Gold Market Comments

Heraeus Metals NY

The Yemen news yesterday gave a short lived pop to gold. But yet there is something else going. In Asia gold traded as high as 1206. In London and NY it has traded above 1200 only to retreat. Today’s  fourth  quarter GDP report was  a little higher but the annualized was lower than expected which should have been bullish for gold. Reuter’s Michigan Consumer sentiment was slightly higher than expected causing a net zero effect on market direction. The precious metals complex remains under the gun from the expectations of higher interest rates, futures shorts and ETF liquidations. But in the battle of direction it does not seem that shorts hold all the cards as every good dip has been met by buying. The question is who will tire first, the bulls or the bears before a new direction is made clear when the dust finally settles.

The USA Debt Problem

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And you think the current USD price of gold really means anything with a USA debt of $16 Trillion? Gold as a safe haven has outlasted every government, bank, currency and stock market in all history. It has been and always will be the only form of sound money. BK

Why gold will see $2,000

Barron's 

By : WARREN HOGAN AND VICTOR THIANPIRIYA

March 18, 2015

ASIA’S FINANCIAL TRANSFORMATION

The income effect implies that consumer purchasing power increases as real wages rise, and as such, the demand for gold will increase as more people can afford to buy it. In Asia over the past few decades, the income effect has been dominant. The Asian economies (particularly China and India) have enjoyed strong growth, but still have a relatively tightly regulated and narrow financial system. Gold has been a beneficiary of these challenges as it is largely not subject to the same regulations as the wider financial system. Given that gold has also played a strong role in Asian cultures, the demand is even higher than purely financial factors would suggest.  Read more...

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Central Bankers have always had a stash of gold. I choose not to argue with the people who control the value of our money. 

"Do as they do, not as they say."

BK

Gold Re-cap

Gold was attacked early this morning at around 9:00am and hit a low of roughly $1,142.70, then made an impressive rebound of almost $17 to $1,159.50 by about 9:50am. After the excitement wore off the bears were in control again and we see a close at about $1,149.00 today. This is below the $1,150.00 mark that many technical traders claim is a huge support level. Will it hold is the big question? In light of the FOMC announcement tomorrow and the clear evidence that the bears seem to be in control of this market for now, I suspect the announcement tomorrow will be gold negative and we may test the $1,100 level soon? It's nearly impossible to use any short term market indicators these days to predict prices. 

However the fundamentals for gold to regain it's "safe haven" status are stronger than ever, with the UK and Australia joining the new Asian development bank organization and the creation of a new SWIFT system by Russia and China are clear indicators that the USD's status as the dominate currency in the world is falling. I imagine we will soon have a few currencies to choose from as a international trade currency. The big question is: will gold be the backing to any new currency developed for international trade?

Stay tuned...

Bosko Kacarevic

Heraeus NY Market Report

GOLD

Gold ended the shortest month of the year looking for renewed direction last week, following recent sideways moves and losses in the early weeks of February. Technically gold has tried to build some upside momentum: market psychology may be helped in that prices managed to advance over past the week, the first advance in over a month. For market bulls though, patience is still a pre-requisite as the timing of a rise in US interest rates, the performance of the dollar and the euro and the drag of oil prices on commodities as an asset class present a serious uphill challenge. There is no unanimity in sentiment and new highs in several key equity indices suggest that attentions are largely elsewhere for the time being. Economic data also lends little to establishing any form of consistently strong directional view. A more appropriate evaluation of risk will emerge but timing is everything. At the start of the week gold was testing $1200 on the downside but found some support as China returned from New Year’s festivities. The reality is though that many jewellery factories in Hong Kong only opened towards the end of the week and in the mainland many will only re-start on March 2. A rise in Euro gold prices encouraged some buying among European investors’ midweek but rallies tend to also trigger some metal returns. In Europe, after the strong investor interest of January, buying in February was more in line with year-ago levels. There will be keen interest to see how India’s budget and any tariff changes around gold will impact demand in this key consumer: January imports had already jumped to 57.2t, up 55% year-on-year.

SILVER

Before jumping higher Friday afternoon silver had been heading for a pretty much flat performance over the course of the week. Looking for direction, like gold, silver needs a close above $16.60 to build to the upside. The price is though still well under both the 100 and 30-day moving average and there is a risk of renewed weakness, especially compared to gold where the ratio hovers around 73 still. That said, ETF silver holdings have reached a year-to-date high despite the relative attraction of strong equity markets. US dollar strength continues to undermine silver and that looks unlikely to reverse for a while although. The yield on Portuguese debt fell below the US equivalent this past week raising some interesting questions about risk valuations. In the coming week markets will undoubtedly be watching the ECB closely on Thursday and paying attention to economic data from China early in the week for any further signs of a slowdown.