Commentary for Monday, March 27, 2017 (www.golddealer.com)

Gold Market Newsletter with Richard Schwary

By Ken Edwards and Richard Schwary of California Numismatic Investments Inc ……
 

Gold closed up $7.20 today at $1,255.70. The common wisdom being that gold is pushing higher because of safe haven buying now in place because Trump policies are failing? Please – I think the best you can make of this argument is that in reality gold still retains some of its gusto (true) – this figures as we flirt with its 200 Day Moving Average ($1,259.00).

I think the Trump issue is nothing more than a sound bite – the market lacks fresh information and this plays well because it supports a scenario which is still fresh in the voters mind – that Trump may present more problems than solutions.

The real concern traders should have at this point is interest rates – even though the Federal Open Market Committee (FOMC) might be more dovish – they must do something as the economic picture improves – if they are sluggish or get behind the rise in inflation gold will move to new highs.

The so-called Trump failure relative to health care will help support gold’s current price range but this argument will read like yesterday’s paper before the end of this week.

The physical demand everyone is fond of citing gets excited (and enters the race) on lower prices. China and India are quintessential buyers. Their timing is excellent – patience first-rate and they are not impulse buyers. Real physical demand prompted by lower prices is what to anticipate – another food fight in Washington is not going to move the needle for more than day or two.

Donald Trump illustrationThis Trump argument is also tied to dollar success or failure and I’m not really hot on that idea either – at least as long as we are in the honeymoon phase of his presidency (if he ever had one). The Dollar Index closed Friday at 99.38 and did move somewhat lower as health care reform faltered but quickly turned around (99.18) so the net change really was not much.

If you are looking for real reasons for gold to move higher consider the upcoming debate over US debt – it’s right around the corner – we will likely raise the limit – we have the last 72 times it was under consideration! Citizens and common sense no longer enter this debate but really, is this a way to run a country? The numbers are not only extraordinarily large, they are accelerating; since Clinton we have gone from $4 trillion to now $20 trillion.

Gold did push to the upside late Friday – moved into an unchanged range ($1,255.00) over the weekend – pushed into the $1,260.00 range in early domestic trading and finally thought better of the situation – settling somewhat below its important 200 Day Moving Average. That’s not to say the 30 day price chart is a bust – we are after all in an upward price trough which began at $1,200.00 in early March – this makes the bulls happy but we still have not moved above the monthly high of $1,260.00. And once again given the absence of real – fresh news I would not be surprised if gold continues to mark time between $1,200.00 and $1,260.00.

Keep in mind that the Exchange Traded Fund (ETF) numbers favor gold – they have not substantially bailed – good news or bad. We are only about 200,000 ounces away from the high point on the year so some are holding an insurance bet.

Silver closed up $0.36 at $18.11. Gold Continues to Flirt with Higher Prices

Platinum closed up $1.10 at $969.00 and palladium closed down $18.90 at $794.45.

Coin World notes that new regulations regarding damaged or mutilated coins and currency remain in limbo. The reason the Treasury is revamping this buy-back program is that last year it was found that they have been duped. Perhaps China or a surrogate had been naughty. It seems the unnamed country has been making and selling fake damaged coins back to the US Treasury for years. This is no small-time racket – they are still trying to figure out how much money was stolen. Why this lasted so long is being invested (of course) but one thing is sure – you and I will be picking up the tab for more sloppy government oversight. The reason they have not re-instituted a new program in more than a year is simply because they are still trying to figure out how the old one failed.

By the way – today’s paper money lasts about 18 months in circulation – coinage about 30 years. The fact that no one seemed to ask why there was such a large rise in damaged coins over the last decade goes unanswered.

Gold Market IllustrationThe GoldDealer.com Unscientific Activity Scale is a “4” for Monday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Tuesday – 3) (last Wednesday – 3) (last Thursday – 4) (last Friday – 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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