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Gold Sees Mild Bargain Hunting

Gold Sees Mild Bargain Hunting

Commentary for Wednesday, February 26, 2020 – Gold closed down $6.90 today at $1640.00. So, is there enough going on with the precious metals? Near panic to the upside on Monday – our phones were overloaded but eventually folks got the chance to either buy or sell and we appreciate your patience. Then, just as suddenly gold turned choppy suggesting a near term high. The drama further heightened by shaky stocks, the DOW off 2000 points in three days as the world worried about China manufacturing and the corona virus.

What you see here is what I talked about on Friday – the expected volatility of a market driven by fear of the unknown. What I forgot to include was the added turbulence of overcharged prices and the possibility of profit taking when the wind suddenly changes.

Gold closed last Friday (Feb 21st) up $28.00 at $1644.60 with plenty of buzz in the paper and physical market going into the weekend. Monday, we moved higher by another $27.80 at $1672.40 – our phones and parking lot were jammed. Then, just as suddenly, gold sold off, down $25.50 on Tuesday at $1646.90 and everything turned quiet – crickets. Today’s market saw continued weakness with a range between $1625.00 and $1655.00 – but look at the numbers, gold closed significantly off its lows seeing some bargain hunting around ($1640.00) and the store was busy most of the day – again with the public buying and selling.   

Because of the fear that the world economy might become unstable over this growing epidemic the FOMC is considering lowering interest rates – a new wildcard in this already volatile financial roller coaster. Their last meeting was late January – they stood pat – then things looked pretty good – not much in the way of clouds, US stocks were strong and so was the dollar. In less than a month the world was seriously worried over this developing health menace.

Will the FOMC lower rates to encourage growth? I think this is likely and this will further stabilize the gold market while it’s finding solid footing. The Fed could lower rates anytime, but it’s likely they will wait until one of the following dates – March 17th and 18th, June 9th and 10th or September the 15th and 16th. All of which are close enough to watch carefully.

What can gold bullion buyers and sellers expect between now and the summer? Because there are powerful dynamics at play expect a rocky ride which will ebb and flow depending on how this fear factor plays out. But I think safe haven demand is always overplayed – keep in mind that if the virus really gets out of hand it might even reduce physical demand. 

Gold’s long-term price performance presents a better case. We have been in a rather bullish market since August of 2015 as gold has moved from around $1100.00 through a $1700.00 challenge. Be patient on this latest pullback and don’t be afraid to buy the dips. For years this has been a good diversified strategy. And it seems to me that world problems are not improving which makes a reasonable case for owning physical gold and silver bullion. 

This from Zaner (Chicago) – “Global equities overnight were lower again with some declines over 2% but most declines 1.5%. In addition to the stark US warning of a “pandemic” potential, the market is also seeing inverted US yield curves, massive unloading of physical copper supplies (which suggests heavy industry is anticipating dramatic slowing) and German economic data that has fostered talk of recession in Europe. Surprisingly the equity markets are uninterested in the slight improvement in Chinese infection count news/expansion pace mostly because of an additional death in France and similar anecdotal occurrences in a number of other countries. Overnight economic data was sparse with Australian construction work done for the fourth quarter contracting by 3% on expectations of a decline of only 1%. From Europe French consumer confidence came in slightly better than expected but only match the prior month while Italian trade balance figures with non-EU trade partners shifted into a deficit. From Switzerland the CEW survey of expectations for February came in at half the expectations and below the prior month. The North American session will start out with a weekly private survey on mortgage applications. January new home sales are expected to have a moderate uptick from December’s 694,000 annualized rate. Dallas Fed President Kaplan will speak during morning US trading hours while Minneapolis Fed President Kashkari will speak during the afternoon. Earnings announcement will include Lowe’s, TJX and JM Smucker before the Wall Street opening while Booking Holdings, Crown Castle and Marriott report after the close.

In our opinion it was a major failure for the gold market to sell off in the face of another collapse in equities on Tuesday. In fact we see the action again this morning in gold as very damaging to the bull case as it would appear that gold needs a clear sign of a pandemic and clear signs of severe global slowing to ignite a return of aggressive investment buying. The trade could be fearful about the potential for a sustained setback in Chinese physical gold purchases and while we have no credible evidence of this, it is possible that China could be selling gold from its central bank holdings to fund activity to stimulate their economy. Furthermore given significant palladium’s strength on Tuesday, it almost seems like it has become the safe-haven of choice instead of gold. However it should be noted that ETF’s increased their gold holdings for the 25th straight day bringing this year’s net purchases to 2.93 million ounces and that inflow was very significant as it was the biggest inflow since the beginning of the headlines on the virus outbreak. Other stories have pointed out that gold backed ETF’s are seeing an unprecedented inflow which should leave that long-term investment driven bull market hope alive. Not surprisingly May silver performed poorly as well yesterday gapping lower and trading back into the range up day from a week prior as it clearly rejected Monday’s high move. Fortunately for the bull camp May silver appears to have found some support at $18.00 but pushed into the market we see silver behaving as an industrial commodity facing recession unless gold prices began to lead again with very strong gains.

While Palladium might be the new gold, with its combination of safe-haven and tight-supply arguments, we are still fretting over the potential that the Chinese economic shutdown will be pushed out longer than is currently expected (despite improved virus headlines yesterday and today). In short, it would seem folly to think that Chinese auto catalyst demand for palladium will not be injured significantly when the data comes in. Over the near term, using the January/February sideways pattern as a measuring tool, projects the next upside target in April palladium at $2,820. In order to turn the Palladium charts bearish requires a failure back below $2,535.30. Platinum is looking more like its old self (from 2018) as it fell below its February consolidation to its lowest level since December. The nearby contract fell right to the uptrend line drawn off the June and November lows on the weekly chart, and that level ($922.60) could be key support/pivot-point this week, as a breach of that line could turn the long term trend down.

The gold market could be on the cusp of a major failure if it cannot gain in the face of collapsing equities and record-low interest rates. Given the extreme volatility, traders should stick to using options in combination with futures positions. While action this week has shifted away from the massive bullishness on Monday, pressing the short side of gold is not advised as being less bullish is not cause to get “short” a market that has shown significant strength since December. In fact the significant declines in US interest rates could result in negative rates and or a chain reaction of easing by a long list of global central banks and that could take the focus of gold off physical demand destruction and catapult speculative buying from classic financial themes. We look for a major trend to be set in gold before the end of this week. Possible support levels are the 50% and 61.8% retracements of the February 4-24 rally at $1,621.40.

Silver closed down $0.35 at $17.83.

Platinum closed down $17.50 at $912.30 and palladium closed up $45.00 at $2714.70.

This is our usual ETF information – Gold Exchange Traded Funds: Total as of (2/19/2020) was 79,545,377. That number this week (2/26/2020) was 80,280,811 ounces so we gained 735,434 ounces of gold. The all-time record high for all gold ETF’s was 85,108,867 ounces in 2013. The record high for Gold ETF’s in 2020 was 80,280,811 and the record low for 2020 was 76,763,936.

Silver Exchange Traded Funds: Total as of (2/19/2020) was 696,359,080. That number this week (2/26/2020)was 697,612,253 ounces so we gained 1,253,173 ounces of silver.

Platinum Exchange Traded Funds: Total as of (2/19/2020) was 3,143,833. That number this week (2/26/2020) was 3,138,481 ounces so we dropped 5,352 ounces of platinum.

Palladium Exchange Traded Funds: Total as of (2/19/2020) was 604,018. That number this week (2/26/2020) was 590,615 ounces so we dropped 13,403 ounces of palladium.

We believe our four flat screens downstairs with live independent pricing are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.

Yes – you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. We will also wire funds into your account that same day for a small fee ($25.00) if you are in a hurry.

In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s). 

Like us on Facebook and follow us on Twitter @CNI_golddealer – have some fun.

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

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

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Gold Heats Up – 7 Year Highs

Gold Heats Up – 7 Year Highs

Commentary for Friday, February 21, 2020 – Gold closed up $28.00 today at $1644.60! So, we are at 7-year highs, while the Dollar Index is moving towards 100.00 so both gold and the dollar are now seeing solid safe-haven buying. It is a bit perplexing however that as gold is making yearly highs the stock market remains stable.

The big plus for gold now is that it has broken out of the back and forth trough between $1200.00 and $1400.00 in place since 2013 and while there was some commentary last December claiming that gold would challenge $1600.00 in 2020 this latest strength is surprising to even the bull sector. 

Of course, no-one could have foreseen the coronavirus epidemic which first shut down China and worse is now moving into other countries. Trump slammed our door when this mess started and was criticized for overreacting even though Russia shut down their border. So, I hope he gets recognition for being in front of this catastrophe and not simply reacting after the fact.

For now, the technical bull’s rule – but keep in mind there is a lot of headwind between $1600.00 and $1800.00. This formidable overhead pricing shelve has been in place since 2012 which might suggest that bigger swings in price, will develop as virus news ebbs and flows.

If this epidemic continues to spread and China cannot get on her feet and back to work, it makes sense that gold and the dollar will remain strong as the world looks for financial safety.

Keep an eye on stocks – if Wall Street holds up all-time highs in gold may have to wait until inflation becomes a problem or world debt finally rocks everyone’s financial boat.

But if the stock market gets unstable because of the China shutdown – hold on to your hat for even US gold bullion demand could turn hot overnight.   

Still I would not anticipate any large correction in gold. Fear always moves the gold needle and there are too many other options which suggest increased safe haven buying worldwide.

I talked to a customer who has been doing business with us since the early 1980’s and asked him what he thought of gold’s latest push to higher ground. Believe it or not he was not excited.

I said with gold up $60.00 this past month and $300.00 this past year how can you not be impressed? His reasoning was typical of a real believer – “this system is broken and sooner or later there must be a reckoning”. Yet even with this core belief he will wait for a pull-back in prices before adding to his holdings.

This kind of detachment takes the conviction of a real precious metal veteran. While the US market is still not lining up in our parking lot, I would suggest for those still on the fence that waiting for this bull market to cool down might be a mistake. I would not want to be “all-in” at the moment because the virus panic remains uncertain – but I would buy this market in smaller units – unless you believe gold is trying to tell us something.   

This from Zaner (Chicago) – “Overnight global equity markets were lower with the exception of the Shanghai markets. It is likely that the Chinese are providing support for their equity markets. Economic information released to today included a much weaker than expected Australian bank services PMI, softer than expected Japanese CPI and manufacturing PMI and French manufacturing PMI readings which came in softer than expected. However it should be noted that French services PMI and the composite PMI readings were better-than-expected. German manufacturing PMI was better-than-expected while there services PMI was weaker than expected. From the euro zone overall there manufacturing, services and composite PMI readings for February all came in better than expected. On the negative side of the ledger UK services PMI was a touch weaker than expected and Spain saw a clean sweep of weak data from all the various CPI breakdown readings. Finally overall European consumer price readings simply matched expectations and generally remain in contractionary territory. The North American session will start out with December Canadian retail sales which are expected to have a sizable downtick from November’s 0.9% reading. The February Markit “flash” US manufacturing PMI is forecast to have a modest downtick from the previous 51.9 reading. January existing home sales are expected to have a modest downtick from December’s 5.54 million reading. Dallas Fed President Kaplan, Atlanta Fed President Bostic and Fed Governor Brainard will speak during morning US trading hours while Fed Vice Chair Clarida and Cleveland Fed President Mester will speak during the afternoon. Earnings announcement will include Deere and Magna International before the Wall Street opening.

The gold market has caught a significant lift from chatter that it is in the midst of a rotational benefit from other instruments. In fact yesterday some fund managers indicating that stocks were overvalued and some allocation to gold should be made. Overnight the bull camp added in speculation of rate cuts and excessive stimulation in China as reasons to pile into gold. The investment quality gold storyline was given a further boost overnight by news yesterday that Swiss monthly exports of gold into Hong Kong jumped considerably despite the turmoil in that economic zone. Obviously one of the most dominating forces lifting gold and silver prices today is the news that the Chinese virus count showed an uptick overnight. With reports of potential virus spread in the capital city of Beijing some traders are moving into gold under the premise that China will now have a more serious problem outside the initial quarantine areas. Certainly safe haven buying off the ongoing potential for an instant spike in anxiety from the coronavirus continues, but that influence is magnified by the idea that China will throw everything it has to save growth. Apparently the gold market is interpreting vice Fed chairman comments yesterday into ideas that the Fed could cut rates before the end of the year. Adding further into the upward track in gold is the 22nd straight day of inflow into gold ETF’s bringing this year’s inflow to 2.5 million ounces. Even the silver market is beginning to get lift with the March contract seemingly on a path to retest the January high up at $18.89. In the end we assume that the breakout/extension in gold and silver prices this week is going to create a follow-through wave of buying. The next upside target in gold is seen from $1660.

Surprisingly the palladium market has stalled after making a minimal upward thrust early. Perhaps news that Chinese auto sales dropped to 5000 from 60,000 in the most recent readings has finally given some substance to the idea that the coronavirus could hit future purchases of PGM’s for auto catalyst. While the palladium market has not responded instantly to the aggressive upside extension in the gold market a sudden resumption of the bull track can’t be ruled out in the event the flow to precious metals becomes a stampede as indicated in a Bloomberg story this morning. Certainly options volatility is registering significant bullish sentiment, but the last net spec and fund long in palladium was only 5,622 contracts or roughly 25,000 contracts below its all-time high posted back in April, 2013. Therefore the bull camp will rightly suggest more buying from futures is available and will come in with many traders willing to bet that this year’s deficit will result in a tighter palladium market than was seen in 2013. We see critical support in the March palladium contract at $2571.20 which is where the market closed in the 2 prior trading sessions. Given the stellar action in palladium over the last year and given the very strong action in gold this week we suggest traders remain guardedly bullish toward the palladium market in hopes of a typical sharp recovery. Not surprisingly the platinum market has faltered from this week’s early high and is showing some potential to hold above support at $975. While the platinum market looks vulnerable on its charts and has had trouble coming into consistent favor, we suspect platinum will receive enough spillover interest from gold to climb back toward 1000.

As indicated already, the path of least resistance is pointing up in the precious metals markets with the trade stoked by fresh Chinese health/economic concerns. While it would seem to us that the bull case for precious metals is becoming more dependent on a definitive extension of the virus problem, the arrival of investment inflow is a really powerful influence!”

Silver closed up $0.21 at $18.52.

Platinum closed down $2.80 at $973.40 and palladium closed up $31.50 at $2627.30.

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

Of course, it’s not really patented but we do have some fun along the way. This is what the GoldDealer.com employees think: 9 believe gold will be higher next week and one thinks gold will be lower and none think it will be unchanged.

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

Like the employees our customers were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 transactions – unscientific but worth considering because these people took action: 82 people thought the price of gold would increase next week 13 believe the price of gold will decrease next week and 5 think prices will remain the same.

Precious Metal Closes & Dollar Strength – Feb 17  – Feb 21

Gold Heats Up - 7 Year Highs

We believe our four flat screens downstairs with live independent pricing are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.

Yes – you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. We will also wire funds into your account that same day for a small fee ($25.00) if you are in a hurry.

In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s). 

Like us on Facebook and follow us on Twitter @CNI_golddealer – have some fun.

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

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

Posted on

Gold Fights for Higher Ground

Gold Fights for Higher Ground

Commentary for Friday, February 14, 2020 – Gold closed up $7.60 today at $1582.70 in quiet trading. Yet our shiny friend is fighting its way back to recent 30-day highs around $1590.00 after the most recent selloff which approached $1550.00.

So, the technical bulls are happy but for my money this market is still dealing with an extended trading range between $1560.00 and $1590.00. Today’s surge to higher ground is most likely the result of the changing view that China’s coronavirus is dangerous, plain and simple and the previous conclusion that this human threat might fade was premature.

Keep in mind when this virus was first observed it was feared and gold safe-haven demand increased. But this initial reaction was discounted as the possibility of a world-wide pandemic was dismissed by medical professionals. Well unfortunately the fear factor has come roaring back over the latest grim statistics and speculation increases – founded or not.    

Now add to higher safe haven demand over this threat the yearly gold price picture, which is technically strong and gaining momentum in spite of a strong dollar.    

In the past 12 months gold has moved convincingly higher from $1300.00.

In the process it has threatened $1600.00 on two occasions. So, the longer-term and now shorter-term price picture favors the bullish scenario although there is a reasonable case to be made that the perceived threat from the corona virus will again dissipate.

But here is where the picture gets a bit cloudy. Technically the $1600.00 to $1800.00 range represents immense overhead resistance for gold which has been in place since 2012.

If you are a pessimist gold’s recent gains might suggest a round or two of profit taking are in order and you might be right. But as long as bargain hunters keep buying the dips and central banks keep interest rates near zero – we might yet see new record highs for gold in 2020.

And this is without the help of an inflation scenario. I will let you decide what gold might be worth when inflation returns, and I would take the over.  

A reminder that we will be closed this Monday for President’s Day – Banks, the post office and US commodity markets will also be closed.

This from Zaner (Chicago) – “Global equity markets overnight were mixed with the Shanghai markets surprisingly higher on the day perhaps because of aggressive Chinese government intervention. Global markets trading lower generally showed declines of less than 1%. On the other hand those markets trading positive were also posting very minimal gains. Economic data released today showed a decline in a Japanese the Tertiary industry Index for December that was a much smaller than expected decline. From Germany GDP for the 4th quarter was on expectations but 0.2% below the prior reading. From Switzerland import prices were flat on a month over month basis but were down 1% on a year-over-year basis. From Spain various price measures for the month of January came in on expectations and generally right on the prior month. From Italy there global trade balance for December showed a higher than expected surplus. Finally from the overall Euro zone their unemployment change showed a gain of 1% which matched the prior month but failed to meet expectations for a lower rate. Also from the euro zone GDP came in at 0.1% on expectations but below the prior quarter. The North American session will start out with January retail sales which are forecast to hold steady with December’s 0.3% reading. The January import price index is expected to have a sizable uptick from December’s reading while the January export price index is forecast to have a modest uptick from December’s reading. January industrial production is forecast to have a minimal uptick from December’s -0.3% reading while January capacity utilization is forecast to have a modest downtick from December’s 77.0% reading. December business inventories are expected to have a modest uptick from November’s -0.3% reading while a monthly private survey of February consumer sentiment is forecast to have a modest downtick from the previous 99.8 reading. Earnings announcements will include Enbridge, Newell Brands and Portland General Electric before the Wall Street opening.

Obviously the virus count continues to be the predominant driving force in many markets and while the overnight virus infection tally gained 5,090 yesterday in China and there is a disturbing and growing number of medical workers catching the infection (while trying to treat patients) the markets have remained calm. The gold trade was clearly expecting a replication and perhaps an acceleration of the startling jump in the previous days infection count in China. Gold and silver are capped by widespread expectations for the Chinese government to unleash massive stimulus which in turn is keeping the trade from factoring in a sharp increase in economic uncertainty. It should be noted that some traders think gold is catching its primary lift because of the massive stimulus efforts of the central banks with the safe haven theme a secondary force. In minimally supportive overnight developments the Indian gold jewelry industry is soliciting the government to reduce the import duty on gold and gold ETF’s saw the 17th straight day of inflows. In a another potentially supportive longer-term story Gold Fields has apparently decided not to divest itself of its only remaining South African mining asset because of a sudden improvement in performance at their last mine. While risk off psychology is in place early today we suspect it will regain momentum in the afternoon in preparation for the next Chinese infection count after the close today. We suspect the gold trade will see increased speculative buying late today by those looking to position for 3 days of market closure and the potential for something surprising to happen in that period. Given the potential for significant volatility, traders should consider the purchase of gold futures and the purchase of a March (11 days until expiration but that also cheapens the premium cost) at the money put. An alternative for those expecting the worsening virus case is the purchase of a Silver $18.10/$17.60 March bull call spread.

While this week’s action in palladium would seem to suggest it is mostly immune to the threat of significant auto catalyst demand losses from China, it is also possible that the market is looking at the strong likelihood of a historical annual deficit this year in the event that the coronavirus situation begins to show containment soon. However the palladium market was presented with a negative article on palladium from Bloomberg overnight, with estimates that Chinese auto sales could drop by 30% this month after a record decline of 22% in the prior month. While slowing auto sales are potentially a precursor to lower palladium purchases by China, the more important near term impact is the idling of Chinese car production facilities. In our opinion, the bull camp in palladium needs to see a somewhat limited duration shutdown of the Chinese economy or that 1 million ounces deficit projected by an industry official could be dramatically reduced. In fact Citigroup has projected a near term decline to $2100 an ounce. We suggest that longs bank profits or at least sell calls against their positions.

We don’t want to give off the impression that we have a solid opinion on where gold prices are headed, but the news of a sharp acceleration of the infection earlier this week, another noted jump overnight, spreading global containment, massive Chinese stimulus, new and quicker detection methods all would seem to project a major decision off the virus in the coming week. Because of the gold markets historic safe haven following and because the virus situation could offer a catch-up reaction after a long weekend plays out, traders who think the crisis will expand should consider long gold futures and long gold puts or consider a March silver bull call spread. However if you think the crisis might moderate buy March near to the money gold puts as they are less expensive because they have only 11 days until expiration.”

Silver closed up $0.12 at $17.72.

Platinum closed down $5.90 at $966.00 and palladium closed down $34.30 at $2338.60.

We believe our four flat screens downstairs with live independent pricing are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.

Yes – you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. We will also wire funds into your account that same day for a small fee ($25.00) if you are in a hurry.

In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s). 

Like us on Facebook and follow us on Twitter @CNI_golddealer – have some fun.

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

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

Posted on

Gold – Defensive to Choppy

Gold – Defensive to Choppy

Commentary for Friday, February 7, 2020 – Gold closed up $3.50 today at $1568.60. It was choppy all day moving from $1564.00 on the open through a high of $1574.00 and finishing up a few dollars into the weekend. Last Monday we closed at $1577.20 so with today’s close at $1568.60 we have lost $4.68 on the week. This may sound like nothing is going on but believe me this market has plenty of tension right beneath the surface.  

Our shiny friend may be telling us that even if you don’t like the recent $1590.00 sell off which quickly led to a $40.00 price drop – this market is still in the game. And even if you are a pessimist the recent $1550.00 bottom has remained intact since early January.

Many should now be asking why paper players did not “sell” and move to the sidelines, waiting for this storm to pass when this latest bullish leg began around $1460.00? There is certainly plenty of profit in this trade but there may also be a feeling creeping in around the edges that this mighty $40.00 drop was a bit overdone.

And so, traders “bought the dip” which is kind of a magic phase if you are looking for the logic behind these surprisingly steady prices. Whether this latest longer-term bullish run was damaged or not still remains to be seen. But it would not take much to now reestablish that “feeling” that this market has legs and the hopes of $1600.00 or even $1700.00 in 2020 was not pie in the sky.

If you are a full-blown gold bull, you believe the world financial system is broken. A full-blown bear thinks stocks are the only place to be and is willing to ignore world debt. I’m somewhere in the middle but the fact that no central bank is now willing to begin paying back the huge sums of money borrowed over the past decade is troubling.

In a recent post by FEE (Foundation for Economic Education) Burton Folsom makes several important points, the most important being that regardless of political party, modern presidents have doubled the national debt every 9 years. If this trend continues through the end of the 21st century it will be $9 quadrillion or $10 million dollars per person.

I’m always suspicious of this kind of math but it is true that governments in the form of central banks have no problem printing more paper money when they need an economic boost but always have trouble paying the money back.

This one-sided ledger keeping has not toppled our financial boat to date which is why we keep following this economic recipe and the ownership of gold and silver bullion is not taken seriously in the United States. But it’s a common theme in the precious metals business that this type of mismanagement cannot continue forever without consequences. So for my money I would like to make a few small plans for something that may not occur (paper money collapse) than to wake up one morning regretting that I ignored old Ben Franklin’s timeless warning that “an ounce of prevention is worth a pound of cure”.   

This from Zaner (Chicago) – “Global equity markets overnight were lower with some surprising minimal gains posted in Shanghai markets. Surprisingly the Chinese markets were able to show some positive action in the face of growing admissions from Chinese officials that the Chinese economy was taking a severe hit from the virus. However Chinese economic data for January released overnight (with the exception of imports) did not show noted weakness. From Japan coincident index readings came in softer than expected while there leading economic index came in stronger than expected. Unfortunately German industrial production contracted significantly and in turn fostered fresh talk of a return to recession. Germany also posted disappointing export and import data for December while France also showed a significant contraction in industrial output of 2.8%. However French nonfarm payrolls in the quarter were up 0.2% and Italian retail sales came in stronger than expected! From the UK Halifax house prices gained more than expected with a 4.1% gain. The North American session will start out with the January employment situation report. January non-farm payrolls are forecast to have a modest uptick from December’s 145,000 reading. January unemployment is expected to hold steady at 3.5% while January average hourly earnings are forecast to have a minimal uptick from December’s 2.9% year-over-year rate. January Canadian unemployment is expected to hold steady at 5.6% with a modest increase in their net employment. December wholesale trade is forecast to hold steady with November’s reading. The January Canadian Ivey PMI is expected to have a moderate uptick from December’s 51.9 reading. December consumer credit is forecast to have a modest increase from November’s $12.5 billion reading. Earnings announcements will include AbbVie, FirstEnergy and CBOE Global Markets before the Wall Street opening.

While overnight infection counts were not shocking it does appear as if fears of very negative economic consequences inside China are beginning to escalate. In fact the Chinese central bank has promised to take additional action again and have suggested their priority is to cushion the economy over control of their debt levels. On one hand the April gold contract has forged a 3 day high early and appears to be leaning in favor of the bull track, but ongoing new high for the move action in the dollar is probably limiting early gains. We suspect that the focus of the gold trade will shift to the US nonfarm payroll results before shifting back toward the potential developments in China over the weekend in the afternoon trade. Expectations for today’s US nonfarm payroll reading call for a gain of around 160,000 and a reading at or above that level would likely cause some temporary selling of gold. However there have been some analysts warning that the payroll reading today could come in softer than expected due to production changes at Boeing. Overnight gold ETF’s added to holdings for 12th straight session bringing net purchases this year to 1.65 million ounces. Silver ETF’s also added to their holdings bringing this year’s net purchases to 2.61 million ounces. In the end, we give the bulls an edge with a critical pivot point at $1576 potentially setting the tone for the rest of the Friday trade. Traders might consider being long gold and short silver as a strategy to play for renewed safe haven buying, with the short’s silver component possibly protecting the long gold position against any return to the deflationary/slowing physical demand environment from earlier in the week.

With the palladium market showing very little correlation with fundamental forces lately and showing multiple recoveries from large corrections over the last six months, it is very difficult to predict today’s action. However we think the massive reversal from this week’s highs combined with surging views that the Chinese economy is headed to at least a moderate slowdown has turned the tables against the bull camp. We might also suggest that the market might have seen a bullish zenith in fundamental news earlier this week when a Russian PGM Mining CEO suggested palladium might be facing a world-wide deficit of 1,000,000 ounces. Furthermore, open interest has continued to liquidate which to us suggests that buyers are not stepping up on setbacks as usual and that could set the stage for March Palladium to fall back to consolidation low support down at $2,178.80. Given our patently bearish view toward palladium today, we suspect platinum will also be under pressure and a return to $954.30 could be an easy target.

Pushed into the gold market today, we favor a buy breaks strategy as we think speculators will try to push up prices ahead the close in anticipation of evidence of significant economic slowing news from China but also because of expectations for a noted Monday morning jump in the number of Chinese infections from the weekend. However, it could be a very narrow difference for gold traders between noted safe haven buying interest and moderate physical demand fear selling. Buying support in April gold today is seen at $1,565.80 with that level potentially tested through US payrolls. In the event US payrolls disappoint that could allow weekend virus speculation buying to gain control earlier in the day.”

Silver closed down $0.12 at $17.67. Interesting that this market has been quiet of late, but we are seeing a renewed interest at these levels.

Platinum closed up $1.90 at $966.60 and palladium closed down $27.00 at $2232.10. Palladium has, not surprisingly turned into a market in which we see almost all sellers. 

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

Of course, it’s not really patented but we do have some fun along the way. This is what the GoldDealer.com employees think: 7 believe gold will be higher next week and none think it will be lower and 2 think it will be unchanged.

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

Like the employees our customers were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 transactions – unscientific but worth considering because these people took action: 52 people thought the price of gold would increase next week 32 believe the price of gold will decrease next week and 16 think prices will remain the same.

Precious Metal Closes & Dollar Strength – Feb 3 – Feb 7

Gold - Defensive to Choppy

We believe our four flat screens downstairs with live independent pricing are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.

Yes – you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. We will also wire funds into your account that same day for a small fee ($25.00) if you are in a hurry.

In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s). 

Like us on Facebook and follow us on Twitter @CNI_golddealer – have some fun.

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

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

Posted on

Gold Quickly Corrects

Gold Quickly Corrects 

Commentary for Tuesday, February 4, 2020 – Gold closed down an unexpected $26.80 today at $1550.40. Its weakness over the past few days is, most likely a combination of stronger equities and the notion that stocks are the right place to be, given the Fed likes cheap money and perhaps too soon a change in the world view that China’s coronavirus scare might be overblown.

This “back to business” mood on Wall Street is based on the DOW’s recent rebound so higher stocks make sense, but the coronavirus remains a potential big deal in my mind so I’m wondering why the big turnaround in sentiment just over the weekend.   

So, what is gold’s “across the counter view” as we move further into 2020 now that its most recent up trend might be negated? In the broader picture the bulls still hold sway but there are crosscurrents, as we have seen today so a bit of caution is warranted. 

The technical picture in place at the close of business last Friday was positive. As gold pushed to the higher end of the pricing trough established this past month between $1550.00 and $1590.00. But closes yesterday and today were lower so we must rethink this market on the short term. 

Gold closed down $5.70 on Monday and $26.80 today with a $4.00 aftermarket bounce to the upside, so pricing is choppy. And the trading conversation has turned from “maybe higher” to “we are now searching for a short-term bottom”.

The question of whether this down draft will bring in more players buying “cheap” or turn into a profit taking rout is difficult to say. On the short-term gold is in a solid profit position. Will these folks take the money and run or is world angst high enough that traders will buy the dip? 

It will most likely take this week for gold to find its feet. But even from that point it could break in either direction so expect more volatility. It looks like $1550.00 level is the technical Rubicon if you look at the 60-day pricing chart. A break below that number would be troubling. There is some support at $1520.00 and a worst-case scenario looking at $1480.00.

Gold was trading around a 7-year high with a great deal of overhead resistance between $1600.00 and $1800.00 so a round or two of profit taking makes sense. And today’s downdraft will throw some cold water on the bulls but this market has plenty of reasons to trade higher especially if stocks get wonky or the dollar again heads south.  

Just a week ago plenty of Wall Street traders thought that gold’s firm uptrend might confirm a growing suspicion – there was trouble in the paper markets. Today’s action will sweep away this grumbling, but it could easily return – perhaps worse depending on the catastrophe de jour.  

For the optimist there are reasons which support higher gold prices even on the shorter term. The big central bank players remain the same – Russia and China, and both are engaged against US interests so gold bullion will remain on their shopping lists. And I see no reason why central bank buying of gold will slow down in 2020. In fact, it might push higher than an encouraging 2018 and 2019. Central banks aren’t price watchers – they use gold to hedge their crazy bets in the fiat currency markets now white hot across Europe as interest rates go negative.  

On the minus side, consider that Asian gold demand lags with higher pricing. It’s difficult to pin this down because of the underground market but informed guesses claim that as gold approached $1600.00 Asian demand might drop by half or more.

The virus impact cuts both ways – if it gets out of hand the economic damage to China will further dampen regional sales. But the potential for worldwide slowdown might increase safe-haven demand as countries implement quarantines, still there appears to be no panic worldwide.  And the price of crude oil – moving from 63.00 through 50.00 this past month is a negative. And finally, the rebound in the dollar also hurts gold shorter term.

So you can see there are reasons to adopt a bullish or bearish position. The middle of the road US perspective is to remain watchful and see how this latest change in settlement shakes out – good or bad. On the plus side it will take some uncertainty out of the market and make planning easier. I would not read too much into this latest drop – here are no bells or whistles going off but this situation remains fluid.

This from Zaner (Chicago) – “ Despite growing infection and death rates inside China global markets have seemingly begun to discount the long term negative impact of the virus outbreak. However Taiwan is suggesting that China is restricting WHO access to information on the outbreak which Taiwan says has resulted in the World Health Organization spreading “fake news” on the status of the situation. Therefore the potential for the virus to become a sudden and massive flight to quality buying catalyst in gold again should not be discounted. On the other hand, given fresh damage on the charts, ongoing strength in the dollar, definitive global risk on flows into equities and speculation that Indian gold imports in January will fall by 48% over year ago levels provides a pretty bearish cocktail for gold prices to start today. Furthermore the gold market closed lower in Hong Kong and the charts in the April gold contract have suffered fresh damage early on. However gold could garner some very minimal support from news that gold ETF’s raised their holdings for the 9th straight session pushing this year’s net purchases up to 1.29 million ounces and to the highest level in over 12 months. According to one measure global holdings of gold bullion backed ETF’s have now reached 2537.9 tons which surpasses the previous all-time record high holdings achieved back in 2012. Another supportive issue that looks to be discounted by the trade today is a report from the Congo that their gold production last year fell 5.7% on a total of 34,657 kg. While Chinese December gold imports from Hong Kong jumped in December that should be considered “old news”. In fact with a sustained contraction in January and February gold imports highly likely and substantial it could be impossible for Chinese gold imports to remain near 1,000 tons. In fact for most of the last 6 years, Chinese gold demand has held below 1,000 tonnes but a sustained idling of the Chinese economy could bring 2020 imports down to the lowest level since 2012 with a net reduction in the neighborhood of 150 tonnes! Unfortunately for the bull camp, the latest net spec and fund long positioning in gold was relatively close to the all-time record long (within 23,000 contracts) and therefore the market has used a lot of fuel to get to and remain near the $1,600 mark. Since the last positioning report into the high on Monday April gold managed a further rally of $25, thereby increasing the odds that the spec long might have reached a new record. In conclusion, without a major economic meltdown from a noted breakout of the virus from quarantined areas, the bear camp is likely to control on a softening physical demand argument.

The palladium market has once again impressed with a sharp range up extension in what appears to be relief provided by a surge in global equity prices. Apparently the market is nonplussed with the potential lengthening shutdown of the Chinese economy and its potential knock on impact on auto sales and auto catalyst demand for palladium. In fact the market is also unconcerned of recent extractions from palladium ETF holdings with the market instead embracing a forecast from the Amplats CEO of a possible 1 million ounce global supply deficit. On the other hand Norilsk Nickel has blamed the historical surge in prices on financial speculation but at the same time the company indicated miners are struggling to meet surging auto catalyst demand from pollution control efforts inside China. In the end it would appear as if the palladium market is looking beyond the Chinese virus crisis but we would also note that palladium hasn’t exactly shown a tight correlation to the ebb and flow of economic conditions inside China. While we are suspicious it is clear the charts have shifted back up and near term resistance might not be seen until $2335.60. Fortunately for the bull camp, the net spec and fund long positioning in the palladium market has liquidated to the lowest level since September 2018 and that combined with 11 days of chop around $2,250 has probably helped balance the overbought condition in palladium from the early January rally. While we continue to have serious fundamental demand reservations for palladium, at the same time, the market has been made aware of potential special supply flows from fund holdings, comments from the South African President that “time is running out to enact reforms to save the mining sector” rekindles some supply uncertainty. While the markets have not paid too much attention to the disruptions of South African production due to electrical grid shortages, mining companies there have little hope of expanding output under the current situation.

While we can’t discount the potential for a sudden without notice resumption of the upward track in gold from a revival of safe haven buying interest, it now appears that the spread of the virus will have to become very severe with perhaps a breakout beyond initial quarantine areas to overcome fears of lost Chinese physical gold demand. Critical support in April gold today was already violated at $1,575 and that shifts the next support level down to $1,567. The outlook for silver is even more vulnerable than gold as the market hasn’t seen much safe haven interest to begin with and the market continues to face the threat of deflationary selling in the wake of news overnight that some global factory activity might be idled because of supply chain problems caused by China. Initial downside targeting is seen at $17.52 and then again down at $17.28.”

Silver closed down $0.11 at $17.53.

Platinum closed down $4.60 at $963.40 and palladium closed up $102.10 at $2357.50.

We believe our four flat screens downstairs with live independent pricing are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.

Yes – you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. We will also wire funds into your account that same day for a small fee ($25.00) if you are in a hurry.

In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s). 

Like us on Facebook and follow us on Twitter @CNI_golddealer – have some fun.

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

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

Posted on

Gold Fear Index Cools

Gold Fear Index Cools

Commentary for Friday, January 31, 2020 – Gold closed down $.060 at $1582.90. I think too much emphasis is being put on gold’s safe haven status relative to the coronavirus outbreak in China even though this tragedy has surpassed the SARS epidemic of 2003. The problem here however is that on the short term it is difficult to say because this type of human tragedy is impossible to measure.

Worse it can get out of hand exponentially because of modern transportation – in a matter of days this virus can be carried worldwide while concerned countries are still just considering quarantine. Still, today’s halt of airline service to China by Delta and American highlights this evolving problem as the virus creates more confusion.

Gold’s initial reaction was to spike higher in early trading, but it quickly lost altitude and closed virtually unchanged. The point here is that when real trouble knocks on the door gold becomes a legitimate warning bell as to the degree of danger. That is why sound financial planning should include some bullion before the trouble begins. The opportunity to take a physical position might be limited, perhaps even impossible once the problem is widely known and understood. 

Subsequent weakness in the dollar also encouraged the price of gold today. Since Wednesday the Dollar Index has moved from 98.2 to 97.5 so lower and enough lower to support higher gold prices and reflect the tension created by just the possibility of a pandemic.

Now add to this mess the fact that gold has an established bullish leg up – one which began last November ($1450.00) has pushed above the important $1550.00 level and is now looking at $1600.00. In my mind, if it were not for the serious China problem these prices would be considered “too much too soon” even with the continued dovish FOMC inclination.

Whether or not this turns out to be an overreaction remains to be seen. But there still remains an absence of gold high rollers in the US market. I would have expected more “across the counter” sales of gold bullion given gold’s bright technical picture – but this has not been the case.

This might suggest that while the US market remains interested in gold and silver bullion – recent higher prices have not convinced those still on the sidelines to join the party.

If you look at the larger 10-year gold picture you must respect the notion that it has pushed above stiff overhead resistance at $1400.00 which has been in place for 7 years. Perhaps a wake-up call or hint that inflation is not as dead as most suppose.  

In any event the next technical hurdle goes back to that “old highs” channel – established between 2011 and 2013 between $1600.00 and $1900.00. This too is formidable but will easily melt if inflation returns (always an FOMC concern if you read between the lines) or something like the coronavirus turns into a dreaded Black Swan.

The very least you can take away from this human misery is that gold will remain more than “interesting” in 2020 – challenging $1600.00 or $1700.00. This pot has not begun to boil as yet but it is heating up and will be watched carefully. 

The fact that the FOMC “must” keep the “cheap money” floodgates wide open or risk significant damage to Wall Street and Trump’s second term is gaining more attention. This will continue to support the price of gold and encourage the return of inflation. 

If you are on the fence there is time to develop a longer-term plan, but this period of grace will not last near as long as most believe. Indeed, we have already begun to see the consequences of fiscal abuse as world central banks hedge their bets by increasing their core gold holdings.

It’s amazing how easily most forget that history repeats itself. So, acting before the crowd shows up makes perfect sense. Or more succinctly, if you are one of the many which lamented missing the last “gold rush” – make sure you don’t miss the next one. The old adage “don’t wait to buy gold, buy gold and wait” comes to mind. Blessings and prayers for our world neighbors.      

This from Zaner (Chicago) – “Global equity markets overnight were weaker with the exceptions the Russian, Australian and Tokyo indexes. News from the virus front is not overly concerning with new cases showing up at a very slow rate outside of China and news from inside China on the virus somewhat limited in its flow. The World Health Organization did declare a global health emergency but that distinction posted yesterday afternoon did not apply noted pressure to global equities. Overnight economic developments included very soft Japanese retail trade data for December, significant weakness in large Japanese retailers sales and a very surprising report from China indicating nonmanufacturing PMI for January came in stronger-than-expected and higher than the prior month. It should also be noted that Chinese NBS manufacturing PMI for January matched expectations but ticked lower from the prior reading. On one hand we are surprised that the Chinese government release data given the holiday and the chaos inside the country but it might have been tactical to release data before the midmonth debacle hit their economy. In other economic news Japan saw some rather volatile readings from construction orders which jumped by 21% over year ago levels in December while housing starts in December fell by a sharp 7.9%. From Europe GDP for France declined 0.1% (worse than expected), German retail sales for December fell by 3.3%, Swiss real retail sales in December fell by 0.1%, while French consumer spending for December also fell by more than expected. It should also be noted that French consumer prices came in softer than expected with the only bright spot in the overnight European economic news flow seen from Spain and Italy which produced slightly upbeat GDP readings for the 4th quarter. From the UK which is gearing up for the mechanical exit the market was presented with net lending to individuals which came in stronger than last month, a bigger than expected rise in consumer credit and a significant jump in mortgage approvals for December. The North American session will start out with December personal income which is expected to have a modest downtick from November’s 0.5% reading while December personal spending is forecast to have a minimal downtick from November’s 0.4% reading. The fourth quarter employment cost index is expected to hold steady at 0.7%. November Canadian GDP is forecast to have a minimal uptick from October’s -0.1% reading. The January Chicago PMI is expected to have a modest downtick from December’s 48.9 reading. A private survey of January consumer sentiment is forecast to hold steady with the previous 99.1 reading. Earnings announcement will include Exxon Mobil, Chevron, Honeywell, Caterpillar, Colgate-Palmolive, Illinois Tool Works, Phillips 66 and Aon before the Wall Street opening.

While the gold market appears to be starting off on a softer footing we would suspect it will regain its footing at some point during the trade today. In fact today might be a day where prices pay little if any attention to classic supply and demand fundamentals and instead look ahead to the potential virus/economic developments inside China from over the weekend. However recent chart action has been supportive and the market has shown signs of shaking off morning weakness and clawing higher in the afternoon trades. In a sign of rising speculative bullish interest gold ETF’s saw their holdings increase for the 7th straight day yesterday bringing this year’s net purchases up to 1.19 million ounces. It should be noted that total gold holdings by ETF’s are now at the highest levels in 12 months with gold holdings last year thought to be poised to make more new record high holdings this year. As for the virus situation cases continue to show up sporadically around the globe and the death toll has climbed above 200 but the markets are not concerned about the global health threat. In fact we would suggest the containment efforts outside of China are seemingly slowing the spread to a very manageable level and the incubation/transmission window could be mostly closed one week from today. However as we will continue to suggest the major uncertainty thrown off from the virus is what is taking place in the Chinese economy with images of major thoroughfares, train stations public spaces like shopping centers and parks completely empty. While China released a surprisingly upbeat nonmanufacturing PMI reading for January, economists are quickly discounting that reading as a “pre-virus” reading. In short expect choppy two-sided trade with the likelihood of a grind higher and potentially a re-test of $1594.70 with even higher prices possible if equities show increased concern and the S&P falls below 3260.00. The biggest threat to the bull camp would be any fresh soothing commentary from World Health Organization officials regarding progress toward global containment or maybe even the slowing of the spread of the virus inside China but that is unlikely considering that the WHO provided a statement yesterday.

With a fresh higher high/4 day high in palladium to start today, the bull camp probably congratulates itself on weathering this week’s major potential demand destruction threat from China. However we would also note that equities have not shown significant downward action yet with global investors still confident in global containment and as of yet they are not too concerned about the dramatic vulnerability of the Chinese economy because of the nearly complete economic shutdown. In retrospect, the palladium market has absorbed news of a fresh source of supply (96,000 ounces from Russia’s Norilsk nickel) impressively but with that company overnight indicating its palladium and platinum output in 2019 gained 7% and 8%, the company would appear to have more supply than the markets might have been expecting. In our opinion if the company decided to liquidate some of its fund holdings, it has more supply in reserve and could be motivated by more attractive prices to liquidate even more supply. While it is difficult to know for sure if, when and how much palladium the Russian mining company plans to move on to the market, the initial report of 96,000 ounces is material when combined with surging demand destruction fears. From our analysis, it appeared that some mining concerns began to build their funds of palladium in 2015 and therefore the holdings are likely to be much more significant than the 96,000 ounces in play this week. In early 2016, palladium prices bottomed out below $500 which means some of those purchases reaped 4 or 5 times their investment! On the other hand we have to admire the company’s resolve to hold in the face of a nearly doubling of prices since the middle of last year. While the relationship might be suspect between palladium and platinum prices those looking to remain long palladium might consider a cross hedge with the purchase of puts in platinum. In conclusion the initial bias is up in palladium but volume and open interest has fallen off dramatically since the highs and the $2300 level should offer some measure of resistance this morning with the afternoon direction of equities a potentially important catalyst for the PGM markets.

As indicated already we think the path of least resistance is pointing upward in gold but the bull camp has to be somewhat concerned that the rapid expansion of the infection tally inside China (nearing 10,000) has not undermined global sentiment more significantly. In fact following a declaration of a global emergency from the WHO yesterday equities held and gold failed to sustain modest gains. Given the “weekend impact” we suggest there will be an inflow of speculative money later today expecting something notable to surface into the opening on Monday. In short there should be an attempt to retest 3 week highs in April gold at $1594.70. On the other hand, the inability to hold above support at $1576 could be problematic as volume and open interest has declined notably over the last 5 days in a sign that overall interest toward gold is declining in the face of a major health/economic incident.”

Silver closed up $0.02 at $17.97.

Platinum closed down $17.90 at $959.20 and palladium closed up $9.00 at $2246.60.

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

Of course, it’s not really patented but we do have some fun along the way. This is what the GoldDealer.com employees think: 9 believe gold will be higher next week and none think gold will be lower and 1 thinks it will be unchanged.

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

Like the employees our customers were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 transactions – unscientific but worth considering because these people took action: 58 people thought the price of gold would increase next week 20 believe the price of gold will decrease next week and 22 think gold will remain the same.

Precious Metal Closes & Dollar Strength – Jan 27 – Jan 31

Gold Fear Index Cools

This is our usual ETF information – Gold Exchange Traded Funds: Total as of (1/22/2020) was 77,448,755. That number this week (1/29/2020) was 78,011,036 ounces so we gained 562,281 ounces of gold. The all-time record high for all gold ETF’s was 85,108,867 ounces in 2013. The record high for Gold ETF’s in 2020 was 78,011,036 and the record low for 2020 was 76,763,936.

Silver Exchange Traded Funds: Total as of (1/22/2020) was 683,385,695. That number this week (1/29/2020) was 689,977,645 ounces so we gained 3,145,506 ounces of silver.

Platinum Exchange Traded Funds: Total as of (1/22/2020) was 3,131,305. That number this week (1/29/2020) was 3,145,506 ounces so we gained 14,201 ounces of platinum.

Palladium Exchange Traded Funds: Total as of (1/22/2020) was 668,542. That number this week (1/29/2020) was 659,834 ounces so we dropped 8,708 ounces of palladium.

We believe our four flat screens downstairs with live independent pricing are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.

Yes – you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. We will also wire funds into your account that same day for a small fee ($25.00) if you are in a hurry.

In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s). 

Like us on Facebook and follow us on Twitter @CNI_golddealer – have some fun.

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

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

Posted on

Gold Firm – China Troubles and Trump EU Threats

Gold Firm – China Troubles and Trump EU Threats

Commentary for Thursday, January 23, 2020 – Gold closed up $9.30 today at $1564.60. With the price of crude oil cooling off and the dollar moving higher you would expect the price of gold to be lethargic at least – perhaps even subject to some healthy profit taking being up $73.00 this past month and $273.00 this past year.

Now consider the 30-day pricing chart which adds to the buzz – moving from $1480.00 through $1570.00 between late December and early January, but this drive to higher prices suddenly flattens out by mid-January holding steady around $1560.00.

So remember the “sweet spot” I have been banging on about for a month – it really makes no difference on the short term what gold does on either side of $1560.00 – it must break higher sustaining prices above its most recent high ($1570.00) before computer trading is going to give everyone the green light.

Today’s $10.00 push at the higher end of this latest extended price trough does neither – so why is it getting some attention? Why are we seeing higher prices now and why are we not seeing the expected round of profit taking? These are some questions which concern the big thinkers in gold now that pricing is holding firm. This is not to say we have trend reversal here – but it does suggest something is not right in River City.   

Neils Christensen (Kitco) points out that the economic summit in Switzerland might be providing more gold buzz. “Mike McGlone, senior commodity strategist at Bloomberg Intelligence, said in a report Wednesday that he sees more potential for the precious metal and technology metals, compared to oil as he listens to some of the themes being discussed at this year’s international conference in Davos Switzerland.”

Trump’s threat of EU sanctions is creating concern – like him or not he is capable of rocking the boat at any time – so while I think that safe haven demand is off considerably, especially across our counter his sometimes out of the box behavior is a plus for the physical gold market.

Still I would keep your powder dry. This latest semi-jump in prices looks more like “chop” in a troubled world to me – but with a continuation above $1570.00 would change my mind.

This from Zaner (Chicago) – “Global equity markets overnight were lower, with the Shanghai markets trading 3% lower while most other markets declined by less than 0.3%. While the market has not been presented with fresh official exposure/death readings, China did move to shut down travel at 2 cities thought to be at the center of the outbreak. Global economic news overnight saw Japanese all industry activity for November come in slightly less than expected with their coincident and leading economic indicators also coming in softer than expected. Early in today’s session there will be an ECB interest rate decision and a series of Spanish bond auctions. The North American session will start out with a weekly reading for initial jobless claims that are forecast to have a moderate uptick from the previous 204,000 reading. Ongoing jobless claims are expected to have a modest downtick from the previous 1.767 million reading. The Conference Board’s December reading for leading indicators is forecast to have a modest downtick from November’s unchanged reading. The Kansas City Fed’s January manufacturing activity index is expected to have a minimal uptick from December’s -7 reading. Earnings announcements will include Procter & Gamble, Comcast, Union Pacific, Kimberly-Clark, Travelers and Freeport-McMoran before the Wall Street opening while Intel and Intuitive Surgical report after the close.

The April gold contract continues to mark time on the charts with sideways action but in the process we feel the $1550 level has been enforced as a key support level. While potential news flow from the virus situation is capable of popping-up and dominating price action at any time, this morning’s initial focus will temporarily shift to the ECB interest rate decision. However traders do not expect any change in policy with the bank expected to sustain a negative deposit rate of 0.5%. While the Chinese virus situation has already become a global virus issue, economic news from Tuesday got the attention of gold following negative economic views from the Moody’s credit rating agency earlier this week and the trade saw a contraction in the Chicago Fed National Activity Index and that has fostered some economic uncertainty. Therefore the gold market is likely to take some initial direction from today’s US scheduled data flow (weak data should lift prices and strong data should pressure). However in the near term, it could be extremely difficult to determine which if any fundamental factor will be capable of driving gold prices out of the recent range and it could even be more difficult to determine which direction a specific fundamental will drive prices as the focus waffles back and forth from safe haven and fears of slowing. For example, the initial surprise of the outbreak of the virus actually resulted in a slide in gold that appeared to be deflationary in nature. On the other hand, the technical condition seems to offer solid support and gold does not appear to be negatively impacted by gains in equities or strength in the dollar. We continue to suggest those looking to be long gold consider the purchase of put protection for those positions. Given the intense media coverage of the virus it wasn’t surprising to see Gold ETF’s yesterday add 124,130 ounces to their holdings bringing this year’s net purchases up to 370,211 ounces. Clearly many ETF investors are seeking to hedge equity investments while others are simply attempting capitalize on the prospect of a pandemic. Unfortunately for silver bulls ETF holdings were reduced by 485,597 ounces boosting this year’s net sales to 8.68 million ounces and extending the liquidation streak to 7th day.

The palladium market ranged sharply higher again overnight and managed that rally in the wake of a historic rally yesterday! Certainly technical measures are flashing red, but we think it is possible that bullish fundamentals are starting to materialize, with stories overnight suggesting the South African power outages are expected to add to the existing shortage. In fact overnight Amplats indicated power issues last year reduced their output by 38,000 ounces and the pattern of blackouts has clearly extended into 2020 and may worsen. While not a major additive to the lost production potential, one has to wonder if normal seasonal power demands will add to the shortfall of power availability in South Africa. While a reduction in output of 38,000 ounces from one company might not seem significant, that reduction might add another 5% to the projected deficit of 820,000 ounces in 2019. However another more sinister potential behind the rally, could be news that a Russian fund (establish to meet PGM contract demand at Russian companies) has been buying on the open market because of their persistent declining output. In fact if Russian mining company interests are buying palladium on the open market that action has created a significant windfall and might perpetuate until a conclusion at some point in the “future”. For example analysts have suggested that ETFs won’t be able to cover shortages in the long term as holdings have fallen to about 613,000 ounces from levels above 2.5 million ounces back in 2015. In other words total ETF holdings are barely enough to cover the 500,000 ounce supply deficit from a single top miner (MMC Norilsk Nickel). Reportedly the Russian palladium fund used to meet customers’ demand reportedly sold more than 1 million ounces from it between 2017 and 2018 which reduced their reserves and highlights the need to replenish their cache. Palladium ETF’s did decrease their holdings yesterday by 1,622 ounces with that outflow the 5th straight day of liquidation. However we would note that flows into palladium ETF’s have not budged from the lowest level since their inception which suggests those instruments are not being utilized yet in the current rally. While palladium options are extremely thin and difficult to trade, those with long futures positions might attempt to implement near to the money bear put spreads as the risk of longs in our opinion is now extreme. As we indicated a number times over the last 2 weeks, it probably takes continued gains in palladium prices to “drag” platinum prices higher and that appears to be the case. Uptrend channel support in April platinum in the short term is seen at $1,001 with a longer-term uptrend channel support seen at $980 and that uptrend channel support line increasing to $1,011.30 on Monday.

As indicated already in our coverage today we suspect that daily ranges are set to expand throughout the precious metals complex with standard fundamental factors potentially not driving markets in the directions that would normally be expected. However, the gold market has shown consistent and building support above the $1,550 level and traders should remain long but utilize two long gold put options against each long futures position. As for silver, we are less bullish and think the market is especially vulnerable to any notable expansion in virus numbers today.”

Silver closed unchanged today $17.77. This market has been quiet of late but the buying of monster boxes these past few days has picked up.

Platinum closed down $14.10 at $1001.70 and palladium closed down $6.60 at $2342.00. These markets continue to be very volatile – if you are buying or selling make sure you get either a Purchase Order Number or Invoice Number from Alex confirming the trade. 

We believe our four flat screens downstairs with live independent pricing are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.

Yes – you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. We will also wire funds into your account that same day for a small fee ($25.00) if you are in a hurry.

In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s). 

Like us on Facebook and follow us on Twitter @CNI_golddealer – have some fun.

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

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

Gold and Stocks Higher?

Gold and Stocks Higher?

Commentary for Friday, January 17, 2020 – Gold closed up $9.80 today at $1558.80. A rather firm close into the long weekend which is good but in the broader sense you have to wonder if the current pricing pattern over the past 30 days will hold – especially with all the good news and all-time highs in US stocks.

Wall Street obviously loves the Trump/China trade deal and the FOMC seems ready to double down on cheap money. As we have not heard much from the Fed which might rock the interest rate boat. Most feel that interest rates will remain cheap through 2020 and perhaps much longer if inflation remains tame.

So why higher stocks and higher gold? I don’t think its safe-haven demand even with a troublesome Iran. So how about some scuttlebutt – a slang term meaning rumor or gossip, deriving from the nautical term for the cask used to serve water. The word corresponds to the colloquial concept of a water cooler in an office setting, which at times becomes the focus of congregation and casual discussion for our younger readers.

The latest watercooler talk? A friendlier and more profitable relationship between China and the US might suggest better economic sailing for everyone! Which would mean more money for the rank and file which (outside the US) considers gold cheap relative to their own currencies.

And what if you turn Grinch-like and claim this “economic miracle” will not hold together?

Gold bullion is still the best choice for a world-wide hedge in the unlikely event that stocks turn south, or inflation returns sooner than later.

And the US buyer (still absent in my opinion) also gets a great option- the free look (you are watching these prices carefully – right?) The fact that gold is holding up well despite all the champagne toasting should provide some pause in your financial planning.

For now the gold bulls still have an edge. But a breakdown in price – perhaps as much as old lows ($1480.00) seen in December is still possible if profit taking overrules common sense.

It always pays to plan for that Black Swan event especially because the world abounds in complicated problems revolving around debt approaching the impossible. In other words, does anyone consider that a “tipping point” is possible? That point where the red ink finally topples the latest financial comeback which was funded with borrowed money.  

There are more reasons to own the precious metals than there was this time last year so watch this current pricing trough between $1540.00 and $1580.00. This is where all the recent chop has been trying to work itself out. A break in either direction will give you more information as to what might be in the cards for 2020 and beyond.

Personally, I would be more concerned about a break above recent highs ($1550.00) than I would being able to buy gold cheaper in the short term. A break to the upside may portend higher prices and a continuation of this latest bullish leg. And no one interested in the precious metals wants to be late to this party.    

A reminder we will be closed this Monday (Jan 20th) for Martin Luther King, Jr Day. The banks, post office and domestic trading will also be closed.

This from Zaner (Chiacgo) – “Global equity markets overnight were higher with the exception the Hang Seng which closed minimally lower. In addition to continued optimism from the US/China trade deal signing, the markets appear to be lifted as a result of overnight Chinese economic data flows. While Chinese GDP only matched the prior month at 6% Chinese, industrial production in December rose much more than expected while retail sales for December gained 8% on year ago levels! Unfortunately for the UK, retail sales for December gained only 0.9% off expectations for a 2.6% gain. However the UK retail sales result was an improvement on the prior month. The North American session will start out with December housing starts which are expected to have a modest uptick from November’s 1.365 million annualized rate. December building permits are forecast to have a modest downtick from November’s 1.482 million reading. December industrial production is expected to have a moderate decline from November’s 1.1% reading. December capacity utilization is forecast to have a minimal downtick from November’s 77.3% reading. A private monthly survey of January consumer sentiment is expected to hold steady with December’s 99.3 reading. The November job openings and labor turnover (JOLTS) survey is forecast to have a moderate decline from October’s 7.267 million reading. Philadelphia Fed President Harker will speak during morning US trading hours while Fed Vice Chair Quarles will speak during the afternoon. Earnings announcements will include Schlumberger, State Street, Fastenal, Kansas City Southern and JB Hunt Transport before the Wall Street opening.

It is somewhat impressive that the gold market has managed to sustain the bounce from the initial washout this week as the dollar has held up, risk on mentality is entrenched by ultra-strong US equity prices and ETF’s have seen some liquidation this week. However we suspect that resistance this morning has been thickened somewhat by signs that US/EU trade relations might be improving with positive EU commentary regarding talks with the US on trade. While not overly impressive Chinese economic data came in slightly better than neutral which might contribute minimally to the risk on bias and in turn make gold and silver less attractive. Gold might be put under late pressure today if prices in the afternoon are tracking below $1550 as the market continues to maintain a very large net spec and fund long and the prospects of a moderate weekly loss and risk on psychology could result in a retest of this week’s lows down at $1536.40. Gold ETF’s yesterday sold 182,084 ounces of gold bringing this year’s net sales up to 453,034 ounces. Silver ETF’s also reduced holdings by 813,630 Troy ounces bringing this year’s net sales up to 7.79 million ounces and posting 3rd straight day of net sales. In other slight negatives, Barrick Gold predicted their fourth quarter gold production to be higher than market expectations and a Chinese company purchase of a Russian Gold Mining company might have been derailed. In retrospect Iran did threaten EU personnel in the region this week as a result of EU complaints regarding enrichment violations and the Iranian leader has also rekindled some tensions by suggesting the strike against American forces was “the hand of God”. Therefore some residual safe haven support is likely to remain in place ahead of the weekend. It is also possible that President Trump will become more aggressive with Iranian sanctions if it appears that other countries are now growing tired of Iran’s enrichment violations. In the end, risk-on from equities looks to limit/pressure gold but the capacity to trade positive in the face of negative impacts this morning shows some residual capacity on the part of the bull camp.

While the palladium market has not forged new all-time highs again this morning, prices remain right on the all-time high level early and would appear to retain positive technical momentum. In fact given a sea of green in global equity markets, mostly positive Chinese economic data (retail sales were strong enough to consider the data positive) and increased media coverage on the stellar gains in the PGM markets, the bull camp looks to have a fundamental edge. On the other hand some media outlets are beginning to take note of the historic overbought technical conditions in the palladium market with standard RSI readings approaching 92 and Bloomberg coverage noting that palladium has already gained 21% since the start of the year. One countervailing argument against the overbought technical condition of palladium is the fact that the net spec and fund long positioning might still be one half of the record levels in tonight’s positioning report. In palladium, there have been two instances since last September where chart action of the like displayed on Thursday resulted in multi-day corrections. In November, the chart reversal resulted in a five day decline of $151 whereas the reversal on December 17th resulted in a slide of only four days and amounted to $189. Furthermore, the press is beginning to show a lot of stories caring evidence of seriously overbought “short-term classic technical signals”. By some measures, the RSI is at the highest level since January 17th but it should be noted that prices following that reading fell for only three days and only dropped $64 before exploding for over $300 in the ensuing three weeks. In the December washout, prices also recovered with a massive gain of $500! With the platinum market this week showing increased positive sensitivity to palladium gains, platinum options volume showing an increase in activity and the rising fear of expensive palladium pricing it is possible that platinum could begin to show more upward momentum. For some traders the primary source of the lift in PGM prices is the removal of headwinds from the threats against the Chinese economy which is thought to be locked on a significant auto buying trend.

While the gold and silver markets are likely to continue to chop in both directions again today we generally expect ongoing respect for $1,550 on the February gold charts. On the other hand, we think the bull camp currently lacks a definitive theme to return the market to the strength seen in December and early January. Furthermore if equities post a significant risk-on rally sustained rally today and in turn puff up economic optimism that could result in gold finishing lower today. Obviously critical support is seen at $1,550 but more than likely support is at $1,541 and then again down at $1,536.40 if stocks prompt a euphoria condition today. To shift bullishness into forward gear again to end the trading week probably requires an early trade today back above $1,559. Unfortunately for the silver market, favorable US schedule data and new all-time highs in equities yesterday failed to result in a positive days’ trade. Therefore, we lean in favor of the bear camp with expectations for an extension of this week’s pattern of lower highs.”

Silver closed up $0.13 at $18.01.

Platinum closed up $23.70 at $1019.40 and palladium closed up $49.10 at $2337.90. 

We believe our four flat screens downstairs with live independent pricing are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.

Yes – you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. We will also wire funds into your account that same day for a small fee ($25.00) if you are in a hurry.

In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s). 

Like us on Facebook and follow us on Twitter @CNI_golddealer – have some fun.

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

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

Posted on

Gold Turns Choppy

Gold Turns Choppy

Commentary for Friday, January 10, 2020 – Gold closed up $5.80 today at $1557.50. This past month gold has seen the typical volatility we have been talking about for some time moving from $1460.00 through $1580.00 for various bullish reasons the most recent being the hostility between the US and Iran. Both parties, for the sake of world sanity decided this road was too dangerous and so did not push the “war” envelope.

When the shooting started the White House went silent (Tuesday) and trading tension heated up with a sensational plus $40.00 aftermarket in gold. By Wednesday afternoon Trump was busy talking everyone down and assuring the rank and file that Armageddon was an overstatement.

At that point there was still plenty of interest, but a great deal of the buzz was gone, and gold traded choppy to lower. Traders were reminded that “shorting” gold in its current condition was a bad idea and the Middle East is capable of being pushed to the “brink” overnight. 

This mania was created when the US decided to strike Iran for “acts of war” and our missile attack killed one of their famous generals. Iran in turn fired missiles at US targets in the area and the world began to think once again that owning physical gold might be their best option.

In retrospect this “larger than life” incident turned out to be another Middle East scare but for a short time a few US dealers thought “this might just be the event” which would push gold to new all-time highs. Thank the Lord this was not the case, but it does nicely define why owning gold bullion is not an option but a mandate as desperate regimes become better armed.

So did this latest flare-up in higher pricing help or hurt the gold market? Actually, it did neither, but everyone would do well to note the “handwriting on the wall” – recounting Daniel.

One thing should be less clear at this point – political turmoil, largely ignored by gold traders of late is now back with a vengeance. The supposedly “quiet” gold trade which reappeared after the President’s hand holding woke up again Friday as a Russian warship “aggressively approached” a US destroyer in the Arabian Sea – gold moved higher by $10.00 in 15 minutes. Still this “up and down” choppiness is likely transitory, but it suggests tension right below the surface.

So at this point I would call this market nervous because the fundamental bullish case for gold remains in place. Central banks have created a massive amount of red ink this past decade – worse they have failed to pair back these programs – so debt continues to move higher. An old story but the longer everyone pretends it does not exist the worse the potential outcome. 

I have said many times there is a vast pool of money sitting on the sidelines watching gold. And what are they watching? The same two price points we have been talking about for months.

First, will gold hold $1500.00 and second will it show strength at or above $1550.00? With all the recent fireworks this question remains in the wind. 

I think we are stuck in that prolonged pricing channel between $1450.00 and $1550.00 which began in August of last year. So, if you are still scratching your head over buying, selling or standing pat you have not missed the boat.

On the other hand, it pays to get all your ducks in order.

If we push above $1600.00 in the first quarter of 2020 – at least a possibility – the basic bullish case for gold is once again in play and will be supported by momentum players once everyone is on the same page. That means price changes will happen quickly. 

This from Zaner (Chicago) – “Global equity markets overnight were generally higher with the Shanghai markets minimally lower and the Hang Seng down by slightly less than 1%. Chinese new loans for December were lower than the prior month with a slight expansion of M2 money supply last month. Overnight Japanese household spending for November dropped significantly and was obviously much weaker than expected. However Japanese coincident and leading indicators came in better than expectations but were still below the prior month’s results. From Switzerland the unemployment rate was unchanged and on expectations. French industrial output for November contracted by 0.1% and Spanish industrial output rebounded with a gain of 2.1%. From Italy industrial output for November on a month over month basis came in at +0.1% which is marginally better than the unchanged expectation. The North American session will start out with the highlight for global markets, the December US employment situation reports. December non-farm payrolls are expected to come in around 155,000 to 175,000 which compares to 266,000 in November. December unemployment is forecast to hold steady at 3.5% while December average hourly earnings are expected to hold steady at a 3.1% year-over-year rate. December Canadian unemployment is forecast to have a minimal downtick from 5.9% with a moderate increase in their net employment. November wholesale trade is expected to hold steady with October’s unchanged reading.

The charts in gold and silver remain in favor of the bear camp today, with general geopolitical calm seen on both Middle East and trade fronts. While gold did see a measure of support from a bit of confusion on the date of the US/China trade deal signing (apparently the President indicated the signing would take place “shortly after January 15th) and that seemed to suggest a possible delay. The market might also be seeing some residual support from Iranian commander comments yesterday alluding to the potential for future attacks but in general there doesn’t appear to be a fuse available to light the bull case today. However the US nonfarm payroll report could provide a measure of volatility in the event that the readings are softer than expected as that would rekindle some economic uncertainty. In a sign of waning market bullishness both gold and silver ETF’s saw liquidations of holdings yesterday with the net sale of 91,085 ounces of gold lowering this year’s net purchases to only 4,902 ounces. It should also be noted that silver ETF’s now have net sales of 2.49 million ounces so far this year. While the gold market has not paid that much attention to classic supply side fundamentals the trade was presented with news of a 33% annual increase in second half 2019 gold production from DRDGold but that overall production level wasn’t overly significant at 3,037 kilograms. In fact that minimally negative news was offset by Evolution Gold news that their full year gold production would come in at the lower end of their production forecast for the year around 725,000 ounces. While not a significant factor there have been more South African power problems this week and that could result in some lost gold output in future supply readings. A developing negative for gold and silver prices is seen from the extension of gains in the dollar back to the highest levels since December 26th! From a technical perspective the February gold contract continues to show some attraction to the $1550 level thereby providing the bulls with some confidence and in turn that tempers the aggressive bearish sentiment in place in the prior two trading sessions. While the COT positioning report released after the close today will probably not see the impact of the Wednesday explosion on the upside we suspect the spec long positioning adjusted for the highs this week would have resulted in a new record high long. Therefore, the threat of further stop loss selling should not be under stated and traders should view the Thursday low of $1,541 as a potential inflection/pivot point where another wave of panic selling could be seen.

While the Russians are the primary production source of palladium, it should be noted that South Africa is seeing fresh power outages this week and that could contribute to fresh palladium supply-side concerns and in turn that could result in lower PGM output from that area. On the other hand, a $1,848 2020 palladium price forecast from Morgan Stanley is certainly a development capable of prompting some long profit-taking given that March palladium prices yesterday closed at $2,062.40. In searching for fundamental justification for the explosive rally in palladium over the last year, some sources have suggested it is possible that Russia could be buying palladium or holding back supply to meet contractual obligations as their production has shown signs of tailing off over the last several years. From a technical perspective, March palladium prices yesterday hit yet another chart objective but fell back toward the middle of the wide daily trading range and failed to improve notably on the prior all-time high closing level at $2061.40. To end the trading week, we see a critical pivot point down at $2,023.30. As indicated already, the reemergence of South African power problems this week also rekindles threats against platinum production in that country and that could eventually show up in the future production data but in the near term, that news is only minimally supportive. Certainly the record net spec and fund long positioning in platinum has been moderated somewhat by the $50 correction from last week’s highs but it is very difficult to suggest platinum will resume the November through early January uptrend without further corrective action. In fact the September correction was $112 an ounce while the November washout was $80 and the current correction so far is only $49.”

Silver closed up $0.17 at $18.03. 

Platinum closed up $14.10 at $981.20 and palladium closed up $12.50 at $2072.70.

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

Of course it’s not really patented but we do have some fun along the way. This is what the GoldDealer.com employees think: 7 believe gold will be higher next week and 1 thinks gold will be lower and 2 think it will be unchanged.

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

Like the employees our customers were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 transactions – unscientific but worth considering because these people took action: 48 people thought the price of gold would increase next week 25 believe the price of gold will decrease next week and 27 think prices will remain the same.

Precious Metal Closes & Dollar Strength – Jan 6 – Jan 10

Gold Turns Choppy

We believe our four flat screens downstairs with live independent pricing are unique in the United States. The walk-in cash trade can see in an instant the current prices of all bullion products and a daily graph illustrates the range of the markets on any given day.

Yes – you can visit the store with cash and walk away with your product. Or you can bring product to the store and walk away with cash. We will also wire funds into your account that same day for a small fee ($25.00) if you are in a hurry.

In addition to our freshly ground coffee we offer complimentary cold bottled water, Cokes and Snapple. We also provide fresh fruit in a transparent attempt to disguise our regular junk food habits as we sneak down the block for the best donuts in the world (Randy’s). 

Like us on Facebook and follow us on Twitter @CNI_golddealer – have some fun.

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

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

Posted on

Gold Jumps on Middle East Grief

Gold Jumps on Middle East Grief

Commentary for Friday, January 3, 2019 – Gold closed up $24.70 today at $1549.20. The US airstrikes last night are obviously responsible for today gain in gold prices but it would be a mistake to think that is all that is going on with our shiny friend. Gold has been surprisingly upbeat since early December despite the US and China claim that they will sign at least a partial trade deal in a few weeks.

And while this morning is the exception – consider that US stocks are steadily higher most likely in anticipation of that promised deal. And perplexing as it might seem the dollar has been weaker – the Dollar Index this past week losing a full point.

Technically this past month the bulls are dancing in the street – we have moved from $1460.00 through $1520.00 which now places gold back in that sweet spot question about its ability to move above recent highs ($1550.00) seen last August.

So from a shorter term viewpoint gold is technically strong and perhaps ready to move even higher but from the most recent longer view, yes we have put in a bottom above $1450.00 but we are still trading in that rather extended 5 month pricing trough between $1460.00 and $1550.00.  

And while last night’s surprise US airstrikes against Iran have once again focused the world on the importance of gold as an international hedge against uncertainty you can plainly see there was longer term rising price line which makes a technical case for owning gold. Prices being up almost $50.00 this past month and $230.00 this past year.    

So do you think this latest push into higher ground is your best last chance at cheap gold bullion or do you see a rather classic bull market trap? Cloaked in out of the blue military action which now has the world on edge as China asks both sides of the conflict for moderation and the world wonders about possible disruption in the oil trade as crude prices hit $62.00 this morning.

The question of continued higher prices of course dances around dollar strength, physical demand from China and India (still lagging because they think prices are too high) and safe-haven demand – lately missing because higher US and world stocks are a wet blanket – yet revitalized today through sudden air strikes against the Iranian regime.  

You might want to look at the bigger picture here and consider the air strikes an unfortunate and dangerous result of a political pot always ready to boil over. Yet one that is ignored by most everyone and should rank in the top three reasons to own gold bullion regardless of price.

On the “bigger picture” page consider that our beloved FOMC may have painted itself into an interest rate corner. Not a new idea but one worth considering if you are looking for that undefined dynamic capable of pushing gold to new all-time highs.

I wonder if the world is beginning to wake up to the “unthinkable” if you believe Keynesian economics still holds water. Could it be possible that the Fed will not raise rates in 2020 and worst now faces the same problems Japan has been struggling with for more than a decade? Stuck in a ridiculous cheap money trap which cannot be “undone” because it’s necessary to keep the free enterprise boats afloat.

I don’t believe this last scenario, but it does answer the curious question as to why gold is drifting higher in spite of lagging physical demand, a strong dollar and higher stocks. And this “out of the box” explanation will become more believable if gold moves above $1550.00 with conviction and the momentum players decide it is time to stop sitting on their hands.

So for now it might be best to keep all your options on the table for 2020 but assume that the metals will present more volatility than expected because of the uncertainty factor continues to grow – today being the classic example. Today’s kind of financial stress is never far from the gold trade and longer-term trends, already in place will keep the physical markets busy.          

This from Zaner (Chicago) – “Global equity markets overnight were lower with the exceptions the Russian and Australian markets. Obviously the US strike against Iranian Republican guard leadership within Iraq has caused significant uncertainty and political tension. Overnight economic information included UK shop price index readings for November which contracted and UK nationwide house price readings which came in minimally better than expected on a month over month basis. From Europe the market saw CPI from France surprise with a large 0.5% jump. However Spanish unemployment declined significantly but that was offset by Germany posting a larger than expected rise in its unemployment readings. Fortunately for Germany its unemployment rate remained steady at 5%. From Switzerland the purchasing manager’s index for December came in better-than-expected and substantially better than the prior month. Late breaking economic news from the UK included slightly softer net lending to individuals, a dip in consumer credit for November and a much softer than expected UK construction PMI reading for December. However economic sentiment toward the British economy was supported somewhat by a significant jump in mortgage approvals for the month of November. The North American session will start out with a private survey of New York business conditions, followed by the December ISM manufacturing index which is expected to have a moderate uptick from November 48.1 reading. November construction spending is forecast to show significant improvement from October’s -0.8% reading. December vehicle sales figures will be released during the day, with the national total expected to show a modest uptick from November’s 17.1 million annualized rate. The December FOMC meeting minutes will be released during afternoon US trading hours. Richmond Fed President Barkin will speak during morning US trading hours while Fed Governor Brainard, Chicago Fed President Evans and Dallas Fed President Kaplan will speak during the afternoon.

Obviously the killing of Iranian military leadership has stirred uncertainty and anger in the Middle East and that in turn has sparked fear throughout the marketplace this morning. Not surprisingly the Iranian’s have threatened to retaliate against the US with the Iraqi Prime Minister also suggesting this could “light the fuse of war” in the region. While the gold market could be held back by the two day recovery in the dollar, evidence of weakness in Chinese November gold imports from Hong Kong and news from yesterday that Indian gold imports last year declined by 12% over year ago levels, the market instead has fully embraced a flight to quality/safe haven focus. Yet another negative in the last 24 hours for the gold market came from the US Mint which indicated gold coin sales last year were the lowest on record. However the soft demand evidence this week is a backward look at demand sectors that were not expected to lead the gold market higher in 2020. In fact gold ETF’s increased their holdings yesterday for a 6th straight trading session with the addition of 100,311 ounces. Unfortunately for silver bulls silver ETF’s reduced their holdings by 616,294 ounces which brings the net two day sales tally for 2020 up to 1.7 million ounces. Going forward the trade will focus on the Middle East and the action in the crude oil market which overnight posted gains in excess of $2.70. It is possible that additional stimulus from China, recent signs that the dollar has entered a downtrend and a sustainable safe haven condition has set the stage for a return to the 2019 highs up at $1,571.70.

Clearly the bull market pattern last year in palladium has extended straightaway in 2020 with prices this morning already within the trading range forged on the day that palladium set its last record high. Apparently the markets are discounting Chinese economic data this week and instead embracing a 5th straight week of gains in Chinese stocks, the recent Chinese stimulus move and favorable auto sector headline flow inside China with respect to Tesla. In fact the Chinese central bank has indicated their reserve rate ratio requirement remains high compared to international standards and could be cut even further if necessary. It is also possible that palladium is seeing a lift from news that Tesla reduced its model three Chinese pricing by 16% in a move that could facilitate significant overall electric vehicle sales inside China. Support in March Palladium moves up to $1913.80 and the next resistance point is seen at $1955. The platinum market is also catching a lift from the palladium wave higher with prices within striking distance of the 2019 highs. Unfortunately the net spec and fund long positioning in platinum (adjusted for the recent gains) has clearly forged yet another higher all-time high long reading. On the other hand open interest in platinum has spiked this week in a fashion that suggests traders are not yet balking at the short-term overbought status of the market. In fact open interest in platinum continues to post new all-time highs and a nine dollar rally above early pricing this morning would put prices back up to the highest level since the beginning of 2018. While it is likely that the source of buying this week is coming from annual reallocation of investment by fund managers into the PGM complex and that could continue into next week it should be noted that April platinum has now returned to psychological resistance of $1000 on the charts. The next resistance point in April platinum seen up at $1002 and at the 2019 high of $1009.30.

While we have recently labeled the current rally in gold a “stealth” rally, the overnight events translate the rally into a more widely embraced flight to quality rally. Certainly the market is becoming short-term technically overbought with the market since the last COT positioning report into the high today adding another $46 in gains. It should also be noted that gold has seen a rather consistent rise in open interest from the early December low, suggesting that the market is pulling in fresh buyers and so far high prices are not putting off speculators or fund managers. Initial upside targeting is now seen at $1,555.30 and then again at $1,562.20. Critical support in February gold today is seen at $1,534.00.”

Silver closed up $0.10 at $18.07.

Platinum closed up $5.90 at $984.50 and palladium closed up $27.70.

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

Of course it’s not really patented but we do have some fun along the way. This is what the GoldDealer.com employees think: 8 believe gold will be higher next week and 1 thinks gold will be lower and 1 thinks it will be unchanged.

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

Like the employees our customers were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 transactions – unscientific but worth considering because these people took action: 83 people thought the price of gold would increase next week 11 believe the price of gold will decrease next week and 7 think prices will remain the same.

Precious Metal Closes & Dollar Strength – Dec 30 – Jan 3

Gold Jumps on Middle East Grief

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