1840.00 before settling somewhat on the close in what looks like a mild round of profit taking going into the weekend. Why? A good guess would be the Bloomberg commodity index. Which has moved back to within 7% of all-time highs posted 10 years ago.

Today was not all good news for the bulls in that both gold and silver ETF outflows continue. But it is clearly punching higher and is in the position to challenge the formidable $1850.00 overhead resistance. Gold is only up $100.00 this past year but $75.00 of that has happened the past month! So, a round of profit taking should be expected – at the same time, analysts are now talking about $1900.00. Which is so typical of the metals – either everyone is “is” or “out”. This has been my experience these past 40 years, excluding old timers and real believers. These are same people we have seen for decades who always buy the dips. Next week may turn into a volatile cowboy show. But would guess there are not many “short” players left in the speculator ranks. On the day gold closed up $15.60 at $1831.10 and silver closed unchanged at $27.46.

Silver closed unchanged at $27.46.

Platinum closed down $3.20 at $1252.30 and palladium closed down $22.30 at $2929.10.

Posted on April 30, 2021 by Richard

Gold – Rangebound/Quiet

Commentary for Friday, April 30, 2021 (www.golddealer.com) – Gold closed down $0.80 at $1767.30 and silver closed down $0.20 at $25.85. Both our shiny friends look like consolidation is the best scenario going into the weekend. Rising US confidence in our economic recovery further diminishes the “fear” trade. This contributes to tight trading ranges as traders feel their way through this transition. Fresh information will be needed to move the gold market but the silver bulls are still talking “shortages” which does produce some buzz in the physical market. Last Friday gold closed at $1777.00 and silver closed at $26.08. On the week we are watching the grass grow with gold down $9.70 in gold and silver up $0.23.

Gold Monday was rangebound even through the dollar is at 7-week lows. Traders will be watching for any change in Fed monetary policy this week as the FOMC meets Tuesday and Wednesday. Fed Chair Jerome Powell will comment on Wednesday, but you are not likely to see new revelation. The Fed has already doubled down on their policy of monetary support as the pandemic winds down and inflationary spikes will be ignored as the Fed concentrates on full recovery and full employment. Gold premiums in India are moving lower as a Covid 2^nd wave decreases physical demand. President Biden is moving to help these devastated people.

The physical trade remains impressed with gold’s technical picture and is looking for $1800.00. I think this market is flattening out ($1780.00) and treasury yields will have to move lower to support prices above $1800.00. Most repeated dealer rumor (always fun) – “there is no physical silver left and food prices are about to skyrocket because corn was up limit”. Hmmm.

Reuters – Palladium, used in emissions-reducing catalysts in automobiles, has risen 19% this year. Higher prices being fueled from the prospect of a renewed supply deficit according to Commerzbank. Higher prices are the result of robust demand from the automotive industry due to tougher emissions regulations for cars with combustion engines and reduced supply. On the day gold closed up $2.20 at $1779.20 and silver closed up $0.13 at $26.21.

Gold opened surprisingly choppy Tuesday but held up even in the face of greatly improved consumer sentiment now at a 14-month high. I expect a quiet market today and tomorrow – waiting for FOMC input. The Dollar Index has remained steady between 90.75 and 91.00.

Quiet trading and tight price ranges detract from the buzz that has been in place as gold pushed from $1690.00 in March towards $1800.00 in April. So, I think there are a few short-term price influences to keep in mind. Less buzz is a minus but higher inflation numbers in China and crude oil over $60.00 is a plus for the metals. While I do not expect much from the FOMC this time around the greatly improved consumer sentiment might prompt early talk of tapering. Even though the Fed is committed to cheap money most likely through next year just the talk of tapering would pressure the metals lower on the short term.

The expectation of cheap money is widespread and so already factored into gold pricing. Reuters – StoneX / Rhona O’Connell – “The mantra of lower for longer in terms of U.S. interest rates is pretty unshakeable. So that would essentially be supportive for gold. It wouldn’t necessarily be outright bullish because that’s what the markets are expecting.” Finally, the Reddit Raiders are at it again – they have declared May 1^st – Buy Physical Silver Day – A global movement, or so they say. On the day gold closed down $1.20 at $1778.00 and silver closed up $0.20 at $26.41.

Gold drifted lower in early trading Wednesday but reversed direction and firmed at $1765.00 awaiting the big FOMC input after these markets close. So, what happened to the buzz? As usual traders continue to ignore signs of rising inflation especially in necessary commodities and improved physical demand in the Asian market. Why? An overfocus on the problems faced by the FOMC is coupled with a still developing technical picture. The result is typical in the gold trading environment. What have you done for me lately?

Early Reuters today – “Powell will attempt to portray the current rise in inflation as temporary and to dispel speculation about a withdrawal of bond purchases in the near future. It is possible then that yields will fall again this evening, allowing gold to recoup its latest losses,” Commerzbank analysts said in a note. Analysts have cut their gold price forecasts, with many believing an economic recovery could impede the metal’s return to last year’s record highs.”

What happened to the price of gold on the close? It was down $4.80 at $1773.20 and silver was down $0.33 at $26.08. As Powell explained why one good jobs report was not enough to change its powerful mandate to put the pandemic to rest and restore full employment traders bought today’s weakness, the Dollar Index lost a half point and gold recovered to $1780.00.

Now this does not mean that everything is hunky dory. Gold is still looking for its lost buzz and the threat of Fed tapering will not disappear. This fear will hinder gold prices on the short term. But it does mean that the Fed remains serious about a lose money policy. The real question has always been less straightforward. Can the Fed dance around this interest rate problem, keep Wall Street happy, continue to float their way out of this pandemic and avoid inflation?

Gold Thursday opened choppy and with good demand news from both China and Asia, but rising yields rained on the parade. So, traders heard what Powell had to say but are still suspicious and ETF outflows buried the developing buzz. Gold moved lower but traders did buy the dip around $1755.00 so this latest weakness will confirm lower consolidation, most likely between solid support at $1740.00 and solid overhead resistance at $1780.00. Yields and dollar strength will dictate gold’s short-term direction and the Dollar Index is higher by almost a half point this morning producing additional drag.

The CRB Index (Commodity Research Bureau) is higher by 20% this year and is a reliable indicator of today’s global commodity markets. Some are talking about inflation and a few are beginning to worry – but most are not yet concerned. How long this will be the case remains an open question but sooner or later this worry should grow and support longer term gold pricing.

Another “hidden” plus for the current gold scenario is the now apparent rebound in physical demand both in China and Asia. This is surprising to me because usually this market bought “value” at under $1700.00 so today’s higher interest may just be representative of rebounding demand based on the pandemic recovery.

Will traders “buy this current weakness” or take a “wait and see” attitude? This is important because a slightly negative bias is still in place. If they stand aside this negative buzz may encourage a test of short-term support. The talk of pushing through overhead resistance ($1800.00) has faded and this market is becoming defensive. Most dealers look for a challenge to old highs this year depending on how the world bounces back from this pandemic. Should the inflation scenario be embraced obviously gold does well, but we might discover there is not much downside at these prices given the amount of fiat currency floating around. On the day gold closed down $5.10 at $1768.10 and silver closed down $0.03 at $26.05. Both gold and silver made up for these losses and then some in the aftermarket.

Gold pricing on Friday was very choppy but prices remained firm even as the Dollar Index moved higher. The talk of rising inflation is creeping back into dealer commentary and the China Gold Association cited rising physical demand. While European and American demand may be heading in the wrong direction as gold ETF outflows continue. This “push-pull” is always a buzz killer and so our shiny friend looks distracted as the week ends.

Everyone will be looking at dollar strength and Treasury yields next week, and gold’s technical picture has changed from encouraging to questionable or range bound. But I like the current pricing of gold and silver because of its discount to highs.

Not that we are off this bumpy road but there are other reasons to hold metals besides the reasons you are tired of hearing about. Look at the huge rise in equities pricing for example. Not that I am bearish on stocks but there is plenty of “blue sky” in many stocks and the metals would be the “go to” remedy in the unlikely case equities get unstable.

Palladium has moved to $3000.00 because of stricter environmental rules and it has been in a structural deficit for 10 years. I would not buy palladium at all-time highs but would suggest that car makers may be forced to switch back to the cheaper platinum market which could double in price and still not be at all-time highs.

Finally, I do not think anyone knows what is going on with the silver market. There are still a few naysayers, but the Silver Institute believes prices may increase 30% this year and there is not much physical product for immediate delivery. On the day gold down $0.80 at $1767.30 and silver closed down $0.20 at $25.85.

Silver closed down $0.20 at $25.85. Producers are not minting enough product to meet demand.

Platinum closed up $7.90 at $1203.00 and palladium closed up $5.10 at $2957.70.

Posted on April 23, 2021 by Richard

Gold – Resting or Tired?

Commentary for Friday, April 23, 2021 (www.golddealer.com) – Gold closed down $4.20 today at $1777.75 and silver closed down $0.09 at $26.08. Our shiny friend closed last Friday at $1779.00 so on the week we have lost $3.25. Traders like the short-term technical picture in gold – a plus. The takeaways – prices are up $100.00 in three weeks which suggests possible profit taking and gold’s failure to move above $1800.00 on good momentum is a buzz killer. Still, I would withhold judgment and expect the fog to clear next week.

Look for bullion delays of 4+ weeks in some gold and silver products, especially 2021 gold and silver eagles from the US Mint. Should you decide to use our Delayed Delivery Program please talk with your service rep and understand how this program works. It is handy if you want to lock in the price “now” but is not for everyone. Just like us – you must pay upfront to “lock in” prices and you can’t “change” your mind. So, unless God has blessed you with patience, please ask your rep for other options. Thanks!

Gold pricing Monday was to be expected – it pushed to $1790.00 before rising Treasury yields and profit taking turned this promising attempt at $1800.00 into a red ink day for the bulls. Surprising really considering the Dollar Index was weaker by ¾ of a point! So big cross currents remain in place and price moves (higher or lower) should remain suspect. Some of today’s mild losses were the result of higher yields but I think this takes a back seat to simple profit taking.

Gold has pushed $100.00 higher from its recent low ($1680.00) these past three weeks. Granted a portion of this higher number relates to short covering but the paper trade loves to take a profit and move to the sidelines waiting for the next opportunity. So, let us see how both gold and silver settle this week now that both are in uptrends. The short-term technical picture now favors the bulls. A little chop here is instructive. It may produce a better sense of whether this latest buzz is a flash in the pan or the real thing. Will the traders “sell into this rally” or “buy the dip”?

John Miles (Zaner) – “With soaring lumber prices catching daily international attention, extreme volatility overnight in crypto currencies, grain prices hitting 8-year highs and the Fed still promising to hold rates down in the face of inflation, we have a-very-unique historical situation. In fact, upside breakout action in gold to start the new trading week be a sign the markets have thrown off what has been sloppy and anemic action. In our opinion, we have not seen so many signs of inflation in our 36 years of analysis. Standard inflation measures world-wide are flaring (PPI and CPI indices) and industrial material prices surging fundamentals and technical momentum should fuel prices sharply higher While the impact might not be immediate, news that China will now allow domestic and foreign banks to import large amounts of gold, is a potential major driving force for gold. It is difficult to determine how much gold the Chinese central bank holds, but for them to bring their central bank gold reserves up near the level of the US (Aug 2020 8,134 tons), Chinese gold holdings (Aug 2020 1,948 tons) would have to quadruple. In a bullish technical development last week’s rally was forged on rising open interest and we suspect that will be followed by a reversal in money flows back toward gold and silver ETFs. It is also possible that classic fund managers will be moving into gold, especially in-the-event that equities rise further and the initial waves of the inflation spiral.” On the day gold closed down $9.60 at $1769.40 and silver closed down $0.27 at $25.83.

Gold opened surprisingly choppy Tuesday considering the Dollar Index remains left footed around 91.00 and Treasury yields have stalled. Gold’s modest technical edge remains in place but considering the dollar is at 7-week lows I would have expected more bullish enthusiasm. Still positive gold sentiment continues to improve but price performance this week remains lackluster considering Chinese gold imports hit a 14-month high in March. The plus today however is that traders finally bought the dip late in the trading day.

John Miles (Zaner) – “China announced they would allow large banks and financial institutions to import large quantities of gold as that policy change “opens up” China to the type of “wild West” import capacity seen in a very long list of physical commodities over the last several years! In the past, China only allowed gold imports to the mainland from Hong Kong, with that policy altered several years ago to include 3 mainland China import cities. It is possible that an unfolding disaster in India from the virus is scaring away traders and investors from gold, as Indian gold imports in good years approaches demand levels seen in China. On the other hand, Chinese gold imports surpassed Indian gold imports for the first time ever in 2012 and since then China has consistently consumed 150 tons more gold than India. The PBOC has not indicated its desire to have its gold holdings on a par with the US but given their desire to be “number one” and given their rapidly expanding import pace of goods and services, it would make sense for them to raise gold holdings closer to US holdings. For China to raise its central bank gold holdings to the vicinity of US central bank holdings would require a quadrupling of current holdings. Fortunately for the bull camp, the gold trade has not been overly focused on physical demand with the market instead alternating between interest rates, currency and reflation issues.”

The Dollar Index has lost 2 full points these past three weeks – moving from 93.00 through 91.00. This created positive buzz but at the same time gold failed to move above tough overhead resistance at $1800.00 even with significant short-term momentum. Today’s close sets up another attempt. Standing in the way is the perhaps oversold Dollar Index. Should the dollar index firm – gold pricing would likely consolidate. Fresh news from a change in either Treasury yields, or physical demand would then dictate direction. On the day gold closed up $7.90 at $1777.30 and silver closed up $0.01 at $25.84.

Gold opened choppy Wednesday but quickly pushed again towards $1800.00. I was right about the dollar being oversold but wrong about its ability to cap recent bullish sentiment. Gold was stronger today because Treasury yields were weaker (a sign that traders believe the Fed will ignore possible inflation and favor the continued liquidity needed to insure there is no pause in US goals of full economic recovery and employment). And gold ETF outflows are reversing themselves possibly because of weaker equities. Another reason for firm gold prices is more threatening – perhaps early signs of safe haven demand – as fear mounts over surging coronavirus cases in other parts of the world.

Still traders will measure the newfound strength in gold solely by its ability to push above $1800.00. Should that happen, the heavy lifting continues because the resistance between $1800.00 and $1850.00 is another technical challenge. This “bullish” happiness will also be regularly challenged as “profit taking” keeps everyone honest. So, keep your investment eyes on the bigger, inflation picture and not the day-to-day figures.

There are plenty of rational reasons to own gold or silver bullion today but consider adding this fledgling idea to your growing list. In the process, have a good laugh when realizing how creative our government is becoming at controlling what you do with your own money.

He believes US currency should include a digital tracking device so the US can tax private possession of dollar bills. The longer you hold currency without depositing it in a bank account, the less that currency will be worth. His proposal will give greenbacks automatic expiration dates. The redesigned magnetic strip would record when a bill was last withdrawn from the banking system. A carry tax could then be deducted from each bill upon deposit according to how long the bill was out of circulation. Most metals dealers might like this idea because anyone sitting on cash would convert to gold or silver bullion overnight! On the day gold closed up $15.00 at $1792.30 and silver closed up $0.73 at $26.57.

Gold Thursday opened weaker and trended mildly lower as gold continues to struggle with substantial overhead resistance at $1800.00. It figures that traders are taking profits at this 2-month peak and it will be interesting to see when they will buy the dip.

John Miles (Zaner) – “From a short-term perspective gold appears to have paused just under psychological/even number pricing of $1800 early on but classic bullish longer-term fundamental demand signals are beginning to surface. While not significant global central banks are showing signs of building their reserves with the central bank of Hungary this year already adding over 60 metric tons to their holdings. According to the IMF in February Japan, Turkey, Czech Republic, and Uzbekistan added to their gold reserves, while India and the UAE added to their reserves in January.”

It is true that significant buzz has returned to these markets, but sentiment during these uncertain times can quickly refocus. Obviously, gold is fueled by inflation fears and bargain hunting at recent lows. But fears are not the same as tangle rising inflation numbers which could remain missing in action until the first quarter of next year so expect a bumpy ride.

The silver market is different type of investment play. Its current price is half all-time highs, so the value case is easy to make. President Joe’s “go big” agenda makes the greens happy, and silver plays an important environmental part in that almost certain roll out.

There has always been suspicion as to what exactly is going on with silver futures and while I discounted this argument for years I am now beginning to wonder. It is also hard to explain why silver bullion production is still behind the demand curve. So, while the buzz in the silver market comes and goes, there is more than enough conspiracy to keep everyone interested.

Finally, silver’s price is so low it can attract the entire world regardless of economic circumstances. Anyone interested can get started. This creates a massive and still untested potential which has always been one of silver’s most fundamental reasons for ownership. On the day gold closed down $11.10 at $1781.20 and silver closed down $0.40 at $26.17.

Gold pricing on Friday was a classic example of how quickly bullish sentiment can fade and traders sell the rally. Why? Economic data was stellar – which leads to the old conclusion that gold will no longer be necessary post Covid. Gold opened firm – moving toward $1800.00 and as traders thought about the explosion in new home sales gold and joy reversed as our shiny friend dropped $20.00 an ounce and the bears roared. Good economic data should not be a surprise – what would you expect housing to do as the Fed continues to pump “virtually free” money into this closed system?

While today’s price reaction was a learned knee-jerk reaction in my opinion, it did rain on the gold parade because our shiny friend is struggling with that overhead resistance at $1800.00. But this is a great example of what I have been talking about this week.

Feeling good about rising prices in the metals is always transitory because traders are notoriously weak in their working theories. They change like the wind – so your job is to keep the bigger picture in mind or self-doubt will enter your house on a regular basis.

Ask yourself about the basics. How will the Fed pay back this money and what about inflation – real or imagined? The current CPI numbers indicates that inflation is stirring but many in the gold community believe this measure of inflation is old and tired. And our world view myopic – there is plenty of stuff going on in the world that could upset the dollar world balance.

Whether you believe inflation is right around the corner or a red herring the case for owning gold and silver bullion has never been stronger. And the potential for higher prices has never been greater. Why? Because of the expanded Federal mandate to keep this monetary ship on course.

I believe that today’s downdraft will keep everyone honest but watching the averages might prove helpful. The conversation that Chris Vermeulen (TheTechnicalTraders.com) had with David Lin (Kitco) might help. David points out that gold’s 200 Day Moving Average is still higher than its 50 Day Moving Average which is technically long term bearish for gold. But he could change his mind if these averages converge and form the very bullish indication called a “golden cross” around $1850.00. In the meantime, keep your powder dry and remember there are many good reasons gold and silver bullion has stood the test of time. On the day gold closed down $4.20 at $1777.00 and silver closed down $0.09 at $26.08.

Silver closed down $0.09 at $26.08. Still selling everything in the safes.

Platinum closed up $24.50 at $1230.50 and palladium closed up $14.10 at $2851.70.

My Brothers and Sisters, we thank you for your business and fellowship. If you have unusual circumstances, need cash or are looking for a special visit – talk to Harry.

Most of our staff have been vaccinated and we continue to enforce rigid safety standards. Everything coming in or going out of this building is sanitized. Be careful, this virus remains a danger as can now be seen in India devastating 2^nd Covid wave.

Trust that God will get us back to normal. Have a blessed day. Richard Schwary

Posted on April 16, 2021 by Richard

Gold – Bullish Optimism Returning?

Commentary for Friday, April 16, 2021 (www.golddealer.com) – Gold closed up $13.60 at $1779.00 today and silver closed up $0.14 at $26.10. Our shiny friends have enjoyed a surprisingly strong psychological reversal this week. As the Dollar Index and Treasury yields turn soft and demand for physical product gains steam. Gold is now looking at 4-month highs and traders are talking about $1800.00 gold and $30.00 silver in a market that just a few months ago was weak and struggling. This from Reuters – “The macro argument for gold has also improved. We are poised for a run towards $1,800,” said Edward Moya, senior market analyst at OANDA. “We’ve had many investors abandon some positions because of some extreme technical selling we saw with Treasury yields and that has really provided a strong backdrop here for gold prices to continue to appreciate.” How long this optimism will last depends on the dollar in my mind but in the meantime it is a welcome change for the bulls. This past Friday gold closed at $1743.30 so on the week we are higher by $35.70.

Gold opened lower Monday after data on Friday showed US producer prices in March registered their largest annual gain in 9 ½ years, likely marking the start of higher inflation as the economy reopens according to Reuters. So, the debate continues – will the Fed continue to ignore inflation if that is the cause of rising bond yields? From my standpoint this market is ahead of itself when it comes to waving the inflation flag. Treasury yields are moving higher but it now looks like the curve has flattened out around 1.6% which is still historically cheap. The Fed does not seem concerned claiming “inflation” is transitory – it will disappear. And besides according to the FOMC they have room to ignore their own 2% guideline should inflation push higher.

Fair enough for now because the FOMC is in the middle of The Great Balancing Act. The Fed is creating huge amounts of fiat currency to finance huge new programs. But at the same time, they want to ensure the dollar remains steady or moves somewhat lower (the preferable option).

The problem at this early point is that the politicians and academics are split as to what the current FOMC Rube Goldberg will produce. If they can print and it produces little inflation, they have effectively eaten the cake and kept it for another time. If they cannot the dollar should move lower in value and gold will move higher because it is a traditional inflation hedge.

This from Standard Charter – “Gold prices are not fully reflecting risks of high inflation in the near term as economies reopen but are garnering support from recovering physical demand,” Cooper said in a report. “While the Fed’s dovish stance and the scale of U.S. fiscal stimulus provide a favorable backdrop, gold prices tend to rally strongly amid periods of high and unexpected inflation.”

Now just because Standard Charter takes this point “does not make it so”. As you should have learned in debate class asserting something without explanation is known as an empty assertion. It usually leads to divisive arguments, which now swirl around the notion of “inflation”. The latest CPI (Consumer Price Index) numbers will be released tomorrow, and this could help shape the conversation. On the day gold closed down $12.10 at $1731.20 and silver closed down $0.46 at $24.85. Our volume numbers are still trending higher and there is not much in the way of consumer selling but this market still has not produced any “fear” buzz.

Gold on Tuesday opened soft but quickly reversed itself and headed higher as the latest CPI reading released this morning was interpreted as “hot”. Gold pushed as high as $1750.00 as the press embraced the notion that inflation was indeed heating up. What all this was about is frankly perplexing in that the Consumer Price Index was only mildly higher and the Dollar Index only mildly lower. My take is that traders are still wound up over rising Treasury yields and there is some talk that because of this the Fed will have to taper perhaps as soon as early 2022. Today’s perhaps irrational jump in gold prices does however serve a good purpose. It reminds everyone that gold, whether rising or falling in price keeps everyone honest in a world obsessed with the notion that central banks are infallible. I do not think this latest interest in our shiny friend is a game changer – gold once again failed to push above $1750.00 even on an inflation scare. But the big takeaway is plain – real inflation will produce real higher gold prices. In the meantime, upward momentum for gold may be capped by profit taking, sellers still taking advantage of rallies and the realization that Treasury yields could move above 2% and still be seen as cheap historically. As far as inflation is concerned it might serve us if everyone thought more about the old benchmarks and less about modern academic interpretation. Gas at over $4.00 a gallon in the LA area is no bargain. Rent for a small two-bedroom apartment – nothing fancy – $2000.00 month. Or how about asking a working family about rising food prices? On the day gold closed up $15.00 at $1746.20 and silver closed up $0.57 at $25.42.

Gold opened Wednesday choppy but turned mildly lower in what looks like a small profit taking round from yesterday. The Dollar Index has moved lower from Tuesday’s high of 92.25 through 91.79 but has turned flat this morning. The surge in the global equities market is weighing on the price of gold as investors look for other opportunities in a post-pandemic world. Still the price of gold is further supported by comments from Federal Reserve’s Patrick Harker who said the Fed will not withdraw its funding even if the US economy expands by 5% or 6% this year (Reuters). I think the US economy will continue to roar as the infection numbers move lower. This will support dollar strength and encourage gold’s current holding pattern until the dollar weakens because of massive Federal spending or signs of inflation become more than conversation. Keep in mind overhead resistance for gold between $1740.00 and $1760.00 remains a technical challenge and the ETF outflows continue – so the best scenario short term is to see gold continue to consolidate. Could this consolidation break down? Of course, but I still do not see much downside. Gold has bounced higher on two recent occasions at $1680.00 over bargain hunting and short covering. So, today’s lower numbers may be seen as the new “value region” by the Asian market – who patiently take advantage of dips. At the same time, it is difficult to make a case for much higher gold as the pandemic winds down. Many would agree that if inflation becomes a problem gold will likely trade between $2000.00 and $3000.00. But for now, that is not the obvious case – so folks in the physical market are considering value at the lower end of this latest decline. If you are looking for something outside the box, consider the limited availability in the physical market of gold and silver bullion. There has been plenty of time for producers to “catch up” with demand yet mint premiums remain high – especially on silver bullion. It figures that a few physical dealers are considering the possibility of a fresh silver short squeeze. This is a reach, like last time but I cannot explain why it is taking so long to get new product from various world mints. Is it possible that the much talked about and often maligned “silver shortage” is a fact? I still do not think so, but we are living in very goofy times. On the day gold closed down $11.30 at $1734.90 and silver was up $0.10 at $25.52.

Gold Thursday offered a real surprise and was welcome news in the bullish camp. It opened quietly in a typical sideways pattern between $1740.00 and $1750.00. And out of the blue it pushed through overheard and headed towards $1770.00. This improves gold’s technical picture and may help confirm the physical shortages are not a mirage. What also makes this latest surge to higher ground compelling is that the Dollar Index remains steady (91.7) as gold moves to a 6-week high. Still, this may be a short-covering rally. So, confirmation of this “pop” Friday is important. If momentum continues hot into the weekend it would indeed be impressive.

If gold ETF’s are moving lower and safe haven demand lackluster as the pandemic winds down – what is supporting the price of gold? Rajan Dhall (Kitco) claims renewed central bank demand buying and rising physical gold demand from India/China are two reasons gold continues to consolidate on both sides of $1700.00. He also suggests that this “pricing floor” might prompt a reversal in ETF flows as investors again worry about rising inflation numbers.

Federal Reserve Chair Powell said yesterday that the US deficit is currently sustainable, but the path of rising debt is not. He received the typical internet bashing for his honesty. I think Powell is doing a great job at keeping all hands on deck and calming the world’s financial seas. While creating enough monopoly money to buy our way out of this miserable pandemic. So, hats off to the captain – there will be plenty of time for second guessing once this storm has passed.

As far as our rising debt is concerned, obviously it is not sustainable. But the Fed has never claimed their largesse was infinite – just long lasting. So why not be more optimistic and consider what might have happened if the Fed blinked?

For now, the US is committed to this debt and the world is right on our heels. Let us hope that central banks can unwind this monster once the need for this extra loot has passed. My problem has been that it is easier to create and spend money than to pay it back.

Wondering about today’s surge in gold prices. Perhaps the recent increase in the US money supply is finally creating worries. As much as 40% of all the dollars in circulation today have been created within the last year. This is inflation waiting for a place to happen and the Fed’s estimated 6% growth rate once the economy opens may be the fuse on this stick of dynamite. On the day gold closed up $30.50 at $1765.40 and silver closed up $0.44 at $25.96.

Gold on Friday was again surprisingly strong, pushing towards $1785.00 before profit taking settling the trade somewhat going into the weekend. This “price happiness” likely the result of momentum trading, a slightly weaker dollar, lower Treasury yields and continued physical demand. I am not sure the surprisingly tough sanctions against Russia by President Joe have helped the metals, but they go a long way in dispelling any idea that Biden will be a pushover when it comes to foreign policy.

This latest strength in the metals has now created a bullish technical picture for both gold and silver on the short term. But gold’s significant $80.00 gain since late March sets up the usual profit takin scenario which will likely be framed by dollar strength. The bullish plus here is falling Treasury yields suggests at least the possibility of a still weaker dollar. This has always been a favorite bullish argument as the Fed continues to create money out of thin air. But the “falling dollar part” has not materialized because it remains the quintessential safe haven.

Gold is now making higher lows and higher highs which get everyone’s attention. Its recent double bottom ($1680.00) being confirmed and encouraging. Today’s pricing is threatening $1780.00, another technical plus. But here is the thing, gold runs into new and significant overhead resistance between $1780.00 and $1820.00. And while Reuters points out that consumer sentiment rose to a one year high in April – worry about inflation is growing.

For now, no price grumblers allowed. But my cautious side suspects turbulence and consolidation in a market trying to get back on its feet. At the same time April will likely be another record setter for us as the public has been buying weakness for months. On the day gold closed up $13.60 at $1779.00 and silver closed up $0.14 at $26.10.

Silver closed up $0.14 on the day at $26.10. Still solid public interest and lack of product.

Platinum closed up $8.40 at $1206.20 and palladium closed up $35.30 at $2769.40.

My Brothers and Sisters, we thank you for your business and fellowship. If you have unusual circumstances, need cash or are looking for a special visit – talk to Harry. Many on our staff have now received the vaccine as we continue to enforce rigid safety standards. Be careful, this virus remains a danger. At the same time trust that God will soon get us back to normal. Richard Schwary

This from John Miles (Zaner / Chicago) – “Global equity markets overnight were higher possibly following the strong gains in the US markets on Thursday. Overnight economic news of from China was mixed with GDP on quarter over quarter basis gaining only 0.6%, off expectations of a gain of 1.5%. However, Chinese retail sales rebounded sharply in March versus year ago levels (a bad comparison) and Chinese fixed asset investment also bested expectations with a very large inflow. In another inflationary signal Swiss producer and import prices in March gain 0.6% over the prior month versus expectations of a gain of only 0.1%. Another inflation reading released overnight came from the overall Euro zone consumer price readings for March gaining a whopping 0.9%. The North American session will start out with March Canadian housing starts which are expected to have a minimal uptick from February’s 249,500 annualized rate. March US housing starts are forecast to have a moderate uptick from February’s 1.421 million annualized rate while March US building permits are expected to have a modest uptick from February’s 1.720 million annualized rate. A private survey of April consumer sentiment is forecast to have a modest uptick from the previous 84.9 reading. Dallas Fed President Kaplan will speak during morning US trading hours. Earnings announcements will include Morgan Stanley, PNC Financial Services, Bank of New York Mellon, State Street and Kansas City Southern before the Wall Street opening.

At least in the early going today it would appear that gold and silver prices are likely to post significantly narrower trading ranges to end the week. Similarly, the dollar did not show definitive direction overnight and appears to have settled into a tight 3-day consolidation range. However, it should be noted that Treasury yields yesterday dropped sharply in the face of data that should have “spiked” yields higher and that seems to point to US rates remaining low for longer than global rates and that could facilitate additional Dollar declines. In retrospect, it is difficult to determine the primary catalyst behind the sharp range-up action seen in the Thursday US trading session. Certainly, the downside breakout in the dollar provided gold with early lift, but that lift continued despite a definitive dollar bounce from its early lows. In looking back at yesterday’s activity in gold and silver, it should also be noted that prices fell in the wake of very positive US claims and stellar retail sales data and then resumed the rally following very disappointing US industrial production/capacity utilization readings. In other words, gold and silver are not paying attention to classic physical demand signals and are infatuated with the action in the currency markets. Certainly, seeing the US implement fresh sanctions against Russia creates some safe harbor buying of gold and silver but that is not a big issue to the metals trade. While it appears that both gold and silver have the capacity to benefit from momentum from the large rallies yesterday, to completely throw off the bear trend (from last August) probably requires a return of investors to gold and silver ETFs. In our opinion, investors in ETFs might favor silver over gold funds and that view is given added credence with gold holdings yesterday dropping 49,161 ounces and silver ETF holdings jumping by 1 million ounces. While it is usually a bad idea to buy overbought markets, we suggest would be longs consider far out of the money bull call spreads in silver on a moderate corrective dip.

With a new high in palladium prices Thursday taking place alongside strength in platinum, it is possible that bullish interest now has breadth and prices might be able to extend on the upside next week. However, in the recent past speculative longs in palladium appeared to protect their positions with short platinum. Clearly, platinum and palladium were lifted as-a-result of strong US retail sales yesterday, as that provides jewelry demand hopes for the first time in 13 months. Unfortunately for the bull camp, a bulge in retail jewelry demand might not lift be enough to prices as much as positive demand news from the auto production front. With palladium posting a new all-time high yesterday, the next upside target is extremely difficult to project. Nonetheless, using the recent sideways consolidation range as an upside measuring tool, we see the next target in June palladium at $2,790. Even the platinum market showed noted gains yesterday and forged the gains without seeing “weakness” in palladium. In other words, yesterday’s action could finally signal a breaking of the inverse relationship between the two markets. For now, platinum appears to have rallied yesterday off macroeconomic optimism, and seeing palladium forge a series of all-time highs ahead, it is possible that platinum will soon be seen as a cheaper long play.

Obviously, the magnitude of the rallies throughout the precious metals complex yesterday creates the potential for upside follow-through next week. However, for today, we see corrective action as the Dollar calms and US Treasury yields bounce up from their sharp and very unusual decline yesterday. For now, the most likely catalyst for the bull camp is further weakness in the dollar and therefore the bull camp needs another lower low for the move in the dollar today with a decline below 91.49 to restart the rally. In retrospect, inflation expectations this week have been pushed higher from a very long list of sources and from geographic regions and the precious metals markets appear be poised to trend higher at a much slower pace than the stratospheric rally in bitcoin. Close in support in June gold today is $1760.30 with a more significant and credible support point seen down at $1750.70. In May silver, close-in support is seen at $25.67 with a more significant and credible support point seen at $25.59.”

Posted on April 9, 2021 by Richard

Gold – Inflation? Or not?

Commentary for Friday, April 9, 2021 (www.golddealer.com) – Gold closed down $13.50 at $1743.30. While gold had an encouraging price week it cannot seem to shake the fear that stirring inflation (real or imagined) will force the Fed to act by raising interest rates. China’s inflation numbers may be creeping higher, and the US Producer Price Index (PPI) came in hot so why did gold weaken after a week of relatively upbeat news and trading patterns? Traders believe that the Fed will be forced to raise interest rates as yields rise. I am not sure why this old argument is persistent as the Fed said that “inflation” is small and transitory. Still this fear remains in the face of rising yields which pushes the dollar higher and gold lower.

But it is important to keep your perspective in what I believe is a critical transition period for the world and the metals. It is true that today’s PPI was twice expectations but that does not mean inflation in right around the corner. And the Fed has assured everyone that it will remain accommodative till the cows come home – so what is the problem?

It would also be reasonable to claim that today’s drop in gold was a round of profit taking. My point being that there are enough theories and distractions in today’s financial world to fill Noah’s Ark. It might be more helpful to note that while gold was weaker it bounced off $1730.00 support nicely. And if bargain hunting remains in place my “consolidation” theory makes sense. How long it may take for the rest of the world to realize the danger ahead is not the point. Everyone thought that Noah was crazy until it started to rain. And few worried about the roaring twenties until the stock market crashed. This past Friday the commodity markets were closed but Thursday gold closed at $1726.50 so on the week gold was up $16.80.

Gold opened flat Monday and closed almost unchanged on the day. Which is very surprising considering the Dollar Index was off by almost half a point (92.60). This from John Miles (Zaner) – “While gold and silver prices are slightly lower to start the new trading week, they remain near the recovery highs forged over the prior 2 trading sessions. Obviously, thin trading conditions because of the partial global holiday have restricted ranges but the gold market should see some fundamental support flowing from news that India’s gold imports in March reached a record 160 tons, with retail interest recovering and stimulated by reduced taxes and gold prices nearly $300 below the early 2021 highs. In February, India cut import duties by 1.75% and that combined with recent pricing at 12-month lows, apparently stoked purchases last month. While the Indian March gold imports were up an astounding 471% versus year ago levels, the comparison to year ago readings is suspect given the pandemic demand destruction in place last March. While the gold market has not shown signs of tracking physical demand over the past several months, we see the Indian demand news as a sign that the twin giants of India and China are likely to spool up imports after the pandemic lockdowns.”

Still the strong US jobs data and consequently hot stock market supports the rapid recovery scenario which detracts from gold’s safe haven appeal. Under these circumstances gold bulls are left hoping for dollar weakness and bargain hunting from the Asian physical trade.

Technically speaking gold also remains under pressure trading below its major moving averages. But the news is not all bad as veteran chart watcher Gary Wager (Kitco) points to multiple bottoms at $1680.00 this past year, suggesting we may be in for another big price run.

I remain in the middle of this “push-pull” conversation. The professional trade is looking for lower prices as the pandemic safe haven demand diminishes. But how do you figure bargain hunting as prices dip below $1700.00 and the growing fear of renewed inflation over government spending? So, I expect longer consolidation on both sides of $1700.00. Until weak hands are finally liquidated – watch ETF outflows. At the same time, this market is likely already oversold so ignore volatility along the way. The fact that gold showed no reaction to a weaker dollar this morning is problematic but may be the result of a thin trade coming back into focus after the Easter holiday. We should get a better idea of reasonable pricing later in this week. On the day gold closed up $0.50 at $1727.00 and silver closed down $0.18 at $24.76.

Gold on Tuesday moved sharply higher reacting to a weaker dollar and lower US Treasury yields, the Dollar Index this past week losing a full point moving from 93.40 through 92.40. Gold’s recent double bottom and the slowing of ETF outflows suggests that some of the doom and gloom safe-haven commentary may be dissipating. Still the bullish gold scenario needs something more substantial to shake off the still in place negative technical picture. Today’s jump in the price of gold is an important bullish step but the market closed off highs so you could just be looking at an overdue short covering rally. In early February gold weakened at $1840.00 quickly settling with a double bottom ($1680.00) in early April. At that point, the news could not get much worse so traders might assume all the sellers have already sold. But this is just a working theory – it should be confirmed with something tangible like a reversal of ETF selling (which has not happened) or the return of safe haven buying, not bargain hunting which figures to improve as prices get cheaper. The important point today is that both the “fear factor” and the speculative buzz are still missing. For me to give up my “consolidation” theory I would like to see gold above stiff overhead resistance ($1750.00 – $1780.00). This would suggest a wider investment audience looking for inflation protection over the next decade. On the day gold closed up $14.50 at $1741.50 and silver closed up $0.45 at $25.21.

Gold opened Wednesday with a small downward bias despite a dollar which has moved lower since Monday. Gold ETF numbers on the year are off 6.8% while silver ETF numbers are 3.8% higher. At the same time Neils Christensen notes that the Perth Mint has announced record sales for the first quarter of 2021. “These figures are 285% higher (gold) and 178% higher (silver) than average months sales dating back to 2012”. As for US dealers – delivery for smaller orders is improving but still not up to old standards and larger orders for newly minted bullion remains delayed. World mints cannot keep up with physical demand. There you have the Tale of Two Cities when it comes to the dichotomy in today’s physical markets. You would think that the lack of immediate delivery for many larger orders would create positive buzz which helps prices move forward, but this has not been the case. With gold’s higher close yesterday ($1741.50) I would expect this market to be more upbeat. But this trade remains precarious because at recent critical support ($1720.00) everyone holds their breath. So, for now I am happy we are holding on to current gains. Time to notice how crazy things have become on the financial seen – visit USDebtClock.org and notice the Dollar to Gold Ratio which is a fancy way of saying that the price of gold should be $36,742.00 relative to dollar expansion. On the day gold closed down $1.40 at $1740.10 and silver was higher by $0.02 at $25.23.

Gold on Thursday once again pushed higher for several reasons. The release of the FOMC March minutes yesterday offered no suggestion that the Fed was considering higher interest rates. They will continue to supply all the loot necessary to keep this recovery on track and moving forward. The news was expected but dovish enough to weaken the dollar. This “steady as she goes” attitude has been in place since the beginning of the pandemic but for some reason traders must be reminded on a regular basis that the FOMC will do nothing to upset the fabulous Wall Street run or the rising economic optimism. This “more now more later” attitude continues to weigh on the dollar. The Dollar Index has moved from 93.00 through 92.11 this week and frankly long or bullish metal traders are encouraged enough by recent upward momentum to at least come out from under the bed. Keep in mind this is a dramatic turnaround from just a few weeks ago when gold pessimism was the order of the day. All of this is a bit suspect because these higher gold numbers are based on a falling dollar which always seems to recover nicely as uncertainty continues to rule. I also do not like the continued gold ETF outflows which suggests that traders are selling into strength. This from John Miles – “It should be noted that the World Gold Council produced its February central bank gold holdings report and global central banks were net buyers of 94.5 tonnes of gold! In fact, India bought 11.2 tonnes in a move that could be related to its recent monetization of Indian gold holdings in the form of gold bonds. Seeing central banks resume purchases helps underpin prices, but to throw off what is now a 9 months-of-down-trending prices, probably requires evidence of improving physical demand in either China or India. From a technical perspective, the bull camp needs a trade above $1,756 this week in the June gold contract to signal a reversal of a firmly entrenched 3-month-old downtrend channel. In the past, corrective bounces in the current bear trend have been 25 days with the current bounce/sideways consolidation at 22 days in duration. While the silver market has also forged 4 days of corrective recovery action, to reverse a 2-month-old downtrend pattern, probably requires a trade above the downtrend channel resistance line at $25.60.” On the day gold closed up $16.70 at $1756.80 and silver closed up $0.34 at $25.57.

Gold on Friday moved lower by $26.00 on the open but managed to recover half of this early loss on bargain hunting as traders bought the dip. This early weakness may have been the result of traders once again feared rising Treasury yields and a stronger dollar over stirring inflation fears. I would also not discount continued selling into strength, a trend which has been in place for some time – supported by continued ETF selling. Still, recent upward movement in the price of gold has dispelled some of the bearish sentiment and is supported by a continued lack of physical product. On the day gold closed down $13.50 at $1743.30 and silver closed down $0.26 at $25.31.

Silver closed down $0.26 at $25.31. Plenty of action – the public remains aggressive buyers.

Platinum closed down $26.00 at $1207.30 and palladium closed up $7.70 at $2630.70

My Brothers and Sisters, we thank you for your business and appreciate your fellowship. If you have unusual circumstances, need cash or are looking for a special visit – talk to Harry. Many on our staff have now received the vaccine as we continue to enforce rigid safety standards. Be careful, this virus remains a danger. At the same time trust that God will soon get us back to normal. Richard Schwary

This from John Miles (Zaner / Chicago) – “Global equity markets overnight were mostly lower with declines less than 1%, while markets trading higher posted fractional gains. Overnight news of importance came from China where CPI on a month over month basis contracted by more than expected while PPI and CPI readings on year-over-year comparisons jumped sharply. From Switzerland the March unemployment rate declined from 3.4% to 3.3% following expectations for a 3.6% reading. From Germany exports for February grew less than expected, while imports in February jumped significantly more than expected. Other data from Germany included industrial production readings were slightly disappointing with the German trade surplus coming in slightly below expectations. Other data points included Italian industrial output for February which fell more than expected and Halifax house prices which jumped by more than expected. Ramping up the flow of European economic news this morning is an Italian retail sales reading for February which jumped by 6.6%. The North American session will start out with the March producer price index which is expected to have a sizable uptick from February’s 2.8% year-over-year rate. The March core producer price index (excluding food and energy) is forecast to have a modest uptick from February’s 2.5% year-over-year rate. March Canadian unemployment is expected to have a modest downtick from February’s 8.2% reading along with a sizable net increase in employment. February wholesale trade is forecast to hold steady with January’s 0.5% reading. Dallas Fed President Kaplan will speak during morning US trading hours.

While gold and silver are starting out weaker this morning both markets remain within recently developed uptrend channels, with gold support from the bottom of that channel pegged at $1735.80 and silver support from its channel seen at $25.01. With the dollar bounce overnight coinciding with the initial corrective action in gold and silver prices it-would-appear that the dollar is the primary driving force for the current trade. We also suspect that some of the gains this week were the result of follow-through buying in the wake of dovish Fed dialogue from their most recent meeting minutes release. It is also possible that buying of gold and silver has been inspired this week by the Fed’s broad belief that inflation will be seen later this year, but that it will be “transient”. Unfortunately for the bull camp, gold ETFs reduced holdings for a 14th straight session, with silver ETFs also reducing their holdings. Clearly, last night’s Chinese inflation readings for the month of March were mostly a non-event, with month over month consumer prices contracting more than expected and producer pricing on a year-over-year basis jumping by a very significant 4.4%. Obviously, year-over-year comparisons are mostly useless, given the widespread global lockdowns in place last March. While it is possible that news of a 90.4-ton net purchase of gold by central bankers added to this week’s lift, the bull camp really needs tangible signs of improving physical/jewelry demand in India or China to fully throw off a very definitive 4-month-old downtrend channel. From a technical perspective, the gold market did forge a significant upside breakout, of a 30-day sideways consolidation yesterday, with the market posting the highest price since March 1st which in turn could set the stage for a return to $1,775 next week. May silver also forged an upside breakout, but the breakout was slightly less significant than in gold, with prices only reaching 11-day highs. Going forward, we see critical support in May silver at $25.01 and little in the way of resistance until $25.51.

All things considered, the PGM markets performed poorly yesterday especially in the face of noted strength in gold and silver and that weakness has extended into the early Friday trade! However, prices should see support from news earlier this week that UBS reduced its 2021 world mine supply for platinum by 140,000 ounces and projected a global deficit of around 185,000 ounces. The palladium market was expected to see an even larger mine supply forecast reduction from UBS of 545,000 ounces and UBS projected a global deficit of 1 million ounces! More importantly, it should be noted that another deficit this year would result in 10 straight years of global supply and demand deficits in palladium. In short, the palladium market would appear to have much more bullish fodder than platinum, but palladium prices are also at a very stiff $1,400 premium to platinum. Some market chatter suggests that automakers will shift from palladium to platinum in their catalytic converters next year. In the near term, we see the path of least resistance shifting down, and traders should not rule out a temporary retest of $1,200 in platinum and temporary trade below $2,600 in June Palladium.

As indicated already, the gold market forged a significant upside breakout yesterday with the potential for upside follow-through today limited because this week’s rally was forged on very anemic trading volume. More importantly, the Dollar is stronger, Chinese inflation news was mostly benign, and other industrial commodities are trading lower this morning. Clearly, the bull camp in gold needs straightaway ongoing declines in the dollar to resume its stealth rally, while silver probably needs a virtual end of US infection anxiety, from a downside breakout in daily inflections (below 39,000). Critical support and fresh long entry pricing in June gold is seen at $1,726, with critical support in the silver market today pegged at $25.01.”