Commentary for Friday January 9th, 2015 (www.golddealer.com)
By Ken Edwards and Richard Schwary of California Numismatic Investments Inc.………
Gold closed up $7.60 today at $1216.00 so its technical picture continues to improve on the short term. Most writers believe higher numbers are the result of safe-haven buying over European monetary problems. But I think the terror issue in France has everyone rattled and has supported higher ground.
So things are looking better as gold moved up $30.00 the first week of 2015. But to be really convincing it must show strength above $1230.00 or be subject to short-term profit taking.
Gold was quiet overnight but firmer on the open probably reacting to the terror escalation in France this morning as the more complicated hostage situation made the news. The French reacted quickly but this situation highlights a fear we all have that such terror situations can quickly spiral out of control.
The important non-farm jobs number exceeded expectations so I would have expected gold to sell off as the US economy continues to improve which would lead to the Federal Reserve raising interest rates sometime in the first quarter of 2015.
Like I said yesterday – higher US interest rates are an anathema to gold. But it is possible that the Federal Reserve will try a small increase the first quarter of 2015 to test the waters.
The Dollar Index is somewhat weaker this morning closing yesterday at 92.32 compared with this morning’s look at 91.96 – and WTI crude is steady around $48.00 – both of these factors help to steady gold prices.
Still the physical market remains active. This from Reuters – “In the physical markets, demand from China has been strong in recent weeks in the build-up to the Lunar New Year holiday in February, when gold is bought for gift-giving.”
Gold short-term technical picture continues to improve – especially with today’s advance – but the market is choppy. If we cannot establish new strength above $1230.00 I expect profit taking will continue to cap gains.
US stocks seems stable but watch this metric carefully because of possible overvaluation and the problems in Europe. There are plenty of commentators who believe the DOW should be shorted which is crazy. But a significant move to the downside in stocks could create increased safe haven buying in physical gold bullion.
Finally doubt the stability of oil – many are hoping the slide is over but this may not be the case and lower oil can trigger further weakness in Europe and drag metal prices, including gold lower.
Looked at the World Gold Council – World Official Gold Holdings. The US is still in first position with 8133 tonnes – Germany is second with 3384 tonnes – followed by the IMF – Italy – France and Russia. China comes in a surprising 7th with 1054 tonnes and India is 11th with 557 tonnes. It’s interesting that gold as a percentage of foreign reserves differs vastly – 71.6% for the US – 1.0% for the Chinese!
Silver closed up $0.03 at $16.38 – this market has now begun to drift – the buzz created when we dipped below $16.00 has disappeared.
Platinum closed up $7.00 at $1229.00 and palladium was also up $7.00 at $800.00.
This from Reuters – India not planning further curbs on gold imports – trade secretary – “India is not planning to impose any further curbs on gold imports as the current account deficit is under control, Trade Secretary Rajeev Kher said on Wednesday.
The South Asian country has imported 7 tonnes of gold so far in January, while 39 tonnes of gold was imported in December, Kher said after a meeting with industry representatives.
India’s gold imports in November were 151.58 tonnes, according to the government data.
In a surprise move on Nov. 28, the world’s second-biggest gold consumer scrapped a rule that traders had to export 20 percent of all gold imports.
“The government is also considering our recommendation of a reduction in the import duty,” said Bachhraj Bamalwa, director of industry body the All-India Gem and Jewellery Trade Federation, which was represented at the meeting.
Bamalwa expects January gold imports to be around 50 tonnes.
India in May 2014 had eased some of the restrictions on gold imports it imposed in 2013 when a wide current account deficit had sparked the worst currency turmoil since a 1991 balance of payments crisis.
As part of its measures India raised last year the import duty on gold to 10 percent, which has led to widespread smuggling of the metal.”
Precious Metal Closes & Dollar Strength – Jan 05 – Jan 09
Gold Silver Gold to Silver Ratio
Mon $1203.90 $16.17 74.45
Tues $1219.50 $16.60 73.46
Wed $1210.60 $16.51 73.32
Thurs $1208.40 $16.35 73.90
Fri $1216.00 $16.38 74.23
Palladium Rhodium Platinum
Mon $793.00 $1245.00 $1210.00
Tues $800.00 $1245.00 $1220.00
Wed $792.00 $1245.00 $1220.00
Thurs $793.00 $1220.00 $1222.00
Fri $800.00 $1210.00 $1229.00
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 – 4 believe gold will be higher next week – 4 think gold will be lower and 3 believes it will be unchanged.
Our Patented Customer Survey – Gold’s Direction Next Week?
Like the employees our actual customers were given three choices – up – down – unchanged. We limited the survey to a random sampling of 100 transactions – unscientific yes but worth considering because these people actually took action: 43 people thought the price of gold would increase next week – 43 believe the price of gold will decrease next week and 14 think prices will remain the same.
The walk in cash trade today was again quiet and so were the phones.
The GoldDealer.com Unscientific Activity Scale is a “2” for Friday. The CNI Activity Scale takes into consideration volume and the hedge book: (Closed last Thursday and Friday) (Monday – 5) (Tuesday – 3) (Wednesday – 3) (Thursday – 2). 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”.
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