Commentary for Thursday, March 3, 2016 (www.golddealer.com)
By Ken Edwards and Richard Schwary of California Numismatic Investments Inc….
Gold Markets closed up $14.00 on the Comex today at $1256.60. Well – what do you have here? Gold was flat in overnight trading both in Hong Kong and London – and opened flat to down in domestic trading so something spooked this market. This $1256.60 close is the highest number we have seen this year and the close above the key $1250.00 will make the bulls happy.
This is an interesting combination because stocks have been stronger for three days now probably because crude oil remains firm ($34.71). This is actually a big number for oil – 5 days ago we were around $33.00 a barrel – higher gold in the face of these trends shows that gold markets can still climb over obstacles and would bode well for the theory that higher numbers may still be in the making. It is a big deal that gold is doing well – but it would be a bigger deal if it not only holds ground but moves higher in light of less positive news.
The dollar however is not doing so good – the Dollar Index closed yesterday at 98.18 and today we have traded between 97.46 and 98.35 – we are currently at 97.56 with a negative bias. I think if you are looking for a prime mover here it must be the dollar. And for the dollar to move down means that traders are once again embracing the idea that the Federal Reserve will not raise interest rates anytime soon. Of course this story can change on a dime but the interest rate de jour opinion looks like a no-show in March.
At any rate gold is up more than $130.00 this month and up 18% on the year. And yet the American public is still pondering – which is fine, sometimes it takes more than a quick turnaround to convince players which have been sidelined for years.
So let’s ask a question – how much more would gold have to increase before you would be convinced this market is the real deal? Email email@example.com and I will pass on the numbers to readers.
Silver closed up $0.14 at $15.13. Silver has been the quiet sister of late but recent ETF activity is picking up and sooner or later it will benefit greatly from the surge in gold prices – if they continue. The problem now is that investors remember when the silver was barely holding $14.00 an ounce so today’s price does not look juicy (just made that up) but keep in mind that discounts from highs are very large so $15.13 might become yesterday’s bargain if gold runs.
Platinum closed up $6.00 at $942.00 and palladium was up $27.00 at $542.00. Palladium was up sharply today ($27.00) helped by higher oil prices. Higher oil lessens the likelihood that Russia becomes a big seller of palladium to counteract the drop in revenue from lower oil prices.
By the way we just purchased a large group of American Platinum Eagles (1 oz). The US Mint only produced this bullion coin one year since 2008 and according to mint officials they will not be in production anytime soon. At any rate if you have been waiting for American Platinum Eagles this is your chance – this stock will be gone in a week.
This is our usual Thursday Chicago Mercantile Exchange report covering the last 5 trading days – so we are looking at the trading volume numbers for the “April” Gold contract: Thursday 2/25 (302,957) – Friday 2/26 (297,448) – Monday 2/29 (302,598) – Tuesday 3/01 (299,756) – Wednesday 3/02 (299,666).
We have introduced silver to our CME rundown – so we are looking at the trading volume numbers for the “April” Silver contract: Thursday 2/25 (11,876) – Friday 2/26 (3,804) – Monday 2/29 (3,481) – Tuesday 3/01 (3,440) – Wednesday 3/02 (3,453).
This from Jan Harvey (Reuters) – Gold climbs towards $1,250/oz as equities retreat – LONDON, March 3 Gold rose back towards $1,250 an ounce on Thursday as the dollar eased and equity markets retreated, sharpening appetite for the metal as an alternative asset, but moves were muted ahead of Friday’s U.S. payrolls data.
The dollar extended losses after data showed a rise in U.S. jobless claims last week, though the underlying trend continued to point to a strengthening labor market. U.S. stocks opened lower, while European shares fell 0.6 percent.
Market participants largely stuck to the sidelines however ahead of the U.S. non-farm payrolls report for February. Payrolls are estimated to have risen by 190,000 last month, according to a Reuters poll of economists.
The report is seen by many as a barometer for the health of the U.S. economy. A strong reading may revive expectations that the Federal Reserve will press ahead with more rate hikes this year, which would weigh on non-yielding gold.
Saxo Bank’s head of commodities research Ole Hansen said he expected to see pressure on gold only if the reading came in above 225,000. “That was roughly the average last year, and one that helped bring about the first rate hike,” he said.
“The market most certainly is not prepared to let unfriendly news spoil the party at the moment,” he added. “Once again it is testing resistance towards $1,246, so let’s have the break and see how much is left in the tank.”
Gold has risen 17 percent this year, hitting a one-year high of $1,260.60 an ounce last month as stock market volatility picked up on fears over the health of the global economy.
Moves towards looser monetary policy in China, Japan and the euro zone this year in the face of faltering growth, and a growing conviction that the Fed will put off further rate hikes, have prompted some investors to seek out gold.
“There’s a sense that the debt problems aren’t going to go away, and that’s why people have been moving to (gold as a) safe haven asset,” Sharps Pixley Chief Executive Ross Norman said.
“There’s a sense that the crisis is ongoing, and the central banks are perhaps fallible.”
Inflows into gold-backed exchange-traded funds, which issue securities backed by physical metal, have risen sharply, with holdings of the largest, SPDR Gold Shares, hitting 788.6 tonnes on Wednesday, the most since Sept. 2014.
The walk-in cash business was active today with some big sellers. The phones were just average.
The Baird Rhodium 1 oz bar continues to attract attention. The price is so cheap there are now delivery delays as long as two weeks from the manufacturer!
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 all the time with the “latest and greatest”. 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 Thursday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Friday – 4) Monday – 6) (Tuesday – 7) (Wednesday – 6). 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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