Daily Gold Newsletter Archives - www.GoldDealer.com

Posted on October 19, 2018

Gold Holds its Ground into the Weekend

Commentary for Friday, Oct 19, 2018 (www.golddealer.com) – Gold closed down $1.20 at $1225.30. The best you can say about gold prices is that they have turned choppy leaving the bulls wondering about recent gains but at the same time they have remained steady above $1200.00 in spite of a generally stronger dollar. The Dollar Index these past 5 trading days has moved from 95.00 through 96.00 with some sell off in early trading today which is a bullish plus.

The late dollar weakness was the result of the EU being nice to Italy and her plans to raise deficit spending after a warning that such fiscal irresponsibility was not part of the EU game book. Italy is now at least consistent in doing whatever she wants and damn the torpedoes so while Europe remains off balance worries of another Greece like bailout grow.

Gold still remains well bid at the higher end of its recent price range because the state of world affairs has turned very dicey indeed. That still does not mean much – but it is worth watching.

Traders have short memories – world commotion today world calm tomorrow is the standard operating procedure. But with a real Saudi problem and the White House worried about leaks and Trump not worried about China the rest of us are at least confused leading to trading tension.

I’m not a big DOW watcher but even this potential hot spot is still not resolved in my mind. Yesterday’s choppiness and today’s weakness may suggest that things are just not right in River City. Still with strong economic numbers and number of pundits suggesting that 25,000 is just a good start you have to wonder if the rest of us are just worrywarts.

You see that is just the thing about today’s safe-haven buying in gold – it takes a little fear to keep that dynamic moving and while there are plenty of scenario’s which might support further bullish talk there has not been much in the way of fireworks.

Today’s pricing action is most likely just the result of traders facing a long weekend and not wanting to be short in a world with financial dangers.

The big question at this point however is whether this angst will continue if these concerns either do not continue to develop or in the case of the Saudi problem are just buried.

While the US wants to look good relative to human rights they also understand that the murder of a journalist is another problem in a difficult to understand Middle East cabal that makes no sense to the western mind. Pounding the Saudi’s who, for now are the “go-to” player in this complicated mess is probably not a good idea.

Recent comments by Putin suggesting that US hegemony is coming to an end – and good riddance only amplifies this developing Halloween atmosphere and makes one wonder if our European alleys really do have something to worry about.

Finally the bulls are making a big deal out of gold’s 100 day moving average but I’m less sanguine and would appreciate more buzz. Those wondering and still on the sidelines however would turn bullish if gold pushed through the $1230.00/$1240.00 band with some momentum.

This from Zaner (Chicago) – “December gold is approaching overbought technical levels and is also facing key resistance at the 100-day moving average. It appears to be capturing some safe-haven buying for a change, as it managed to close higher on Thursday in the face of a stronger dollar. The dollar index ended up unchanged overnight after trading to its highest level since October 9th. The Fed’s Bullard said on Thursday that weak inflation levels mean that the Fed does not have to hike rates further, but he also said that the Fed’s current policy is “about right”. Those comments may not have been a surprise, due to his reputation as a policy dove, but they still seemed to provide some support to gold. US initial jobless claims, ongoing claims and the Philly Fed survey all came in better than trade forecasts on Thursday. This may have provided a lift to the dollar, but it did little to support equity markets. Instead, equities appeared to be focused on weak industrial earnings, increasing business expenses due to the tariffs, and higher borrowing costs due to rate increases, and this may have lent additional support to gold. December gold is approaching a major resistance level at the 100-day moving average, which comes in around $1,235.30, but it is also becoming short-term overbought. It may take another sharp break in equities to spark a move through that resistance area. Silver appears to be a follower of gold these days. The December contract broke below its 50-day moving average on Thursday and traded to its lowest level in a week. It managed an impressive bounce off its lows and a close back above the 50-day average, but it still closed lower on the day. ETF holdings in gold increased for the eighth straight day, adding 48,607 ounces and bringing this year’s net purchases to 545,166 ounces. South African gold production in August fell 16 percent from a year ago, marking the 11th straight month of decreases.

The PGM sector was firmer overnight, as a modest recovery in China’s stock markets may have eased some concerns about autocatalyst demand, especially for palladium. However, the fact that China’s growth rate was as low as it was could eventually weigh on the optimism. Both palladium and platinum have put in 3-4 days of lower lows and lower highs, but neither market has traded down to the lower end of its 2-week range, and palladium has clearly rejected that pattern overnight. The markets may have found some modest support from news that South Africa, the world’s biggest producer of platinum, saw its output fall 9.1 percent from year-ago levels in August. July output was down 4.1%. A key resistance area for January platinum comes in at $837.80, with support down at $825 and then $812.40. Look for support in December palladium at $1,050, with resistance at $1,089.50.”

Silver closed up $0.05 at $14.58.

Platinum closed up $4.50 at $832.30 and palladium closed up $5.20 at $1087.90.

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: 6 believe gold will be higher next week 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: 41 people thought the price of gold would increase next week 28 believe the price of gold will decrease next week and 31 think prices will remain the same.

Precious Metal Closes & Dollar Strength – Oct 15 – Oct 19

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Posted on October 18, 2018

Gold – Opinions Remain Split

Commentary for Thursday, Oct 18, 2018 (www.golddealer.com) – Gold closed up $2.80 at $1226.50, so gold continues to be “bid” in the sense that traders are interested but not chasing this market. I think the gold trade is split on this latest rise in prices which sees gold above $1200.00. There are those like me who think this latest flurry of interest will wain as the Fed raises interest rates in December and there are real traders who believe that gold is just resting at this point ready to push higher regardless of what the FOMC does before Christmas.

What makes this more difficult is that my bearish position is not really bearish in that while I think this latest rally has run out of gas in the $1220.00/$1230.00 area the downside even as interest rates are gently raised through 2019 is not much for many reasons.

First, inflation is returning – present tense. Second, Trump’s comments this morning about trimming spending 5% are window dressing for the coming elections. No one wants to cut spending even through the deficit is going through the roof. This “unlimited money policy” will support gold prices for the next decade. Third, the recent DOW scare was just a wakeup call – the Wall Street notion that higher and higher consumption and consumer spending is “guaranteed” in this newly invented economy is a pipedream – most good things come to an end. And fourth, the geopolitical scene is waking up – perhaps big time as China and the US raise the tariff ante and the Middle East heats up with large ramifications for the price of oil.

The resultant “safe haven” buying we have recently seen return might well double down because in the end there really is nothing which can replace the absolute safety of gold bullion.

As for traders who believe this latest rise in prices is the real deal and gold is now just resting – well – perhaps they are right. You could make a case that the FOMC is so determined about interest rates because they are worried about inflation. That makes sense and no one really can explain why inflation has not been a bigger problem considering the amount of fiat paper money which has been generated since the financial crisis first became a problem.

So take your pick – but in either case significant downside may not be in the cards. A choppy gold market rising and falling over the “emergency” of the day might become a way of life as these leveraged financial stakes increase.

This from Zaner (Chicago) – “The gold market was partially undermined by the US Fed’s continued drift toward tightening policies, as prices fell through the Fed release yesterday and made a fresh three day low early today. The strength in the dollar is weighing on gold, silver and other commodities, but we suspect that action will moderate and perhaps reverse if US equities track positive and there are more corporate earnings reports that manage to provide some optimism for Wall Street. All things considered, the reaction in gold and silver to the “more hawkish than expected” Fed stance suggests to us that precious metals have already factored in the eventuality of a return-to-normal rate structure. The April-August slide in December gold of $221 and in December silver of $3.68 clearly assumed an extraction of the hyper stimulus condition. While there does not appear to be a definitive risk-off condition present in the early US equity market trade, the fear of slowing in China casts a shadow on gold and silver directly ahead. The gold market has not paid much attention to classic supply-side issues lately, but it could derive some support from a lower 2018 production forecast from one of China’s largest gold mines. Traders should look to December US Treasury bond prices for direction in gold and silver today, as a downside extension from the 1/2-point slide in the early going could fan the strong dollar/rising rate threat, and that could rekindle the risk-off wash in stocks and push gold back toward consolidation low support at $1,219.30. In order to see gold recover and retest this week’s highs, it would probably require very significant equity market losses, but before that translates into an anxiety event, gold and silver could feel pressure as well. Pushed into the market today, we favor the bear case.

Not surprisingly, the platinum market failed yesterday with a four-day low, mostly off spillover pressure from gold and crude oil. However, like a number of other commodity markets, the PGM complex saw the Fed meeting notes release as a threat to future physical and investment demand. Not surprisingly, palladium held up better, and it could see decent support at a recent triple low zone of $1,059.30. But given the sharp, compact run-up in platinum prices late last week, there might be little in the way of solid support in the January platinum until $831.40. Some traders might even see the continued consolidation of the South African platinum mining industry yesterday as a negative, as it could help industry heavyweights sustain production by economies of scale. In order to avoid a couple days of declines, it would probably require a reversal in the dollar and a trade back below 94.91 in the December Dollar Index.”

Silver closed down $0.06 at $14.53. Still lots of upside here – the across the counter market remains active. Production of some smaller silver products like the 10 ounce silver bar is now behind this demand curve – no big deal manufactures will make more but it does show lower prices in silver bullion have consequences.

Platinum closed down $9.10 at $827.80 and palladium closed down $2.90 at $1082.70.

This is our usual Thursday Chicago Mercantile Exchange report covering the last 5 trading days – so we are looking at the trading volume numbers for the “October” Gold contract: Thursday 10/11 (381774) – Friday 10/12 (373345) – Monday 10/15 (379187)- Tuesday 10/16 (372748) – Wednesday 10/17 (367063) and the trading volume numbers for the “October” Silver contract: Thursday 10/11 (163119) – Friday 10/12 (160387) – Monday 10/15 (159592) – Tuesday 10/16 (159245)- Wednesday 10/17 (157665).

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Posted on October 16, 2018

Gold – There is Still Buzz

Commentary for Tuesday, Oct 16, 2018 (www.golddealer.com) – Gold closed up $0.90 at $1227.30 – in the green but the market closed clearly off its highs. So gold continues firm today but the eventual takeaway in my mind is that stocks soared on job’s information and earnings. I still would not, at this point suggest the DOW is out of the woods – we will need more time to be sure it will at least stabilize.

But today’s strength in stocks holds the price of gold in check because it was the sudden weakness in the DOW which prompted this strength in gold above the important $1200.00 level. Of course increased safe haven buying was supported by geopolitical events and short covering which helped with the buzz.

And the Saudi problem could become a big deal perhaps pushing the price of oil higher. But if this is not the case traders will soon be back to dealing with that promised interest rate hike in late December.

The dollar is somewhat weaker in the 5 day view but today’s Dollar Index suggests stability around 95.00 which can’t be good for gold in the shorter term. And I think traders are still hanging their bullish hopes on a dollar which might be overbought.

Still the technical picture for gold favors the bullish scenario as it looks like the bottom was in around $1185.00 and we have pushed nicely higher threatening $1230.00. This from Reuters – “Gold prices were also trading above the 100-day moving average of $1,227, a bullish sign for investors following the technical signal.”

I’m still somewhat suspicious of this rather steep surge higher. Professional traders will likely not chase this number and there is still the short contingent waiting on higher interest rates.

So on the short term we have a kind of crap shoot but interest internationally will be watched carefully. For now the geopolitical area looks like it might quiet down but there are plenty of loose ends out there. You might find that while gold may not continue to push higher through year end it might just play around this higher end of its trading range looking for clearer trading information.

Yesterday’s business action across the counter was hot and this morning not so much so but busy nonetheless – so the American public remains engaged.

This from Zaner (Chicago) – “While the gold market clearly extended last week’s rally yesterday with a fresh higher high, it has remained off the previous session high this morning but in positive territory. While the US dollar is initially higher it remains within close proximity to a downside breakout on its charts and that should lend support to the bull case especially if the dollar slides below 94.635 in the December contract. The safe haven angle is initially deflated as high level meetings between US and Saudi officials deflate that flashpoint. In fact oil prices are trading lower this morning and most global equity markets are higher and that would seem to be a signal of deflating anxiety. Overnight news supportive of gold prices came from Hungary where their central bank increased their gold reserves and suggested that move shows their commitment to being a solid sovereign economic player. In a modest negative (gold hasn’t paid that much attention to modest increases in supply) Russian Polyus posted quarter over quarter production increase of 20%. Perhaps it is premature to suggest that gold prices will be sensitive to improving physical demand from news from India, but India on Monday posted a surprising jump in gold imports last month of 51.4% over year ago levels. Seeing Indian gold imports improve is potentially a very big issue for the bulls, as slack Indian demand has been a major component of the 2018 bear market! In conclusion, the hope for improved demand at one of the world’s largest consumers of gold and a large spec short help the market rationalize a higher support level now at $1,220.40. Furthermore, the gold market should be underpinned as a result of Goldman suggestions yesterday that they expect gradually higher gold prices from improving emerging market demand. Unfortunately the Goldman price forecasts were not overly bullish, suggesting only $1,250 an ounce target in three months and $1,300 in six months. In the early action today it is possible that Middle East tensions could moderate further given a high level meeting between the US and Saudi Arabia, as the US has already laid the groundwork for a shifting of blame for the murder.

While it appeared as if the platinum market was set to outperform the palladium market this week, the end result from the Monday trade left palladium stronger than platinum on the charts. While the platinum and palladium contracts both finished positive to start the trading week, they appear to need an extension of the safe haven wave from last week to sustain upside extension action. However, we continue to think that platinum is a relatively better safe haven market choice than palladium and could see initial upside targeting at $925 in the event that gold prices rise above $1,250. We would also note that the platinum market would appear to have more spec and fund buying reserve capacity with the most recent positioning report long sitting at 1/4th of the record long positioning registered two years ago.”

Silver closed down $0.03 at $14.63.

Platinum closed up $0.60 at $843.10 and palladium closed down $4.30 at $1091.90.

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Posted on October 15, 2018

Gold Continues to Create Interest

Commentary for Monday, Oct 15, 2018 (www.golddealer.com) – Gold closed up $8.30 at $1226.40 today the highest close since last summer. And there is some buzz developing as traders wonder about the potential scandal and fallout with the Saudi’s and Trump’s warning that he will not be happy if anything underhanded comes from this ongoing Khashoggi investigation. And the gold community is still wondering if this latest push to higher ground is the real deal or just a bit of safe haven buying coupled with a lot of short covering.

Well the jury is still out and everyone is keeping a close eye on the dollar – the Dollar Index moving somewhat lower these past 5 trading days supporting higher gold prices.

But I think traders are really more worried about Wall Street and the potential for lower stocks to push the dollar lower. There is reasonable commentary which claims the dollar’s bullish days are numbered as the stock market continues to hiccup but I just can’t see how this might happen in a rising interest rate environment.

So we will have to be patient and see how the FOMC reacts to President Trump’s mild threat against continuing hikes in interest rates. The final FOMC meeting this year will be in late December so we don’t have long to wait but there is no doubt that gold bullion is heating up – not only in the paper market but across our counters as well – whether this turns out to be just a clever bear trap remains to be seen.

One thing is sure – gold is regaining some of its luster and swagger – just how long this will remain the case still depends on dollar strength and the geopolitical scene. The former is not big news but the latter could turn out to be a very big deal especially if the Saudi’s decide to even the Trump playing field by slowing oil production. This move could easily push oil over $100 a barrel and this would be very inflationary further making the case for higher gold prices into next year.

This from Zaner (Chicago) – “In looking forward we expect increased two-sided volatility in gold and silver given the path of deterioration in global equities and deterioration global economic sentiment. The bull camp has the added benefit of a weaker dollar but the dollar hasn’t made a lower low yet and therefore the brunt of the lift in gold comes from rotation out of equities and speculative anxiety buying. We do think the dollar appears to have lost its bullish resiliency and appears to be in a near term downtrend, and we also suspect it will continue to erode and that should provide further buying support. Some traders will suggest part of the bullish track in gold this morning is the result of the potential for increased tensions between the US and Saudi Arabia off the killing of a journalist. Other safe haven/flight to quality potentials (minimally bullish at best) are the bankruptcy filing by Sears and the latest failure to progress on the British exit. While the most recent positioning report overstates the magnitude of the net spec and fund short at present, the positioning report from last week clearly favored the bull camp. In fact, the Commitments of Traders Futures and Options report as of October 9th for Gold showed Non-Commercial and Non-reportable combined traders held a “large” net short position of 42,617 contracts and that shows a market that had factored in conclusively bearish conditions. Clearly conclusively bearish conditions have been moderated significantly and ongoing short covering is likely ahead. Unfortunately for the bull camp in silver the Commitments of Traders Futures and Options report as of October 9th showed Non-Commercial and Non-reportable combined traders held a minor net short position of 2,504 contracts and that short might have been reversed by the action since the COT report mark off date.

While the palladium market has not broken out to the upside it is poised underneath its highs and seemingly set to “follow” the platinum market which is a distinct change of pace. Obviously the trade is now interested in the platinum group metals sector and they have viewed correctly the fact that platinum is dramatically cheaper than palladium on a short-term and long-term basis! It should also be noted that the platinum market has finally responded to the forces that drove palladium higher but more importantly the platinum and palladium markets held minimally long positioning in the last COT report. The platinum net spec and fund long was only 13,870 contracts and that is significantly below the record spec and fund long of 61,208 contracts posted back in 2016. Similarly the palladium market is net spec and fund long only 12,031 contracts and that is modestly below the record spec and fund long of 30,209 contracts posted back in 2013! In conclusion the platinum market now looks to be the leadership PGM market and a catch up move back to the early July high up at $866.60 would appear to be a logical near term target. However in order to keep the charts distinctly bullish and headline coverage of the platinum market positive, probably requires prices holding above a key pivot point of $841.70. While we doubt the palladium market will be held down consistently, it has already rallied $260 from the August low and at some point it might have to reconcile the prospect of slowing physical demand. Critical pivot point support in palladium to start today is seen at $1059.60 and initial and close in resistance seen at $1082.90.”

Silver closed up $0.10 at $14.66. I think silver is still cheap and if gold runs this area of the market could be very hot.

Platinum closed up $6.30 at $842.50 and palladium closed up $17.40 at $1096.20.

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Posted on October 12, 2018

Gold – Settling or Resting?

Commentary for Friday, Oct 12, 2018 (www.golddealer.com) – Gold closed down $5.40 at $1218.10. Yesterday’s price rise of $34.20 in gold surprised everyone – the lack of follow through today was actually expected as traders get a chance to ponder the potentially dangerous combination of falling stocks and rising trade problems between the US and China.

For now gold rests into the weekend which suggests most are willing to wait and see if these recent fireworks were just a flash in the pan or represent deeper seated problems just surfacing.

Still gold’s trading range and psychology has been changed on the short term as traders watch stock markets carefully both here and overseas.

Like I said yesterday I’m not all in on this surprising jump in gold prices. It still looks like a knee jerk reaction supported by some safe haven overseas buying. Traders still have to deal with the last of the promised interest rate hikes coming right before Christmas.

Could Trump’s comments about the FOMC being “crazy” about rising rates have the desired effect? Maybe – Powell is his own man. But the recent presidential roar might just calm the interest rate jitters and Wall Street can get back to business.

One thing is sure if the FOMC tells Santa they will leave rates unchanged gold will move higher before you can say January.

All that being said I think gold does not have the momentum to sustain higher numbers short term. I would be happy with simply firmer prices through year end.

Professional traders are short or want to be short expecting that promised rate hike. And technically gold is still fighting that longer-term bearish trend. But the bulls are gaining short-term strength.

The sudden weakness in US stocks has redefined the shorter term – but it remains to be seen if that weakness will continue. Stocks have had a nice price run since Trump took office and if this latest correction is simply a healthy sign of a settling market recent safe haven demand for gold bullion will melt and pricing will go back to defensive.

On the other hand – if stocks are capitulating over higher interest rates the price of gold will continue to gain strength with a promising holiday season right around the corner and inflation fears growing into 2019.

This could easily turn into a merry-go-round – step right up ladies and gents and place your bets.

This from Zaner (Chicago) – “While there continues to be anxiety present in the world market place, across-the-board gains overnight in global equity markets looks to translate into a period of calm and that has knocked gold and silver back into a slight profit-taking track. In fact opening indications as of this hour showed the Dow possibly opening 200 points higher and a positive US equity market opening could push gold and silver into fresh new lows for the day!. Perhaps the markets will derive some support following news that Chinese September imports and exports improved with Chinese September crude oil imports reaching the highest level since June, as that information hints at forward motion in the Chinese economy. Unfortunately for the bull camp the December gold contract is short-term technically overbought with the low to high rally this week roughly $44 an ounce. Similarly the December silver contract is overbought from this week’s bounce but not as significantly as gold following a reserved bounce of only $0.40. An issue that probably adds to the slightly negative initial tilt is a story from late Thursday of a decline in Indian September gold imports which were clearly negatively impacted by a decline in Indian currency related to purchasing power. However it should be noted that the September drop in Indian gold imports was preceded by a very strong August jump in imports (the highest level in 15 months). However we doubt that a definitively positive physical demand vibe is capable of dominating market dialogue unless the risk on vibe fully returns to equities and the dollar forges another lower low below the overnight low of 94.66. However, it is possible that a number of funds are licking their wounds from this week’s stock market debacle, and it is possible that some money will continue to be reallocated to gold and silver as a defensive move.

Not surprisingly, the palladium market was once again the stellar commodity market performer as it managed a new contract high directly in the face of a big picture macroeconomic deterioration. In fact, the palladium market has held up despite massive equity market declines, a two day decline of $4.50 in crude oil and signs that China is beginning to exhibit noted weakness in its currency. In other words, the palladium market has continued to “march to its own drummer” and would appear to be set to forge more upcoming gains off a tenuous return to risk-on this morning. Even the platinum market posted stellar gains yesterday, held those gains despite the noted added weakening of global equity prices and they have remained near yesterday’s highs in a fashion that suggests the bull camp retains control. Therefore, it would appear as if the sluggish platinum market has also become a benefactor of the rekindling of safe haven but it might also be able to benefit today from risk-on and that is a sign of a possible bullish shift. Solid support in December palladium moves up to $1,059.30 with solid support in platinum moving up to $834.90.”

Silver closed up $0.02 at $14.56.

Platinum closed down $6.60 at $836.20 and palladium closed down $14.40 at $1078.80.

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 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: 51 people thought the price of gold would increase next week 19 believe the price of gold will decrease next week and 30 think prices will remain the same.

Precious Metal Closes & Dollar Strength – Oct 8 – Oct 12

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Thanks for reading. As always we appreciate your business and enjoy your weekend.

Posted on October 11, 2018 October 11, 2018

Gold Surges – What’s Next?

Commentary for Thursday, Oct 11, 2018 – Gold closed up a surprising $34.20 today at $1223.50. It quickly pushed higher on the open reacting to a number of factors. First, the big drop in the DOW (800 points) yesterday and today’s 500 point loss woke everyone up – fear is a big motivating factor within the established gold bullion community.

The Trump comment about why the FOMC needs to lighten up about promised interest rate hikes also helped in that it sets the stage for perhaps a little less hawkish Federal Reserve – but that remains to be seen and the reason why I would not get too carried away with today’s aggressive price action.

Trump put the current FOMC Chair Jerome Powell in place and knew that he was an independent voice, not particularly challenged by the Oval Office.

There are other factors as well – the notion that inflation is still tepid so there is plenty of room for the FOMC to navigate – with current rates they even have room to “lower” if continued weakness in the DOW suggests a recession. This suggests “stability” not “panic”.

My bet is that the DOW settles down in the next few days and recovers somewhat but who knows – this uncertainty will continue to support gold.

I doubt that these past two days of firm gold pricing is the beginning of something “big” – it looks like a combination of safe haven buying and a knee jerk reaction to a trading mentality that was geared up for further “short” profits based on higher interest rates.

And all of this has been helped by a somewhat weaker dollar – the Dollar Index these past 5 trading days has moved from 96.00 through 95.00.

Today’s close ($1223.50) is however impressive in that gold is now trading above the 60 day pricing model ($1210.00). But consider that there is a pricing “mountain” to climb here if you believe this is beginning of something “big” for the precious metals community.

This can be seen in the 6 month pricing chart – gold broke down from $1350.00 and it was pretty much a dive – bottoming around $1175.00 – bouncing higher and finally holding a fairly tight trough on either side of $1200.00.

This recent “bottom” was as late as last week being questioned. I think the paper trade was just waiting for the next FOMC rate hike to once again pile on short paper.

I have been saying “premiums” are firm to rising – the Krugerrand is a good example. I don’t think this new demand is US based – the Europeans are buying – not a stampede but something is going on most likely because of stock instability both here and overseas.

Still even with this small amount of fireworks gold is technically still in a bearish mode. There are however two big pluses relating to this recent “pop” in its price. First, it will remind everyone that gold bullion is still very much in the financial game and second it should help refocus everyone on the notion that this “dance” about interest rate “normalization” is dangerous. It could turn ugly – but for now let’s settle for the notion that gold has regained its footing.

This from Zaner (Chicago) – “While the dollar is lower this morning and it extended its downside breakout action to the lowest level since October 1st that does not appear to be the primary catalyst behind the impressive jump in gold prices this morning. Obviously gold is outdistancing silver as silver has generally favored its physical commodity market standing while gold remains dollar/safe haven orientated. While it took a massive washout in equities and a moderate amount of economic anxiety, the safe haven lift in gold is justified given that the Dow Jones industrial average into the low this morning has posted a 24 hour decline of 1,300 points. At least for the time being the gold market has tossed aside the fear of slackening physical demand and in a somewhat perverse way has embraced the hope for improved investment demand. In other words for the better part of 2018 gold saw negative economic action as a threat to consumption but that focus has shifted in the short run. On the other hand we get the feeling that the bull camp will need a very high level of ongoing anxiety from declines in equity prices to facilitate a consistent flow of speculative buying into gold. The bull camp should be relieved that the Indian government has excluded gold from a second list of items facing tariffs as they continue to battle a current account problem. While the trade hasn’t paid that much attention lately to raw physical monthly demand figures, the fact that Indian September gold imports were reported to have dropped by 14% (due to currency influences) from Gold Fields Mineral Services (GFMS), we suspect that issue won’t be taken in hand but that should capable of thickening overhead resistance in December gold between $1,212 and $1,215. It should be noted that GFMS also indicated that some improvement in investment demand for gold was being seen because of weaker equity market action prior to the current event, and that view is given added credence by the unfolding string of major loses in US equity markets this week.

In a very impressive fashion the palladium market this morning is trading higher against a backdrop of noted weakness in a long list of physical commodities. Clearly palladium is seen as a safe haven instrument and given its recent strength and the ability to continue higher this week with a shift in market sentiment its bullish capacity is enhanced. In fact while the palladium market showed a volatile two-sided trade yesterday it did manage a higher close in a fashion that suggests it was poised to benefit from the shift in conditions and that might result in a quick test of this week’s high up at $1,077.80. Perhaps funds seeking inflation protection from a small supply/growing demand commodity set the trend in motion in August and now funds and investors are set to extend the upward push with reallocation funds. While the platinum market is avoiding the brunt of the physical commodity market knockdown it did range down sharply initially overnight as if it was poised to succumb to the equity market debacle. In fact the equity market action has become a debacle and psychology toward commodities will probably remain bearish ahead and that should thicken overhead resistance in platinum up at the $831.40 level. At this point it would take massive gains in palladium just to drag platinum higher against outside market forces.”

Silver closed up $0.28 at $14.54.

Platinum closed up $18.70 at $842.80 and palladium closed up $8.00 at $1093.20.

This is our Thursday Chicago Mercantile Exchange report covering the last 5 trading days – so we are looking at the trading volume numbers for the “October” Gold contract: Thursday 10/4 (374043) – Friday 10/5 (375977) – Monday 10/8 (376326) – Tuesday 10/9 (369035) – Wednesday 10/10 (369035) and the trading volume numbers for the “October” Silver contract: Thursday 10/4 (167851) – Friday 10/5 (166612) – Monday 10/8 (165427) – Tuesday 10/9 (163663) – Wednesday 10/10 (163663).

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Posted on October 10, 2018 October 10, 2018

Gold Firms – Wall Street Rattled

Commentary for Wednesday, Oct 10, 2018 – Gold closed up $2.10 at $1189.30 today. It sold off in early trading but recovered and moved higher into the close as an almost 400 point drop in the DOW rattled the equities markets. It really is too early to tell if this weakness in stocks is the beginning of something bigger based on higher interest rates but it was interesting today that commentary began to focus on the massive and growing debt issue. The discussion of extraordinary debt used to carry a lot of weight but has generally been buried for the past decade as world governments created a wall of cheap money.

This question of prudent monetary management often raises a question – “Could the equities market weaken significantly enough to influence higher gold prices”? Sure but I don’t see this happening anytime soon – you could however play up the notion that rising interest rates will eventually push the US into a recession – we have not seen one for a long, long time.

But this too seems farfetched – look at the low employment numbers and the very high consumer sentiment. Granted you could see US isolationism grow under Trump but by the same token the Chinese could just as easily cave if the yuan continues lower. I’m not a big believer in China’s sincerity but any cataclysmic shifts are unlikely – it’s a more plausible scenario that Trump and Beijing will kiss and make up. So for now I don’t see a big recession and subsequent stock market crash as being part of gold’s shorter term future.

This morning however you did see this relationship raising its head – gold caught a bid in a generally lower opening as the big stock market sell-off surprised everyone. Wall Street is finally worrying about inflation, higher interest rates and the consequences of huge rising debt.

Trump has already started to “talk down” the higher cost of money as not necessary when inflation is tame. But if you are still looking for that “big slam” in equities which will get gold back in this slug fest look to Europe.

This from Reuters – shares in the Asian market are at 17 month lows and European stocks are looking at 6 month lows. So it makes sense that at least some of today’s safe haven buying is coming in as a result of paper losses overseas. And if you believe the overseas market will eventually infect the perhaps overpriced DOW a gold bullion hedge before the event might be a good idea. One thing is sure the highly leveraged financial markets could turn into an old time Western shoot out if someone spooks the horses.

Finally the “premium” on stock bullion coins like Krugerrands is moving higher – this would indicate that physical demand is increasing and dealer stock is moving lower. My guess is that this “surprise” is coming from our European neighbors but it’s hard to say.

This from Zaner (Chicago) – “While the gold and silver markets deserve to “bounce”, we suspect that might be the best way to describe any upside action in the near term. In other words, the precious metals markets remain vulnerable but a 3 day low in the Dollar early today has for the time being provided some minor support. However, gold and silver will probably remain off balance (unless the Dollar makes a 5 day downside breakout below 95.17) as economic and investment sentiment has turned down with equity market sentiment deteriorating this week. In other words the fear of slumping physical demand is feared as investors and economists think US market rate expectations are potentially poised to run ahead of the Fed! Surprisingly larger discounts to world gold prices in both India and China have not sparked a noted increase in demand and that action mirrors the rest of the world. In the end it is possible that a downside breakout in the Dollar will only provide minimal lift to gold and silver prices. While we continue to stand by the idea that a return to the August lows in gold and a slide back to the September lows in silver are long-term buy points, until there is significant damage on the dollar charts, a solution to the US/China trade battle or credible inflation dialogue in the headlines, there is not a rush to pick a bottom. It should be noted that the market will see a PPI reading today and that could provide a lot of news on the inflation front.

Discussions regarding weakening US auto sales projections have been viewed in widely disparate ways and considering that palladium has probably drafted some support from upbeat car sales expectations, there would appear to be justification for an intermediate top at the Tuesday high. In fact, Ford September year-over-year sales declined by 11%, Honda dropped 7%, Nissan declined 12%, GM declined 16% with the Chrysler group the only large-volume carmaker posted an annual gain in September. From a technical perspective, the Palladium market seems to be poised to claw its way back to the late September high even though Auto sales were soft, other precious metals markets are weak and the global economic outlook is deteriorating! Given that platinum has settled into a slow erosive pattern and given negative outside market influences that could project prices to recent support in the January platinum contract at $814. In other words, the path of least resistance in platinum is down but losses might be limited at the same time that the trading range will be narrow.”

Silver closed down $0.07 at $14.26.

Platinum closed down $1.50 at $824.10 and palladium closed up $5.10 at $1085.20.

This is our usual ETF information – All Gold Exchange Traded Funds: Total as of (10/3/2018) was 65,255,565. That number this week (10/10/2018) was 64,915,712 ounces so last week we dropped 339,853 ounces of gold.

The all-time record high for all gold ETF’s was 85,112,855 ounces in 2013. The record high for Gold ETF’s in 2018 was 70,728,953 and the record low for 2018 was 64,815,422.

All Silver Exchange Traded Funds: Total as of (10/3/18) was 647,173,536. That number this week (10/10/18) was 646,097,530 ounces so last week we dropped 1,076,006 ounces of silver.

All Platinum Exchange Traded Funds: Total as of (10/1/18) was 2,316,965. That number this week (10/10/18) was 2,312,674 ounces so last week we dropped 4,291 ounces of platinum.

All Palladium Exchange Traded Funds: Total as of (10/3/18) was 946,217. That number this week (10/10/18) was 883,819 ounces so last week we dropped 62,398 ounces of palladium.

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Posted on October 9, 2018 October 10, 2018

Gold Works to Stabilize

Commentary for Tuesday, Oct 9, 2018 – Gold closed up $2.80 at $1187.20 a tepid response to yesterday’s big loss but we did finish in the green. Gold took a hit (Monday) when we were closed for Columbus Day closing down $16.80 at $1184.40 – also keep in mind that the domestic commodity markets were also closed.

Today it looks like gold is still off balance but there is some bargain hunting and the jury is still out as to whether this market can hold up to higher interest rates over the longer term.

A break below $1185.00 would not be good and may portend further weakness perhaps testing $1175.00. The most likely view these days is gold is breaking down at that rather longer “relatively flat” pricing trough which has been in place since August.

But what traders are trying to figure out is obviously “whether this market has further downside”. This may sound “uninteresting” in that the US buyer is still on the fence. But the “world buyer” is bargain hunting and like I have said before the question is whether this renewed interest is enough to keep the short-paper at bay? A question which is not so simple to answer even with higher interest rates on the horizon.

I personally would not “short” these markets – especially now – there are too many unknowns and there are sectors of the precious metals that seem cheap like platinum and silver bullion. I think I’m turning more philosophical in my old age – the US market remains bland but this is usually the case when the technical picture is bearish.

But gold and silver bullion have a very large and well-developed international market and folks from different countries cannot rely on their paper currencies for buying power. The EU in my opinion remains a big question mark with Italy leading the way. The China / US relationship remains strained. I actually thought this posturing between the countries was just that when Trump pushed the tariff issue but now I’m worried as either side does not seem to have any trouble raising the stakes. It is just this type of escalation that becomes dangerous when everyone is using extreme monetary leverage.

So do I think the world is going to blow up? Nope – we are far from that but there is enough pressure to suggest some caution would be appropriate. Better too soon than too late is the investment psychology which should be on the table.

As always, watching inflation is a good place to begin – still not a problem but with employment at low levels employers are now competing.

If you are new to the precious metals business – prices are low enough to consider core holdings. If you are a veteran I continue to buy the dips and be patient.

Keep in mind that the longer gold trades without breaking down the more convinced the trade will become that gold has indeed bottomed. If this revelation is true don’t expect a sudden price jump – my bet is that the metals will trade at or around these low levels until real inflation comes back into the equation – then you will see fireworks. So it’s not like you have to make up your mind today – you have time to plan.

This from Zaner (Chicago) – “The gold market enters the Tuesday trade up from the big range down washout levels from Monday but it appears to be confronted with close-in resistance from the underside of a 40 day sideways consolidation zone. Thickening overhead resistance from a fundamental perspective is the fact that the dollar sits right on three day highs and close to a five day/2 month upside breakout point. With some analysts on CNBC suggesting that it would appear as if the Chinese could lose the trade battle, the move to reduce the Chinese reserve rate requirement this weekend has fostered ideas that the world’s largest commodity consumer is indeed fighting severe economic headwinds and that in turn calls physical gold demand from that country into question. In fact the IMF overnight reduced its world growth forecast because of the tariff war and without some sign of consolatory dialogue between the US and China it could be very difficult for gold to maintain prices above the first key consolidation low point at $1184.30. In the end traders should be watchful of any noted downside extension in equities directly ahead, as a broad-based sustained deteriorating view on the global economy could easily inspire further gold selling off the idea of worsening physical demand. While gold derivative instruments have not shown inflows yet from mainstream investors, news that some ETF’s are reducing costs could facilitate stronger capital inflows if and when there is a definitive bullish “story” for gold. While the silver market was also under pressure yesterday it didn’t forge a massive washout like gold even though it was net spec and fund long 1,638 contracts from the last COT report. In the end silver could be more vulnerable to stop loss selling than gold.

The action in the palladium market continues to be very impressive as the market has clawed out a fresh 7 day high on its charts overnight and has managed most of the gains recently in the face of strength in the Dollar and noted weakness in gold, silver and other physical commodities. Perhaps the palladium trade is hopeful of improved or underpinned demand following the People’s Bank of China reduction in their reserve rate requirement as that should cushion their economy against the ongoing tariff battle. Not surprisingly the platinum market damaged its charts to start the trading week and even if the trade initially rejected the $812.40 level we have to leave the edge with the bear camp. Near term consolidation low support and a target for January platinum is seen down at $809.20 but we see the next upside targeting/resistance in December palladium up at $1075.40. In other words we expect the divergence within the platinum group metals complex to continue.”

Silver closed up $0.07 at $14.33. This sector remains cheap in my mind.

Platinum closed up $11.50 at $825.60 and palladium closed down $6.80 at $1080.10. And while platinum bullion is not everyone’s cup of tea it is hard for me to believe there is much downside here with platinum trading at a $362.00 discount to gold.

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Posted on October 5, 2018 October 10, 2018

Gold Remains Firm into the Long Weekend

Commentary for Friday, Oct 5, 2018 – Gold closed up $4.00 today at $1201.20. Well you have to give gold credit for holding up again this week. We closed last Monday at ($1187.10) so in the past 5 trading days gold moved higher by $14.10 and gained a little buzz in the process.

Yet gold continues to puzzle – perhaps holding $1200.00 and perhaps not but it is interesting that numbers remain firm at the higher end of the range into the long weekend – remember that the domestic markets are closed this Monday (Columbus Day).

The jobs number this morning was disappointing but the smart guys are arguing that this was hurricane created and earlier month’s numbers were adjusted higher so things are humming along. It’s pretty clear that our economy is doing just fine – unemployment is the lowest seen since 1969 and the FOMC are still touting more rate hikes into 2019.

So why is gold holding up? Let’s speculate – first the international scene is supportive of the physical market, the recent flare up in Italy is a good example. And there are other contributing factors like trouble with China, Russia and Iran. The English Brexit will complicate what remains of the EU and the price of oil is at 4 year highs and steady around $75.00 – some are looking for $100.00.

The low employment number now suggests that wage inflation is coming sooner than later.

This could be the beginning of the seismic move the physical gold market needs to rally the base – higher inflation numbers will overpower higher interest rates.

And think about the dynamic of higher interest rates – it makes Wall Street and foreign paper nervous while hurting American companies doing business outside the US.

I hate higher interest rates and the potential damage they might inflict on the price of gold – but there is also a logical case to be made in that higher interest rates and higher gold can coexist – granted this might a bit of early thinking but we are speculating so why not throw this into the pot. Given that the rise in the cost of money is mild and inflation begins to creep higher.

Will all this come to pass? Who knows really – I’m amazed the FOMC has gotten away with watering down the money supply for the past decade. Maybe it can push this high stakes game another few years but sooner or later there must be consequences both here and in Europe.

For now let’s just take advantage of lower prices, especially in silver bullion and make a few strategic gold bullion buys if markets drift lower before the end of the year. Keeping in mind that there is credible dialogue within the bullion community that gold may have bottomed and everyone is waiting for the second act.

This from Zaner (Chicago) – “The gold market showed some positive action overnight and managed that strength in the face of minimal upside action in the dollar. Obviously the US nonfarm payroll report today will take on added importance for gold, silver and many physical commodities as a strong reading could fan the entrenching pattern of rising US interest rates. Fortunately for the gold market it enters a key fundamental junction today with what is probably a net spec and fund short positioning and it has seen slightly improved demand talk from both India and China recently. Unfortunately for the bull camp, gold and silver derivative holdings continued to decline this week and the patently upbeat global economic environment from earlier this week has been tempered which questions physical demand prospects. However, gold producer Centamin reportedly reduced its annual production target for the second time with a 25% drop in its latest quarterly output tally! In a potential future positive development, the Indian trade minister has been talking with Russia regarding imports of gold and diamonds, and that could potentially help Indian demand if a cheaper source of supply is found to offset the import tariffs set by the Indian government. Clearly, the precious metals continue to be physical commodity demand-driven markets and not financial safe-haven instruments, which suggests that they will probably track with equities today. While the trade is suggesting that surging US Treasury yields might offer some rotation into gold, we have trouble with that logic, especially since an extension of rate rise expectations off of US payrolls today could vault the dollar higher.

While the platinum and palladium markets have managed to produce sideways coiling action following the sharp setback from last week’s highs, the path of least resistance in the short term looks to be down, especially if there is a continuation of this week’s higher rate/weaker equity/deteriorating economic sentiment patterns. While there were no specific stories verifying strong Chinese physical demand for palladium as the primary source of the August-September rally, that theme was in our mind clearly a large component of the move. Therefore, moderating global economic optimism, severe Chinese equity market losses or patently weak Chinese economic data and finally any spillover pressure from weakness in the energy and industrial metals markets, could set the stage for an extension of the corrective action that started on September 28th and paused on October 2nd. Critical support and a pivot point in December palladium is now seen at $1,037, while a critical pivot point in January platinum seen at $818.20 and then again down at $811.40.”

Silver closed up $0.06 at $14.57.

Platinum closed up $0.10 at $821.10 and palladium closed up $11.60 at $1075.10.

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: 6 believe gold will be higher next week 2 think 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: 41 people thought the price of gold would increase next week 25 believe the price of gold will decrease next week and 34 think prices will remain the same.

Precious Metal Closes & Dollar Strength – Oct 1 – Oct 5

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Thanks for reading. As always we appreciate your business and enjoy your weekend.

Posted on October 4, 2018 October 10, 2018

Gold Remains Choppy

Commentary for Thursday, Oct 4, 2018 – Gold closed down $1.10 at $1197.20. Gold actually opened firm but soon sold off in a familiar pattern as sellers take advantage of higher prices and the resultant market turns choppy. I would not read too much into this but it remains clear that gold will struggle to stay above $1200.00 and pushing substantially higher is probably not in the cards with the next FOMC meeting right before Christmas.

So trying to call the longer term trend in gold is dicey in the extreme. The reason being is that you can’t really tell if the extended fairly tight trading range on either side of $1200.00 is base building or just an extended part of the unwinding process which began in late 2011. If you believe this is an extra-long base you have to deal with the question as to why gold has not broken to the upside in a sustained fashion.

By the same token if you think gold is still in the process of breaking down from old highs of $1800.00 you have to deal with the notion that it has had plenty of time (5 years) to confirm this rather large downtrend. Yet everyone is still looking for that “blow-out” number as this market continues move sideways.

During this confusing process the story line has remained pretty much the same – the price of gold is subject to dollar strength and given the strength of the US economy it makes sense that the FOMC will push interest rates higher even into 2019.

At best you would assume this will leave gold left footed unless physical demand picks up – either through financial woes worldwide or lagging demand comes back to life because the cheap buyers are tired of waiting.

It also does not make sense that inflation will remain tame forever so the clock is ticking somewhat for those sitting on the sidelines waiting for that confirmation that we are either heading higher or lower.

What does make sense is that gold for now will likely remain supported and contrary.

The latest ETF information from World Gold Council points to a still developing picture. North American flows have been negative for four straight months – creating steady selling pressure. Interestingly enough the Asian funds have seen an impressive increase in buying growing 9.1% year to date. And the European funds have followed this trend growing by 5.8%.

So keep your eye on the bigger picture as the gold bullish scenario develops and remember that current pricing while not that “blow-out” number everyone is looking for is still relatively cheap and represents value.

Look for a game changer like the return of real inflation numbers. Or more explosive problems with China – we have actually just begun this mess. China has the will, the bankroll and the plan to eventually challenge US hegemony. This “tit for tat” with Trump including tariffs will turn out to be Act 1. And Kim Jong-un is much smarter than he looks – North Korea knows exactly what its doing – they will not lay down the nuclear option without being made a big player in this region. And finally the US wants regime change in Iran – a dangerous and unpredictable plan which will threaten the Middle East and support gold price.

Don’t get too bearish on gold – take the rising interest rate story with a bit of salt.

Today the DOW fell 300 points as Treasury yields surged and the NASDAQ sank 2%.

I doubt that the FOMC will get aggressive with higher interest rates in 2019. This would rock the Wall Street boat; perhaps create a stampede as people look for safe haven options like gold and silver bullion.

This from Zaner (Chicago) – “While it is premature to anticipate gold catching a sustained wave of fund buying off reflation, the classic signs of inflation are now stacking up from a number of unrelated quadrants. Furthermore numerous headlines this week are touting acute shortages of workers and many US companies are reportedly dropping drug-test requirements in an effort to secure workers. If the job market is so tight that companies are taking drastic actions to find employees, we assume that will also include higher wages which is inflationary! In our opinion, if the dollar weren’t benefiting directly from strong US data and sentiment, the gold market would not be at $1200; it would be nearing $1250. However the dollar did make a new higher high for the move overnight and reached up to the highest level since August 20th and it might be expected to make even more gains today if the veritable avalanche of US scheduled data over the next 30 hours adds to the “remarkably positive” Fed view on the economy. Another minor negative for gold, silver and platinum this morning is the revelation after yesterday’s close that metals ETF’s generally reduced their holdings for the fourth straight trading session. While SPDR Gold holdings yesterday declined by 198,710 ounces, that fund’s total holdings are still considerable at 23.5 million ounces, with a value in excess of $28 billion.

In the early going today the platinum market has damaged its charts and looks poised to fall in sync with palladium, but we think the platinum market will fall at a quicker pace. Despite an upbeat view on platinum from a private research group overnight, the platinum market could be headed back down to last week’s lows off the spillover pressure from gold, ongoing strength in the dollar and from ideas that sharply rising interest rate yields are poised to undermine equities and therefore economic sentiment. Near term downside targeting and support in January platinum is seen at $818.20 and then again down at $811.40. The palladium market also has a slight downward bias on the charts to start today and while it remains within the prior two session’s range we suspect prices will erode with the first target seen down at $1037 and possibly $1032.40. On the other hand, it is difficult to ignore the unrelenting upside extension in energy prices, as that could suddenly ignite a credible inflationary condition and that would certainly stoke fund interest in platinum, which is extremely cheap relative to both palladium and gold!”

Silver closed down $0.08 at $14.51.

Platinum closed down $11.20 at $821.00 and palladium closed down $7.50 at $1063.50.

This is our Thursday Chicago Mercantile Exchange report covering the last 5 trading days – we are looking at the trading volume numbers for the “October” Gold contract: Thursday 9/27 (378546) – Friday 9/28 (373442) – Monday 10/1 (371215) – Tuesday 10/2 (346541) – Wednesday 10/3 (372478) and the trading volume numbers for the “October” Silver contract: Thursday 9/27 (172568) – Friday 9/28 (172213) – Monday 10/1 (169245) – Tuesday 10/2 (168703) – Wednesday 10/3 (168236).

Remember we will be closed Monday for Columbus Day and thanks for the business.

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Thanks for reading. As always we appreciate your business and enjoy your evening.