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Gold Seeker Closing Report: Gold and Silver End Slightly Higher
By: Chris Mullen, Gold-Seeker.com

 -- Published: Tuesday, 3 June 2014 | Print  | Disqus 

 

Close

Gain/Loss

Gold

$1246.30

+$3.20

Silver

$18.84

+$0.09

XAU

84.91

+0.41%

HUI

206.15

+0.50%

GDM

619.79

+0.23%

JSE Gold

1386.21

+12.90

USD

80.56

-0.07

Euro

136.26

+0.25

Yen

97.53

-0.16

Oil

$102.66

+$0.19

10-Year

2.593%

+0.059

Bond

136.1875

-1.00

Dow

16722.34

-0.13%

Nasdaq

4234.08

-0.07%

S&P

1924.24

-0.04%

 
 

 

The Metals:

 

Gold edged up to $1247.66 in London before it dropped back to $1241.89 at about 10:30AM EST, but it then bounced back higher into the close and ended with a gain of 0.26%.  Silver rose to $18.937 before it fell back to $18.742, but it then climbed back higher in afternoon trade and ended with a gain of 0.48%.

 

Euro gold rose to about €915, platinum lost $4 to $1427, and copper fell a few cents to about $3.14.

 

Gold and silver equities fell over 1% in the first hour of trade, but they then chopped back higher for most of the rest of the day and ended with about 0.5% gains.

 

The Economy:

 

Report

For

Reading

Expected

Previous

Factory Orders

April

0.7%

0.5%

1.1%

 

Tomorrow brings ADP Employment, the Trade Balance, Productivity, Unit Labor Costs, ISM Services, and the fed’s Beige Book.

 

The Markets:

 

Charts Courtesy of http://finance.yahoo.com/

 

Oil found slight gains and the U.S. dollar index traded modestly lower ahead of Thursday’s ECB meeting.

 

Treasuries fell on the outlook for higher interest rates in the near future.

 

The Dow, Nasdaq, and S&P traded mostly lower in quiet trade.

 

Among the big names making news in the market today were BNP Paribas, Hillshire, GM, Ford, AT&T, and Krispy Kreme.

 

The Commentary:

 

Trading in gold has been relatively quiet in today's session (boring would be a better word). I suspect traders on both sides do not want to get too aggressive before the outcome of the ECB meeting on Thursday is known and the monthly payrolls number is released this Friday.

The thinking at this point among the majority is that the ECB is going to provide some sort of stimulus measure. Recent inflation readings in the Eurozone and especially in Germany indicate that the bank has room to make a move along this line. The biggest concern is the lack of lending by banks (borrowing by others). That is the same issue that had been plaguing the US economy even after the first two rounds of QE came and went. The Fed opened up the liquidity spigots but the money never made it out of Wall Street and the equity markets into the hands of the consumer in a large way. That lack of circulation through the broader economy is the reason that the Velocity of Money fell and has continued to fall.

One wonders if that ECB does unveil some sort of liquidity program whether or not that would produce the same outcome this time over in the broader Eurozone.

It seems to me that the one thing that the ECB could do, which would find broad acceptance among most of the members - and certainly among business - would be to try to knock the Euro even lower.

Keep in mind that when the Japanese government came under new management with the Abe administration, that it set about deliberately trying to weaken the Yen (even though it denied so doing). Japan was trying to fight deflation but what they managed to do was to, in a sense, export some of that deflation to the Eurozone because the weakening Yen tended to push up the other majors at its expense.

If the ECB starts trying to take the Euro lower, who gets to import the deflation impact from its currency strengthening? That is unclear.

I guess we will all find out soon enough what the ECB is going to do this week.

For the time being, I am keeping a close eye on the gold price in terms of Euros, or Eurogold.

Here is its chart.

 

You can see, for the last two months (April and May) whenever the gold price neared the 920 level, it bounced. Last week it fell through that level and has remained below it for the time being. It is still up for the year but its looks heavy.

There is some uncertainty as to what gold might do if the ECB acts. One school of thought is that if they set out to deliberately drive down the value of the Euro, it would benefit the US Dollar and thus pressure the gold market. Another train of thought goes that, depending on whether they engage in their own version of QE, it would tend to shore up the gold price as traders who fear a debauchment of the Euro would buy gold as protection against that.

I have to wonder whether or not the ECB would be any more successful than the US Federal Reserve however when it comes to producing inflation. Central Banks can lower interest rates until the cows come home but they cannot make consumers or even business for that matter, go out and borrow. To take on new debt, individuals have to feel comfortable enough or confident enough, that they can handle the additional debt load. The labor markets, I believe, have more sway over the inflation issue at this point in the game than any other area of economic interest. That is true whether it be in the Eurozone, here in the US or over in Japan.

The key in my mind, at least as it regards gold, is whether these Central Banks efforts can seriously fan the flames of inflation or whether their policies are more or less acting to produce a type of standoff between inflationary forces that they want to set loose and the deflationary forces from large levels of debt and stagnant or moribund labor markets.

Based on the price action in the bond markets, and especially the action of the TIPS spread, the market is looking ahead and seeing a period of slow but stable growth without any strong inflationary pressures. That is what we have had for the last couple of years in particular and why stocks have done so well and why gold has fared so poorly.

Something would need to change on that front to alter the current sentiment.

Interest rates have perked up a bit here in the US with the yield on the Ten Year back above the 2.5 level. It is currently sitting at 2.588, up from 2.438 last Tuesday.

Here is a quick look at the broader commodity sector using the Goldman Sachs Commodity Index.

It has fallen to the same level from which it bounced last month in May. It still is showing no signs of any upward acceleration however.

 

One of the reasons that this index is thus far refusing to break down is on account of the strength that continues in crude oil. Large hedge funds have huge long positions in that market and have refused to sell those down and that is keeping this market supported even in the face of some sizeable stocks in storage. As I have said before, crude is a mystery to me because I cannot fathom how much of this hedge fund buying is related to their wanting to own the stuff as an asset class into which they can diversify or how much is due to a general perception that the US economy is very slowly improving with a corresponding increase in demand.

I watch both copper and crude very closely in this regard and their chart pattern over the last of week or so has been remarkably similar. Both remain supported but have been unable to extend higher. That might change at any time but for now, neither are giving any clues as to what direction they expect the global/US economy to move in.- Dan Norcini, More at http://www.traderdannorcini.blogspot.com/

 

GATA Posts:

 

 

British treasury secretary to target forex manipulation by banks

Ecuador pawns half its gold reserves with Goldman Sachs

 

The Statistics:

Activity from: 6/02/2014

Gold Warehouse Stocks:

8,265,765.196

+3,054.25

Silver Warehouse Stocks:

175,842,792.643

+576,018.58

 

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

 

Product name

Total Tonnes

Total Ounces

Total Value

New York Stock Exchange Arca (NYSE Arca) AND Singapore Exchange (SGX) AND Tokyo Stock Exchange (TSE) AND Hong Kong Stock Exchange (HKEx) AND Mexico Stock Exchange (BMV)

SPDR® Gold Shares

785.279

25,247,501

US$31,475m

London Stock Exchange (LSE) AND NYSE Euronext Paris AND Borsa Italiana AND Frankfurter Wertpapierbörse (Deutsche Börse - Xetra)

Gold Bullion Securities

138.13

4,441,056

US$5,528m

London Stock Exchange (LSE) AND NYSE Euronext Paris AND Borsa Italiana AND Frankfurter Wertpapierbörse (Deutsche Börse - Xetra) AND NYSE Euronext Amsterdam

ETFS Physical Gold

152.66

4,908,200

US$8,004m

Australian Stock Exchange (ASX)

Gold Bullion Securities

11.16

358,789

US$447m

Johannesburg Securities Exchange (JSE)

New Gold Debentures

41.68

1,339,954

US$1,709m

Note: No change in Total Tonnes from yesterday’s data.

 

COMEX Gold Trust (IAU) Total Tonnes in Trust: 163.41: No change from yesterday’s data.

 

Silver Trust (SLV) Total Tonnes in Trust: 10,359.09: +74.69 change from yesterday’s data.

 

The Miners:

 

WINNERS

1.  IAMGOLD

IAG +12.87% $3.41

2.  Avino

ASM +7.84% $12.65

3.  Timmins

TGD +5.88% $1.44

 

LOSERS

1.  B2Gold

BTG -7.01% $2.34

2.  Tanzanian Royalty

TRX -3.87% $1.74

3.  Allied Nevada

ANV -2.90% $2.68

Winners & Losers tracks NYSE and AMEX listed gold and silver mining stocks that trade over $1.

       

Please see Yahoo’s Mining/Metals News Wire for all of today’s mining news.

 

- Chris Mullen, Gold Seeker Report

 

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Additional Resources for today’s Gold Seeker Report can be found:

© Gold Seeker 2014

Note: This article may be reproduced provided the article, in full, is used and mention to Gold-Seeker.com is given.

 

 

Disclosure: The owner, editor, writer and publisher and their associates are not responsible for errors or omissions.  The author of this report is not a registered financial advisor.  Readers should not view this material as offering investment related advice. Gold-Seeker.com has taken precautions to ensure accuracy of information provided. Information collected and presented are from what is perceived as reliable sources, but since the information source(s) are beyond Gold-Seeker.com’s control, no representation or guarantee is made that it is complete or accurate.  The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action.  Past results are not necessarily indicative of future results.  Any statements non-factual in nature constitute only current opinions, which are subject to change.  Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities & therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein.  Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.

 


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