Gold Remains Firm as the FOMC Stands Pat
Commentary for Wednesday, Aug 19, 2015 (www.golddealer.com) – Gold closed up $11.50 at $1128.10 on the Comex today as FOMC July minutes were released early and there was even a higher aftermarket by a few dollars.
The overnight Hong Kong and London markets were relatively flat but the domestic market created an upward bias from the opening. Today’s close is the highest level gold has reached since we tested recent lows ($1085.00) so the technical picture continues to improve but note that we may be in for some profit taking as we failed to confirm a movement above Gold’s 50 Day Moving Average ($1138.00)
The dollar faded somewhat on the FOMC information. The Dollar Index range today was 96.39 through 97.08 – we are now trading around 96.60 so the bias was generally negative. The weakness supports the price of gold and is supported by the FOMC decision to stand pat on very low interest rates. No one seems to make any big deal out of this, even gold’s reaction was tepid but I think this latest Fed decision supports the notion that the US does not want to upset the apple cart relative to both what is happening in China and the European Union.
The released July FOMC minutes did not suggest that there was anything special about September relative to interest rates – actually they panned this subject.
It is still hard for me to get my head around higher gold prices with base metals and oil circling the drain. So the pessimist in me is looking for profit taking and a continued side-ways to lower market as the Fed continues to ponder.
So what now? Who knows – the interest rate dialogue is very fluid but if we don’t see a rate increase in September perhaps we won’t see one until December. The Federal Reserve has held tight to the notion that interest rates will be raised this year based on the improving US economy but Janet Yellen is worried about outside factors. If China and the yuan tank or there is a hiccup in Europe the whole world could catch a cold.
Also consider that stock prices have had a field day on cheap money. What happens if an increase in interest rates causes this happy time to wobble? The Dow at one time today was down more than 200 points – that’s a lot of red ink for a day with little real news.
All of this hyperventilation is not a created fear without some foundation. Any one of these scenarios or all of them could develop overnight and we could face another 2008 challenge.
Silver closed up $0.38 at $15.17. So there is some volatility in this market probably due to the lag-time in bringing some products to the market. This difference between the paper silver price market and the actual physical market willing continue as long as real silver investors are will to pay for a particular product. A good example of this is the continued premium being brought in the physical $1000 face 90% bag market. Some usually large players in bags have opted out claiming they will enter when premiums once again become realistic.
Platinum closed up $19.00 at $1012.00 and palladium was up by $17.00 at $609.00.
This is our complete ETF Wednesday information – All Gold Exchange Traded Funds: Total as of 8-12-15 was 48,804,902. That number this week 8-19-15 is 48,842,781 ounces so over the last week we gained 37,879 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 2015 is 53,901,867 and the record low for 2015 is 48,804,902.
All Silver Exchange Traded Funds: Total as of 8-12-15 was 618,948,917. That number this week 8-19-15 is 617,272,970 ounces so over the last week we dropped 1,675,947 ounces of silver.
All Platinum Exchange Traded Funds: Total as of 8-12-15 was 2,680,192 ounces. That number this week 8-19-15 is 2,729,466 ounces so over the last week we gained 49,274 ounces of platinum.
All Palladium Exchange Traded Funds: Total as of 8-12-15 was 3,035,769 ounces. That number this week 8-19-15 is 3,014,960 ounces so over the last week we dropped 20,809 ounces of palladium.
This from Bloomberg – Gold dealer Degussa says German buyers boosted – MINEWEB / BLOOMBERG – Gold sales in Germany increased 50 percent to about 700 million euros ($777 million) during the first six months of the year, according to Chief Executive Officer Wolfgang Wrzesniok – Rossbach. The trend continued in July, with sales for the month reaching the second-highest on record.
A declining currency made buying gold profitable for European investors. Gold valued in euros rose 2.7 percent this year. In dollar terms, prices have dropped on signs that Federal Reserve is preparing to raise interest rates and metal demand is slowing in major markets like China and India. The metal trades at $1,115.08 an ounce in London.
“We are seeing constant buying,” Wrzesniok-Rossbac said by phone on Wednesday. “Greece has certainly been a driver, as well as the weak euro.”
The risk of widespread currency devaluation will increase enthusiasm for gold, he said. China’s decision Tuesday to allow markets greater sway in setting the yuan triggered the biggest selloff in 21 years and roiled global markets.
“The market is volatile, but we are pretty confident that this growth will continue,” according to Wrzesniok-Rossbach.
This from Jeffry Bartash – U.S. housing costs continue to soar, CPI shows – WASHINGTON (MarketWatch) — Higher costs of housing are taking a bigger bite out of American incomes.
The consumer price index, or the cost of living, rose a scant 0.1% in July to mark the smallest increase in three months. Yet the cost of housing, the largest expense for most Americans, continued to rise, threatening bigger advances in consumer inflation in the near future unless prices ease up.
The cost of shelter rose 0.4% last month, reflecting the biggest gain in more than eight years. And housing expenses have climbed 3.1% in the past 12 months, the largest annual increase since 2008.
The cost of shelter has been climbing lately because of low vacancy rates of rental properties and a lack of supply of both older and new homes. Builders are racing to construct more homes and apartments but prices will continue to rise unless demand abates or more units become available.
The prices of most other consumer goods were little changed in July, perhaps a sign that the growing U.S. economy still hasn’t sped up fast enough to threaten an upsurge in broader inflationary pressures. Food prices climbed 0.2% while energy prices rose a smaller 0.1%.
“A surprisingly weak set of inflation figures suggests that there is still more slack in the U.S. economy than we had believed,” said Paul Ashworth, chief U.S. economist at Capital Economics.
Excluding food and energy, so-called core consumer prices also advanced 0.1% in July. Aside from shelter, prices for clothes and medical care also rose.
The walk in cash trade was steady today and so were the phones but there was not tension in the air – disappointing really – I expected more of a “pop” considering the Federal Reserve passed on suggesting an interest rate increase was right around the corner.
It is also possible that “action” is slowed somewhat because certain popular bullion products are simply not in the right manufacturing cycle.
After 3 days of problems the phone company fixed our 800 numbers – at least this is what they claim. If you have any continued problems calling please email richard@golddealer.com.
The GoldDealer.com Unscientific Activity Scale is a “7” for Wednesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Thursday – 6) (last Friday – 7) (Monday – 8) (Tuesday – 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.
When buying or selling you will receive an email confirmation. This includes a PDF File to confirm your invoice or purchase order and includes forms of payment and bank wire instructions. When doing business please check to see if your current email has been entered into the new system and check to see if your computer will accept our email (no spam).
Thanks for letting us know when you move or change your email.
We believe our four flat screens downstairs with live independent pricing (BullionDesk.com) 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 even wire funds into your account that same day for a small service 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. Sal is now in charge of our Facebook page and he is a self-proclaimed expert on gold conspiracy theory. He would be happy to respond to even the most ridiculous conspiracy assertion on our Facebook page so why not join the fun?
Thanks for reading – we appreciate your business and enjoy your evening.
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 advisers. 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.
The post Gold Remains Firm as the FOMC Stands Pat appeared first on www.golddealer.com.