Commentary for Friday, October 28, 2016 (www.golddealer.com)
By Ken Edwards and Richard Schwary of California Numismatic Investments Inc ……
Gold closed up $7.30 today at $1,272.30 and got a political kick in the pants in the aftermarket which pushed prices up another $7.00 looking at $1,280.00. So just when you thought it was safe to come out from under your bed the Trump/Clinton pie fight presents another twist. FBI Director Comey reopened Mrs. Clinton’s email investigation but claims it is too soon to draw conclusions. This political link to higher gold is thin in my mind but persists – the notion that gold will move lower with Clinton and higher with Trump is popular these days but may not hold much water in the longer term.
At any rate this election looks like a train wreck as far as demeanor is concerned and if this continues the ability to govern properly may have already been damaged regardless of the result. If you disregard this most recent sensationalism gold’s trading pattern will put you to sleep. The lowest price we have seen these past 3 weeks has been $1,249.30 and today’s close was $1,272.30 – that amounts to $23.00.
But there is no doubt prices are holding up just fine given the political distractions and possible interest rate hike in December. There might be something new in the air (besides the latest Clinton talk) – gold imports from China and India have been sleepy but this trend may be improving – in September China imported 35.5 tonnes from Switzerland versus 19.9 tonnes in August and imports from Hong Kong moved to 44.9 tonnes from 41.90 tonnes. Sill there are bears in the woods but the rhetoric is also improving as gold holds the upper end of its trading range. Even the famous Aden Sisters are suggesting this might be a turnaround year for gold.
The following Reuters post is about as positive as they get and almost neutralizes the interest rate hike curse.
This from Reuters – “The U.S. economy grew by 2.9 percent in the third quarter, outpacing analysts’ consensus forecast of 2.5 percent, strengthening the case for an interest rate increase and making non-yielding assets such as gold less attractive while boosting the dollar and U.S. treasuries. The reading of the world’s biggest economy dragged gold to a session low of $1,262.04 but the price rebounded shortly after.
“The GDP data was not overwhelmingly strong, the rise was marginal and the contribution to underlying strength wasn’t very strong,” said Carsten Fritsch, commodity analyst at Commerzbank.
“The fact that we have strong physical demand probably puts a floor to the price.” Demand for bullion in India is expected to pick up during the Dhanteras and Diwali festivals, when gold is traditionally given as a gift.
The dollar index, which measures the greenback against a basket of currencies, strengthened briefly following the U.S. data but then drifted 0.25 percent lower to 98.618. U.S. interest rate futures are implying a near 80 percent chance of the U.S. Federal Reserve raising rates by December, according to the CME Group’s FedWatch tool.
Bullion markets may have largely absorbed the impact of a rate rise and moderately higher yields will not necessarily weigh on prices, provided that the dollar does not rally further, HSBC analyst James Steel said in a note. Meanwhile, physical demand from emerging markets is coming back and should support higher prices, Steel said.”
Silver closed up $0.10 at $17.80.
Platinum closed up $16.50 at $981.40 and palladium closed up $3.15 at $616.35.
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 – 5 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: 25 people thought the price of gold would increase next week – 61 believe the price of gold will decrease next week and 14 think gold prices will remain the same.
Precious Metal Closes & Dollar Strength – Oct. 24 – Oct. 28
The walk-in cash trade and the phones were fast and furious as the most recent political news hit the air but everything calmed down considerably after lunch.
The GoldDealer.com Unscientific Activity Scale is a “5” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Monday – 5) (Tuesday – 6) (Wednesday – 6) (Thursday – 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.
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.
