Gold Newsletter Market Report – Gold Moves Lower on Weak Oil into the New Year

Commentary for Thursday, December 31st, 2014 (

richard schwary thumb Gold Market Newsletter : Gold Closes Lower as the Dollar Strengthens

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

Gold closed down $16.30 at $1183.90 saying goodbye to the $1200.00 level – which seems appropriate into the New Year considering the poor press gold has received.

So this is the last trading day of the year – and good riddance!  Still gold being down only 1.5% these past 12 months seems like a good deal and the case for a bottoming market is reinforced.

With the persistent anti-gold themes of low inflation, weak oil, strong equities, fears of higher interest rates and the strong dollar our friend gold fared pretty well – we are lucky there was not more damage; last year gold lost 28%.

Pressuring gold lower today and now creating a sweat in Europe and Russia is the continued weakness in oil. An old story by now but today’s move around $53.00 looks ominous – especially for Russia who exports a great deal of crude.

And for now lower oil equates to lower inflation – so the window of continued near zero interest rates provides the Federal Reserve with more options.

gold_pricesThis from FXEmpire – “The slump in oil prices has contributed to the steepest annual slide in the ruble since 1998, given crude is Russia’s main export earner. OPEC has so far resisted calls from cash-strapped Venezuela to act and stem the rout in prices. U.S. production from fracking is flooding the market, Venezuela President Nicolas Maduro said in a speech broadcast on state television yesterday. The South American country had called for an output cut at OPEC’s Nov. 27 meeting in Vienna. OPEC, which supplies about 40 percent of the world’s oil, pumped 30.56 million barrels a day in November, according to data compiled by Bloomberg. Crude oil prices have plunged 50% from their 2014 high, as prices swung lower again. The pace of the slide, to the lowest settlement in nearly six years, is the fastest in about 8 years.”

The Dollar Index remains strong which also pressured gold lower. Yesterday’s close was 89.94 and today’s action moved from 89.86 to 90.30 which is significant.

The Dollar Index as of this writing is 90.28 and there are many who believe it will continue strong into 2015 because of lower oil – safe haven buying – the recovering US economy and higher interest rates. The Dollar Index began 2014 at 80.8 and ended the year at 90.27!

But enough of this doom and gloom; after all we will soon be celebrating the New Year! And I always like to begin the New Year on a positive note so read Jim Rickards. Get Your Gold Now Before It’s Too Late – “Kitco News is kicking off its Outlook 2015 coverage with an interview with bestselling author Jim Rickards to see what he thinks will happen to the U.S. economy in the coming year and how it may affect gold. “We’re absolutely in a currency war,” he tells Daniela Cambone. “In 2011, we saw the weak dollar; today, we see the strong dollar. I expect a year from now we’ll see the weak dollar again.” Recent strong economic data out of the U.S. has many analysts expecting the Fed to start raising rates this year. “There’s a lot of weakness behind the numbers,” Rickards says. “The economy is not collapsing, it’s just not growing up to potential and as long as that’s true….the Fed is not going to raise rates.” Rickards adds that he thinks the U.S. economy is fundamentally weak and if it gets worse, he wouldn’t be surprised by a QE4 sometime in 2016. He wants to see what will happen to the dollar once the marketplace realizes that the Fed cannot raise rates yet. Looking at gold, Rickards says the current price is a great entry point because once it takes off, he thinks it will be hard for investors to find any gold. Tune in now for a more in-depth look into Rickards’ outlook for 2015 and hear why he thinks the currency wars are not yet over.”

Parenthetically Rickards idea of QE4 in 2016 has been floating around since before quantitative easing was officially stopped by the Federal Reserve. I don’t think the US economy is that weak but if you are looking for a wild card relative to gold – QE4 would be huge. In my opinion such capitulation by the Federal Reserve would easily push the price of gold into new high territory.

We will be closed both Thursday and Friday for the New Year so this is our last newsletter until Monday – Jan 5th. The commodity markets will be open Friday and our site will reflect these changes.

Silver closed down $0.67 at $15.56 and physical buying has once again picked up in everything relating to silver bullion. Silver was hardest hit this year down 19.5% and today’s close is only $0.17 away from the low close of 2014 which was $15.39 on Nov 6th.

Platinum closed down $9.00 at $1209.00 and palladium closed down $6.00 at $798.00. Platinum was down 12% in 2014 even with a long lasting strike in South Africa. Palladium bucked the trend this year – up 9.4%. The big winner in the PGM’s was rhodium – up 27.6%.

Precious Metal Closes – Dollar Strength – Oil Prices – G to S Ratio – Dec 25 – 31

               Gold               Silver             Platinum                Dollar Index    

Thurs    Christmas      Christmas        Christmas                  Christmas

Fri        $1,195.30        $16.11             $1218.00                   90.01

Mon     $1,181.70        $15.74             $1201.00                    90.20

Tues     $1,200.20        $16.24            $1218.00                    89.96

Wed     $1,183.90        $15.56             $1209.00                    90.29

Palladium       Rhodium               Oil                 Gold to Silver Ratio

Thurs    Christmas      Christmas        Christmas                  Christmas

Fri        $818.00           $1245.00         $54.96                         74.19

Mon     $812.00           $1245.00         $53.54                         75.07

Tues    $804.00           $1245.00         $53.69                         73.90

Wed    $798.00           $1245.00         $53.45                          76.08

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 employees think – 6 believe gold will be higher next week – 2 think gold will be lower and 4 believe 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 sampling of 100 transactions – unscientific, but worth considering because these people took action: 40 people thought the price of gold would increase next week – 44 believe the price of gold will decrease next week and 16 think prices will remain the same.

The walk-in cash trade was active today and the phones were relatively busy with continued tax selling and real silver believers once again buying the dips.

The Unscientific Activity Scale is a “4” for Wednesday. The CNI Activity Scale takes into consideration volume and the hedge book: (last Tuesday – 3) (last Wednesday – 5) (Monday – 4) (Tuesday – 5). 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”.

Disclaimer – The content in this newsletter and on the 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. (California Numismatic Investments, Inc.) and its employees do not render legal, tax, or investment advice.


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