Commentary for Tuesday, March 23, 2016 (www.golddealer.com)
By Ken Edwards and Richard Schwary of California Numismatic Investments Inc ……
Gold closed up $4.40 at $1248.60 on the Comex today. The Belgium terror attacks created early safe-haven buying in gold bullion during the overnight Hong Kong market.
The initial news pushed gold to $1260.00 but the market lost steam into London trading and continued lower in domestic trading. World stock markets, initially in the red seemed to get back on their feet in short order. Belgium is the home of the European Union and NATO and an ISIS attack anywhere is troubling but stocks recovered and gold moved lower in short order so this may be a statement that unfortunately the world is learning to live with this nightmare. It’s everyone’s hope that they are also learning how eliminate this 21st Century insanity.
The attacks also pushed the dollar higher – the Dollar Index closed yesterday at 95.40. Today we have traded between 95.26 and 95.73 – we are now around 95.72 so at the higher end of today’s trading range. Crude oil remains firm in the $41.00 range which is surprising – I would have expected higher prices because of possible retaliation.
Silver closed up $0.03 at $15.87. Silver managed to stay above the key $15.80 level for the fifth day. If you are watching the Exchange Traded Funds in silver the action is interesting. The total fund accumulations continue to grow and in fact moved past a new yearly (2016) high yesterday (624,109,623 ounces).
We have seen a few very large sellers across the counter in the $15.00 region. And in each case have resold virtually everything to eager buyers. This would indicate the buying public supports current pricing. A few of the better known silver celebrities (talk show silver advocates) claim this most recent low is a solid bottom and if confirmed technically may lead to something big.
I’m a little more pessimistic because of the coming interest rate hikes for gold but silver is a different kind of beast. Actual physical buyers of silver bullion live in another dimension – it’s not just price driven – these folks are on a mission in that most are convinced there is not near enough silver bullion to go around and once this is fully understood this market will explode. I don’t know about that but a push above current levels brings the $20.00 level back into play.
Platinum closed up $15.00 at $996.00 and palladium closed up $3.00 at $605.00. Platinum is trading for $252.00 less than gold. Trading of gold bullion for platinum bullion has slowed down but I suspect this will not remain the case for long.
The rhodium market remains very active up 12% this year and the cash rhodium market is not well understood by investors. That is what makes it interesting – the “fix” for lack of a better name is created by JM in Europe ($740.00). This is kind of a bench-mark used for dealers to conduct business and is not like the spot market in gold or silver because trading in rhodium is thin – a large deal one way or the other may create a volatile trade. Today we are selling the popular Baird Rhodium Bar 1 oz for $870.00 delivered and the product is in stock. If you are looking for something outside the box this is the mother of precious metal plays and it’s cheap.
This from Jan Harvey (Reuters) – Gold rallies 1 percent after Brussels blasts – “LONDON, March 22 Gold rallied more than 1 percent on Tuesday as investors sought assets seen as a haven from risk after deadly bomb attacks hit Brussels airport and a rush-hour Metro train in the Belgian capital.
The attacks killed 34 people, according to public broadcaster VRT, and triggered security alerts across Europe that brought some cross-border traffic to a halt.
“(The rise in) gold is mainly related to the attacks in Brussels,” ABN Amro analyst Georgette Boele said. “Gold is being bought as a safe haven.”
European stocks fell and investors also rushed for the safety of government bonds after the explosions in Brussels. The euro slipped, the yen and the Swiss franc rose, and the dollar index climbed 0.2 percent after the news.
A witness said he heard shouts in Arabic shortly before two blasts struck a packed airport departure lounge at Brussels airport. The federal prosecutor said one of the blasts was probably triggered by a suicide bomber.
Haven buying sparked by the news helped offset comments from Atlanta Federal Reserve President Dennis Lockhart that the United States may be in line for an interest rate rise as soon as next month.
Gold had fallen for three sessions in a row before Tuesday on uncertainty over the path of U.S. rates. Speculation rates would rise pushed gold down 10 percent last year but it has rebounded 20 percent so far in 2016 as those fears faded.
“Before the explosions we had some fairly hawkish comments from one of the Fed officials saying a rate increase could now be on the agenda for April,” Societe Generale analyst Robin Bhar said.
“I’d have thought that would have weakened gold, but clearly safe-haven buying on the back of the explosions in Brussels has (pushed prices higher).”
Elsewhere, data from the Swiss customs bureau showed Switzerland’s gold exports fell to an 18-month low in February as shipments to leading gold consumers India, China and Hong Kong slumped from the previous month.”
Despite today’s rise in the price of gold used in safe-haven buying I would not be surprised if we were back to this defensive market by tomorrow. It has been clear that the price range in gold has narrowed considerably trading between $1230.00 and $1270.00 since late February. This is the type of market that frustrates the physical buyers but the paper traders are back to making a living. Not that this is an easy market to trade – no commodity is easy to trade. But market psychology has been improving since the beginning of 2016 so a respite of sort in pricing is never embraced in the physical market.
Most commentary will now center on the notion that “gold is losing its mojo” because writers can be fair weather friends and pricing is molded around “what have you done for me lately”.
Before you jump out the window however consider the broader picture – gold has moved from the $1050.00 to $1250.00 since December in an authentic break to the upside – reversing a downtrend which had been in place since March of 2014.
This is significant and what is also important is that the price of gold has bounced around either side of $1200.00 since the beginning of 2013. So today’s close of $1248.60 is holding up rather well considering how gold was summarily dismissed from the financial marketplace as soon as it was clear that the banking system was not going immediately bankrupt.
So as far as the shorter term is concerned I would not get too jumpy about prices unless we break significantly below $1200.00 – anything in the middle means that folks still believe that real gold bullion is worth putting under the mattress – just in case.
The walk-in cash business was active but not hurried today – the phones were busy early on but slowed down considerable by lunch.
By the way – if you are new to the metals don’t be in a hurry. The process of protecting yourself financially with real gold or silver bullion has been around for a long time and can be abused when prices move higher. Avoid pressure from telemarketers who are on commission – and especially avoid promises of quick profits – a sure sign that the dealer will be the only one who makes money. Be careful if the dealer calls you describing a profit opportunity. Take your time in the process – sleep on the idea – and make an informed decision.
The GoldDealer.com Unscientific Activity Scale is a “5” for Tuesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Wednesday – 5) (last Thursday – 5) (last Friday – 6) (Monday – 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 generally increasing – it would indicate things are busier – decreasing numbers over a longer period would indicate volume is moving lower.
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