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Gold Needs More Excitement

Gold Needs More Excitement          

Commentary for Wednesday, May 9, 2018 ( – Gold closed down $0.70 at $1311.30 which is surprising. I would have expected higher prices as Trump dumps the Iran deal and oil spikes because we now have problems in both Iran and Venezuela. The 30 day pricing chart is brighter for the technicians as some claim we may be looking at a short-term bottom. And for you optimists gold has survived a test of the 200 Day Moving Average ($1306.00). Party hats please.

Still the 5 day Dollar Index continues to stifle the gold bulls. The index has moved from less than 89.00 in late January through more than 93.00 today – pushed by a hawkish FOMC and improving US economic conditions.

But I would not be too bullish on the dollar yet – a better average number on the index is more like 90.00 and a 3 point drop in the index would provide a large boost to gold prices.

And the fact that gold remains above $1300.00 even with all the talk of higher interest rates is worth a little something. I don’t see a jump in physical demand across our counter and this story is common among other US dealers so the American public is looking elsewhere.

But this picture might be changing as the international demand is holding up. This according to the World Gold Council – Gold-backed ETFs had their strongest inflows since early 2017 – Global gold-backed ETFs holdings added 72.2 tonnes to 2,481t in April. This is the strongest month of net inflows in more than a year. Growth in global holdings was led by significant North American and European inflows and supported by a small increase in Asia.

Finally consider the longer scheme of things central banks are on the side of gold bullion. From 2002-2009 central banks were sellers to the tune of 110 million ounces in a steadily rising price market. Between 2010 and 2017 central banks have become buyers to the tune of 118 million ounces. The biggest buyer of late has been the Russians who purchased a whopping 60% of all central bank purchases last year amounting to 7 million ounces.

This from Zaner (Chicago) – “All things considered one might’ve expected the gold market to have come into the Wednesday trade with a definitively positive track as geopolitical reverberations from Iran are being seen throughout the world and crude oil prices early on have posted a smart gain 0f $2.00! However the bane of the bull camp in gold and silver continues to be the dollar which has forged yet another upward thrust to the highest levels in six months. Another issue turning up the heat on gold and silver in a chain reaction fashion is creeping interest rate gains in the US as that in turn could attracts money to the US some of which might be pulled out of safe haven metals. There might be some light at the end of the tunnel for the bull camp as the press overnight is reporting speculators have been cutting their net long positions already but it could be difficult for June gold to avoid a retest of $1,300 given the fresh damage on the charts. Issues that could also provide some support for gold are upbeat annual forecasts for 2018 gold prices from Gold Fields mineral services, news that Yemen had fired missiles at the Saudi capital again and suggestions from a rainy in leadership that they would begin to enrich uranium again because of the US stance. While the US has decided to take a much more aggressive stance toward Iran the big question is: will enough of the international community join the ranks of the US to form an effective economic block and will overall conditions in the Middle flare up significantly? While the gold market has not paid much attention to the ever present declining South African gold production trend news reports that the National Union of Mines in South Africa is planning to demand a 37% wage hike from gold mining companies over the coming two years is sure to result in strike threats and potential firings by the companies. In short, the geopolitical developments combined with a fresh supply-side threat should make the last two weeks lows firmer support. However, in order to rise quickly toward the $1,350 level might require some aggressive action from Iran or some aggressive action by the US administration.

We are surprised that the platinum group metals managed to post any positive action yesterday as noted weakness in crude oil, a soaring dollar and anxiety in US equities could have undermined industrial demand driven markets and turned up the liquidation pressure on the PGM’s. Clearly the platinum market is the weaker component in the PGM complex as it is tracking with weaker gold and silver in the early going today while palladium has forged a very tight range in mostly positive territory. It is possible that the PGM complex might draft some minimal support from the prospect of flaring labor tensions in South African mining operations but the rising strength in the dollar and a measure of global economic headwinds from the Middle East situation appears to be hampering both platinum and palladium to start today. The palladium market has managed to respect an uptrend pattern since May 1st but the ranges have become quite narrow and the market appears as if it is coiling for a decision. We do see somewhat credible support at $950 but close in resistance at $973.90. Pushed into the market in the current situation we give the bear camp an edge. Like the palladium market the platinum market has also generally maintained an upward pattern for the month of May but we think the charts are showing a loss of momentum at the downtrend channel line from the 2018 highs and we can’t rule out a temporary spike down to $900 in the event that risk off psychology becomes widespread globally.”

Silver closed up $0.07 at $16.46. What happened to all the recent buzz?

Platinum closed up $4.50 at $911.60 and palladium closed up $7.20 at $972.80.

This is our usual ETF information – All Gold Exchange Traded Funds: Total as of (5/1/18) was 70,608,353.  That number this week (5/8/18) was 80,524,962 ounces so over the last week we dropped 83,391 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 70,763,846 and the record low for 2018 was 68,169,590.

All Silver Exchange Traded Funds: Total as of (5/1/18) was 650,648,596.  That number this week (5/8/18) was 656,871,672 ounces so this last week we gained 6,223,076 ounces of silver.

All Platinum Exchange Traded Funds: Total as of (5/1/18) was 2,398,414.  That number this week (5/8/18) was 2,391,460 ounces this last week we dropped 6,654 ounces of platinum.

All Palladium Exchange Traded Funds: Total as of (5/1/18) was 1,093,287.  That number this week (5/8/18) was 1,103,723 ounces this last week we gained 10,436 ounces of palladium.

The Unscientific Activity Scale is a “4” for Wednesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Thursday – 3) (last Friday – 4) (Monday – 4) ( Tuesday – 4). The scale (1 through 10) is a reliable way to understand our volume numbers. The Activity Scale is weighted and is not necessarily real time – meaning we could be busy and see a low number – or be slow and see a high number. This is true because of the way our computer runs what we call the “book”. Our “activity” is better understood from a wider point of view. If the numbers are increasing – it would indicate things are busier – decreasing numbers over a longer period would indicate volume is moving lower.

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