Mid-Day Gold & Silver Market Report – 7/5/2013

STOCKS HOLD ON TO GAINS GOLD SUFFERS

Stocks have wavered some but are staying positive today on a strong jobs report. Investors can expect continued volatility today with fewer participants in the trading session, which would help even things out. It seems that investors may have decided that the most recent jobs report is not a “Goldilocks” report, a term financial analysts have begun using for reports that are just good enough to point to continued economic recovery, but not so good that the Fed will wind down the QE program too soon.  Quincy Krosby, market strategist for Prudential Financial, said, “It’s obvious that Treasury traders believe this is enough for the Fed to begin to taper.” The consensus is that tapering will happen sometime between September and December.

The news for the Gold price is sounding like a broken record this afternoon. Positive data had the anticipated inverse reaction on the Gold price, pushing the Precious Metal down about three percent today.  Natixis analyst Nic Brown  summarized the current sentiment well when he said, “After the strong U.S. numbers we are approaching the point in which the Fed will start to taper and as a consequence we fully expect that, if the U.S. economy continues to improve, you will see a further strengthening of the dollar, which is negative for the dollar-denominated Gold price."

At 1 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,216.30, Down $37.60.
• Silver, $18.86, Down $0.93.

Morning Gold & Silver Market Report – 7/5/2013

STRONG JOBS REPORT BRINGS DOWN METALS PRICES

Precious Metals  prices fell this morning, reacting to a stronger-than-expected jobs report for June.  Danske Bank analyst Christin Tuxen said that a stronger jobs report “would suggest that although rates are set to stay at record lows in Europe, that may not be the case in the United States.”  The U.S. dollar rose more than one percent against competitors due to weakness in the euro, which also contributed to the losses in metals.

The jobs report showed a gain of 195,000 jobs in June, though theunemployment rate was unchanged at 7.6 percent  due to an increase in the labor force of 177,000.  The jobs readings from April and May were revised upwards as well.  The good economic news has many investors believing that the Federal Reserve’s tapering of its quantitative easing program could indeed be coming soon, putting pressure on the price of Gold.

At 9 a.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,224.70, Down $29.30.
• Silver, $19.08, Down $0.72.

Gold Deeper Setback Would Present Opportunity

Hourly

Chart  Prepared by Jamie Saettele, CMT 

Commodity  Analysis: To review - “I’m looking for a ‘tradeable low’ in  goldbetween 1220 and 1265. 1265 is the June 2010 high. 1250 is the extension from 1523 of the 1523-1796 range. 1220 is the 161.8% extension from 1322 of the 1322-1488 range. 1227 is the November 2009 high. There are clusters of levels at 1155 and 1045/80 as well. It’s been gold’s tendency since September 2012 to ‘crash’ for 2-4 weeks and consolidate for at least a month. This week would be week 2 of this ‘crash’.” The low was 1180 and the rally from that level is impulsive, which makes the low ‘tradeable’. The 2 ‘best’ areas for support are probably the former 4th  wave low at 1225 and the large volume area at 1210.

Commodity Trading Strategy: Order to go long 1215, stop 1180.

LEVELS: 1210 1225 1242 1263 1297 1308

Closing Gold & Silver Market Report – 7/3/2013

GLOBAL CRISES BOOST APPEAL OF GOLD

Gold and Silver are realizing slight gains today as the  safe haven appeal of Precious Metals temporarily resumed  following political turmoil in Portugal and Egypt. “Rising tensions in Egypt and re-emergence of the European crisis, along with the mixed data today” combined to underpin gold prices Wednesday, according to a Precious Metals dealer chief market analyst. As hastening violence erupts in Egypt, austerity difficulties in Portugal have re-focused the spotlight on the eurozone as Portuguese debt and frantic stock selloffs highlight troubles in the region. Domestic investors will await Friday’s nonfarm payroll data to see if the reports can incite movement in Precious Metals markets that are currently in a tug-of-war with bargain hunting physical buyers and ETF sellers. 

Though U.S. stocks were able to overlook international issues and end the trading session higher ahead of the holiday,  some analysts remain leery of a market that has surged to record levels  despite pessimistic technical indicators and daunting concerns regarding the future of quantitative easing (QE). “We're still in this rough period. We have a 10 percent to 20 percent correction ahead of us later this quarter, early next quarter. For two months now I've been a seller of anything above Dow 15,000 and I'll stay that way,” Paul Schatz of Heritage Capital told CNBC. As the bull trend continues for U.S. equities, the tapering of QE could negatively impact stocks that have benefited so greatly from the monthly injections of liquidity.

At 5 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,256.60, Up $2.70.
• Silver, $19.85, Up $0.07.

Morning Gold & Silver Market Report – 7/3/2013

• Gold, $1,253.00, Up $7.60.
• Silver, $19.77, Up $0.38.

Closing Gold & Silver Market Report – 07/02/2013

U.S. STOCKS CLOSE DOWN GOLD STRUGGLES AGAINST DOLLAR

Solid numbers from automobile sales and factory orders weren’t enough to keep stocks in the black today as investors began to look ahead to the jobs report, due Friday. The decline started after  New York Federal Reserve President William Dudley  confirmed the U.S. Federal Reserve’s stance on rate hikes and their intentions for scaling back the quantitative easing program. His speech didn’t seem to help the market, though. One upside is that trading volume in general should be light this week due to the U.S. stock market closing at 1 p.m. (ET) on July 3 and being closed all day Thursday for the Fourth of July holiday.

The Gold price is still struggling against a strong U.S. dollar. Early Tuesday, Gold had gained much of the ground lost last week but those gains were short lived as money managers used the opportunity to sell out of long positions.  Phillip Streible, senior commodities broker at R.J. O'Brien in Chicago, said, " The dollar index is strengthening quite a bit, equities are strengthening and you're seeing interest rates go up. That seems to be the perfect storm against the metal at the moment.” Investors seem hesitant to move much before both the holiday and Friday’s jobs numbers. A strong reading could be positive for the dollar but could push the Gold price lower.

At 5:00 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,244.80, Down $12.90.
• Silver, $19.43, Down $0.24.

Has Gold's 'Bubble' Burst Or Is This A Golden Buying Opportunity?

Introduction 
With the end of the second quarter it is important to take stock and review how various assets have performed in the first half of 2013 and assess the outlook for the rest of 2013 and, more importantly,   the coming years.

 

Global stock, bond, commodity and precious metal markets have been highly volatile since Federal Reserve Chairman Ben Bernanke again suggested that the Fed would soon cut the pace of its highly unorthodox money printing and bond buying.

Gold and particularly silver had a torrid quarter and have significantly underperformed the vast majority of equity and bond markets in the quarter and in the last six months.


Gold in USD, GBP, EUR and JPY in 1H, 2013

Markets were volatile prior to Bernanke’s “jawboning”, particularly after the Bank of Japan said it would boost the monetary base by ¥60 trillion to ¥70 trillion ($600 billion or $700 billion) annually. This led to record gold prices in Japanese yen in April prior to a series of mini Nikkei crashes and gold falling sharply in all currencies. 

Review of Asset Performance H1, 2013

Precious Metals
Gold prices fell 23% for the quarter, their largest quarterly fall since gold began trading in 1971. The 27% fall this year is the worst first-half performance since 1981.

Silver slumped 31% in the second quarter and was down 36% in the first half.


Gold in USD, GBP, EUR, MSCI Word Stock Index, CRB Commodities Index & US 10 Year Yield

Platinum tumbled 16% in the second quarter and is down 12% year to date.

Palladium fell 15% in the second quarter and is down 3.6% year to date.

Equities
The global benchmark MSCI World Equity Index was down 1.2% in the second quarter but remains up 7% year to date after strong gains in the first quarter due to cheap money and hopes of a continuing global economic recovery.


MSCI WORLD – 1 Year

Wall Street's three major indices finished the quarter with slight gains, with the Dow up 2.3%, the S& P 500 up 2.36% and the Nasdaq up 4.1%. 

The DJIA is just 3.2% below its record high set May 28 and up 13.8% in 2013. That is the best first-half performance for any year since the technology-stock-driven bull market of 1999 which was followed by the stock market crash of the early 2000s.

The Standard & Poor's 500-stock index rose 2.4% in the quarter and posted a first-half gain of 12.6%, the best since 1998. The Russell 2000 Index, which tracks small-company stocks often seen as closely tied to the U.S. economy, rose 2.7%. 

Concerns about China and other emerging markets and geopolitical unrest saw that MSCI's broadest index of Asia-Pacific shares outside Japan down 7% for the year. 

The MSCI Emerging Market stock index dropped 9.1%.

Bonds
Bloodletting was not confined to the precious metals markets and there was considerable bloodletting in the bond market, as the yield on the U.S. Treasury 10-year note rose to 2.49% on Friday, from 1.84% on April 1 and from 1.63% on May 2, a low for the quarter. 

Treasuries through the iShares Barclays 20-year-plus ETF fell 8.9% in the last three months, its worst performance over the last 10 quarters.   The Barclays investment grade corporate-bond index fell 3.3%.


US Generic Govt 10 Year Yield – 1 Year 

Also hit hard were emerging-market bonds, where investors were caught flat footed, not just by worries about the Fed but also by concerns about China's economy and political unrest in Brazil, Turkey and in the Middle East.

Commodities
Commodities saw weakness in general with copper, corn and coffee all having deep declines in the quarter due to concerns about global economic growth. 

The Standard & Poor’s GSCI Spot Index of 24 commodities fell 6.7% last quarter, the most in a year.


Thomson Reuters/ Jefferies CRB Commodities Index – 1 Year

NYMEX oil had a monthly gain of 4.7% in June but still had a second-quarter fall of around 1%. Yet, it remains up 5.75% year to date.

Brent crude oil sank 7.1% since March for a third quarterly decline, the longest streak in 15 years and is down 7.4% year to date.

Natural gas prices declined 11% this quarter but remain up 7% this year.

Copper, near its lowest price in three years, lost 10.3% in the quarter and 15% in the second half.

Copper was depressed by concerns over slower growth in top consumer China and saw its third quarterly decline in a row.

Year to date corn, wheat, coffee and sugar are down 22%, 15%, 16% and 13% respectively.

Soybeans have eked out a 2% gain and cotton is 14% higher year to date.

Currencies
Part of the reason for weakness in commodities was the strength of the dollar which is the strongest currency in the world year to date.


Currency Performance in GBP (Year to Date)

The euro, Danish krone, Swiss franc and Swedish krona have also displayed strength so far in 2013.


Currency Performance in Euros (Year to Date)

The weakest currencies have been the precious metals, the Japanese yen, the Australian dollar and the Norwegian krone. 

Outlook For 2013 and Rest of Decade
The volatility of recent weeks is but a mere small taste of the volatility in store for all markets in the coming months and years. The global debt crisis is likely to continue for the rest of the decade as politicians and central bankers have merely delayed the day of reckoning. They have ensured that when the day of reckoning comes it will be even more painful and costly then it would have been previously.

Macroeconomic, Systemic, Geopolitical and Monetary Risks
Despite a degree of irrational exuberance and complacency in markets in recent months, some of which have contributed to the fall in gold and silver prices, there remain significant risks. 

> > Macroeconomic
The global economic recovery remains very tentative. China, Japan, the U.S., the UK, most European countries and all major economies face major challenges and there is a real risk of double dip recessions and a global recession.

> > Systemic
Many western banks and sovereign nations are bordering on insolvency and remain very vulnerable.

Contagion remains the real concern and there is a real risk that periphery economies are canaries in the coalmines and herald coming problems for larger industrial nations such as Japan, China, the UK and the U.S.

  Should this happen long term interest rates would likely rise from the unsustainable record low levels seen today.

> > Geopolitical
Geopolitical risk from terrorism and war remains high and there are many geopolitical hot spots in the world especially in the Middle East - in Syria and between Iran and Israel. Tensions between Iran and Israel and the U.S. could lead to a military incident that degenerates into a regional conflict in the Middle East.

Other potential flashpoints are in Afghanistan, Pakistan, the Koreas and increasing tensions between the U.S. and China and the U.S. and Russia.

While there is little risk of a direct military confrontation between the U.S. and emerging superpower China, there is a risk of war being waged through proxies and of economic war involving economic protectionism and currency wars.

> > Monetary 
The initial skirmishes of the ‘global currency wars' have been seen in recent years. 

These currency wars involve competitive currency devaluation and currency debasement as governments and central banks internationally devalue their currencies in order to maintain job sustaining, export growth and maintain fragile economic recoveries.

We are experiencing a mere lull in currency wars but expect them to return with a vengeance when economic growth falters.

Bail-Ins, Sovereign Debt and Currency Devaluations
There will be banking and sovereign casualties in the coming years with obvious ramifications for those seeking to protect and grow wealth.   Thus, it has never been more important for investors and savers internationally to have diversified portfolios. 

Lack of diversification and being overweight equities and property and the use of leverage and speculation led to much wealth destruction in recent years.

Today, many investors and savers are overweight cash deposits and long term government bonds and are thus being recklessly conservative. This is despite the real risk of further sharp losses in government bond markets and the real and underappreciated risk of “bail-ins”.

With bail-ins set to become policy in the western world, retail and corporate depositors need to be extra selective and vigilant. Owning physical gold outside the banking system becomes even more important so as to protect from deposit or asset confiscation. 

It is important to acknowledge the risks posed to the European Monetary Union due to a potential sovereign default still remain. Greece, Italy, Spain, Ireland and even France all remain vulnerable and the Eurozone debt crisis could rear its ugly head at any stage in the coming months.

Despite Fed talk that they may ‘taper’ and reduce QE, loose monetary policies internationally are set to continue which will support the precious metals in the long term.

New Bank of England governor, Mark Carney is likely to be a dovish inflationist who may debase sterling, making gold important for people in the UK looking to preserve their wealth.    

Sterling is already down 5% and 7% against the dollar and euro so far in 2013 and we expect further weakness in sterling in the coming months.

Conclusion 
The short term outlook for the precious metals is, as ever, uncertain. Further weakness is possible although there is strong support for gold at the $1,200/oz level from a technical and fundamental perspective.   There is robust international demand for gold at these levels and gold is becoming increasingly uneconomical to mine at these depressed price levels.

Pound, euro and dollar cost averaging into a physical gold position protects from volatility and from short term price risk and remains prudent.

Longer term we continue to believe that gold is in a secular bull market which will continue from 2015 to 2020. We continue to believe that gold should reach and surpass its inflation adjusted high of $2,400/oz in the coming years.


Support & Resistance Chart – (GoldCore) 

Given the variety of macroeconomic, systemic, geopolitical and monetary risks in the world today, owning an internationally diversified portfolio with healthy allocations to gold and silver bullion has never been more prudent.

Morning Gold & Silver Market Report – 7/2/2013

INVESTORS AWAIT DATA

Precious Metals prices are mostly flat this morning, as  Gold eyes a third straight day of gains. Societe Generale metals analyst Robin Bhar explained, “It is a short-covering bounce after the losses seen last week, and people are now data-watching and want to see how this impacts on the [Federal Open Market Committee] policy.” Mixed results from economic data are forcing investors to question how soon the U.S. Federal Reserve’s tapering of the quantitative easing program will begin.

After a pullback in European and Asian stocks, U.S. stock futures areattempting to hold onto gains this morning. UBS strategist Stephanie Deo said, “We believe that the markets have overreacted since the recent Fed announcement on June 19. The selloff in Treasuries is believed to be over and the equity correction was not warranted.” Investors are now waiting for the next big data event: Friday’s release of the June jobs report.

At 9 a.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,254.20, Down $3.50.
• Silver, $19.69, Up $0.02.

Closing Gold & Silver Market Report – 07/01/2013

GOLD PRODUCTION COULD SLOW

After a second quarter slide that saw Gold fall more than 23 percent, the yellow metal has started July with strong gains.  Following the recent decline that sent Gold through many key technical levels, today’s price jump is due to a drove of backfill orders by bargain hunting investors.  Along with discussion that the U.S. Federal Reserve will begin tapering quantitative easing, the “strengthening of the [U.S. dollar], unwinding of the global carry trade and tame global inflation” have all amalgamated to drive Precious Metals prices down the last couple months.  However, with prices being so low, Gold producers are second guessing the profitability of their endeavors.  The world’s second largest Gold miner, Barrick Gold Corp, recently postponed the launch of a South American mine by two years.  Experts predict many other producers will suspend production  unless the Gold price can rebound enough to once again make manufacturing lucrative. 

Economic factors helped stocks rise  Monday, as reports showed domestic manufacturing and construction spending edge higher for June.  The data comes just ahead of quarterly corporate earnings reports, which will most likely begin funneling in following the July 4 holiday.  Continued positive data on the economic front could exacerbate sentiment among Fed officials pushing for the early reduction of monetary easing measures that have been so critical in driving stock and Precious Metals markets.

At 5:10 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,254.00, Up $28.30.
• Silver, $19.10, Up $0.13.

Morning Gold & Silver Market Report – 07/01/2013

U.S. STOCKS, GOLD START JULY STRONG

Wall Street rose during the second quarter while the Gold price had one of its worst quarters in history. Stocks finished the month up amid concerns about the U.S. Federal Reserve’s tapering of their quantitative easing program. As July gears up, an upbeat managers survey in Europe helped overcome some of the lackluster readings on Chinese factory activity and investors are now looking forward to this morning’s manufacturing data and construction spending. But it isn’t all smooth sailing this week.  Mike McCudden, head of derivatives at Interactive Investor, said,  “Volumes will likely be depressed by the Independence Day holiday later in the week, plus the fact there’s the nonfarm payrolls on Friday, and there’s absolutely the prospect for some rampant volatility, even if overall markets remain relatively unchanged.”

The Gold price is on the rise to start the month, ahead of this week’s economic data, as the U.S. dollar retreated from Friday’s four-week high.Saxo Bank senior manager Ole Hansen said, “Today's rebound is showing us that a lot of the panic activity has run its course for now... positions that needed to be reduced were reduced last week. Obviously, investors will watch the [European Central Bank] meeting and U.S. data this week and any impact on currencies will affect Gold too.”

At 9:02 a.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,239.00, Up $13.30.
• Silver, $19.70, Up $0.13.

Gold Plunges, but Lands at Key Fibonacci Support - is a Bounce Coming?

Chart prepared by Christopher Vecchio

Analysis: Gold has dropped by -25% this quarter. Call it what you will, but these are liquidation type conditions, not the hallmark of rational investing. With that said, Gold has fallen into the 10/20 RSI support region, where price has held on numerous probes lower ultimately producing a short-term rally. More recently, daily RSI has only dipped into this region in mid-February and mid-April. Accordingly, because the trend is still down, we look for any rallies in precious metals to be sold until sufficient technical evidence mounts to warrant a suggestion otherwise.

Trading Strategy: It is possible, however, that a near-term bottom in Gold may be around the corner. Basing just below $1200/oz shouldn’t be dismissed, as at 1189.91 lies the 100% extension of March high/April low/April high move, as well as the 61.8% extension of the October high (post-QE3 announcement)/April low/April high move at 1192. Time is a factor of course, and the longer Gold lingers near these key levels, the higher the probability of a break towards 1000.00/25.

Weekly Gold & Silver Market Recap – 6/28/2013

• Gold, $1235.80, Up $22.20.
• Silver, $19.71, Up $1.06.