Gold Closes Unchanged in Quiet Trading
Commentary for Friday, Nov 13, 2015 (www.golddealer.com) – Gold closed unchanged today at $1080.80 on the Comex. As you can see not a very exciting day – the range was between $1080.00 and $1088.00 so we began somewhat choppy but trading settled and most of the day prices stayed within the very narrow range of $1080.00 and $1083.00.
Everyone is beating the drum on Gold ETF withdrawals – it’s the easiest place to look when you are considering the physical market. Also pay attention to the fact that July-September 2015 consumption was 1120 tonnes, that’s up 78 tonnes from 2014 and investment demand was up 27% (cheaper prices) with Chinese gold bar demand up 70% (also cheaper prices).
The dollar continues strong – the Dollar Index traded between 98.53 and 99.21 today and we are now around 99.12, so at the top of its already amazing run. It is a wonder that gold was not weaker today – perhaps signs that physical buying is supporting prices.
The price of crude oil continues to “warn” – something in River City is not right. Crude oil these past 5 days has moved from $45.00 a barrel (already very cheap) to $40.53 (down 3% today alone). This is not good for the price of gold even though we seem to be holding the important $1080.00 mark.
I listened to Gary Wagner (Kitco) and his commentary about Nouriel Roubini’s call for $1,000 gold in 2015 – it was interesting. Basically he is a technical player (and a good one) so if gold breaks down at $1072.00 he will throw in the towel and look for $1000.00 – but he did bring up an important point – gold has just put in a bullish double bottom.
And it might well be that with this latest shake out gold has already factored in the first interest rate hike we have seen in 8 years. This “price factoring” and the real physical market may just be enough to hold support in a fairly tight range until – and this is the problem, inflation makes a comeback. Now our Federal Reserve is looking for a 2% inflation rate and so are the Europeans. Neither has gotten their wish – which makes further monetary accommodation a certainty.
Also keep in mind which way the wind is blowing – CNBC today had a forum of sharpies all talking about how retail holiday sales may disappoint. If the American consumer simply refuses to garner further debt and Christmas sales are a flop the Federal Reserve will continue to drag its feet – or alternatively the rate increase will be so small that it will be discounted.
Finally, if you are an optimist there is the seldom mentioned “fear factor” in the gold community. This is important even though it’s yesterday’s newspaper – if anything goes wrong with this monetary scheme which has been in place since 2008 there will be panic and gold will make a new highs.
In most cases such talk is chastised as “fear mongering” because to date no one has had to pay for the wild spending spree. Let’s hope this remains so because if there is a breach in the financial system the only real choice will be gold bullion. And after all is said and done there really is not that much of the stuff to go around.
If all of this sounds suspect I don’t blame you – everyone, even professionals are confused by the gold market today. But before you buy into current reality ask yourself why the World Gold Council released figures yesterday which show that central banks of the world continue to stock pile gold regardless of relative price.
By the way there are changes a foot at the China Mint. This is important because in the past they have followed international standards and their one ounce coins were clearly marked (1 oz). For some reason they will issue coins in 2016 (gold and silver) which will not be an exact ounce. For example the old 1 oz Chinese gold Panda which now weights 31.1 grams (1 oz) will be reduced in weight to 30.00 grams. This is no big deal if you do the math and realize when you shop that in the future the popular Gold and Silver Panda will not be 1 once. There are similar changes being made in smaller size Pandas so let’s be careful out there.
Silver closed down $0.07 at $14.20. Again steady sales of the popular bullion products – nothing really hot but steady – typical these days. I think the public buys around the $14.00 handle. And we see very few large sellers these days.
Platinum closed down $13.00 at $863.00 and palladium was down $25.00 at $538.00. Platinum is now trading for $217.00 less than gold – it has fallen $77.00 this week and $44.00 last week. Think about adding platinum to your holdings – these prices are amazingly cheap.
This from Jeffrey Sparshott and Kate Davidson (Wall Street Journal) – U.S. Producer Prices Stymied by Low Inflation – WASHINGTON – “A gauge of U.S. business prices fell in October, the latest sign of low inflation amid cheap gasoline and a strong dollar. The producer-price index, which measures the prices companies receive for goods and services, decreased 0.4% in October, the Labor Department said Friday. Excluding the volatile food and energy categories, so-called core prices were down 0.3% from the prior month.
Economists surveyed by The Wall Street Journal had expected overall prices would rise 0.2% and core prices would rise 0.1%.
Overall producer prices decreased 1.6% in October from a year earlier, the 10th straight year-over-year decline and the biggest annual fall since the government started publishing the series in 2009. Core prices were up 0.4% from a year earlier.
The index measures prices from the perspective of the seller, but generally tracks closely with other measures of inflation for consumers. Those gauges have been historically weak this year amid low oil prices, a strong dollar and weak demand abroad.
In October, producer prices for goods fell 0.4%, led by a big drop for light trucks. Energy prices were flat and food prices dropped 0.8%. Service prices decreased 0.3%.
Federal Reserve officials are looking for evidence of firming inflation before they raise interest rates from near zero, where they have held since 2008. Officials have said they want to be “reasonably confident” inflation will move toward the Fed’s 2% target before liftoff. The price index for personal consumption expenditures, the Fed’s preferred inflation gauge, was up only 0.2% from a year earlier in September.
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 – 5 believe gold will be higher next week – 6 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: 40 people thought the price of gold would increase next week – 50 believe the price of gold will decrease next week and 10 think prices will remain the same.
Precious Metal Closes & Dollar Strength – Nov. 9 – Nov. 13
The walk in cash trade was busy all day and the phones were also busy in early trading but fell off by the afternoon. Our Activity Scale continues on the high side.
The GoldDealer.com Unscientific Activity Scale is a “7” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 5) (Tuesday – 7) (Wednesday – 7) (Thursday – 7). 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 generally increasing – it would indicate things are busier – decreasing numbers over a longer period would indicate volume is moving lower.
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