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Gold Seeker Weekly Wrap-Up: Gold and Silver End Slightly Higher on the Week
By: Chris Mullen, Gold-Seeker.com

 -- Published: Friday, 6 June 2014 | Print  | Disqus 

 

Close

Gain/Loss

On Week

Gold

$1252.90

-$0.20

+0.17%

Silver

$19.03

UNCH

+1.17%

XAU

86.67

+0.05%

+1.89%

HUI

208.24

-0.01%

+1.01%

GDM

625.82

-0.06%

+0.65%

JSE Gold

1367.24

-28.77

+1.10%

USD

80.42

+0.05

+0.04%

Euro

136.42

-0.21

+0.04%

Yen

97.55

-0.10

-0.72%

Oil

$102.66

+$0.18

+0.05%

10-Year

2.597%

+0.013

+5.70%

Bond

136.28125

UNCH

-1.42%

Dow

16924.28

+0.52%

+1.24%

Nasdaq

4321.39

+0.59%

+1.86%

S&P

1949.44

+0.46%

+1.34%

 
 

 

The Metals:

 

Gold edged up to $1257.38 by a little before 9AM EST before it dropped back to $1246.15 in the next hour of trade, but it then bounced back higher midday and ended with a loss of just 0.02%.  Silver slipped to as low as $18.897 before it also rallied back higher and ended unchanged on the day.

 

Euro gold remained at about €918, platinum gained $6 to $1447, and copper fell a few cents to about $3.06.

 

Gold and silver equities fell over 1% in the first half hour of trade, but they then rallied back higher in late morning trade and ended near unchanged on the day.

 

The Economy:

 

Report

For

Reading

Expected

Previous

Nonfarm Payrolls

May

217K

220K

282K

Unemployment Rate

May

6.3%

6.4%

6.3%

Hourly Earnings

May

0.2%

0.2%

0.0%

Average Workweek

May

34.5

34.5

34.5

Consumer Credit

April

$26.8B

$15.0B

$19.5B

 

The BLS net birth/death adjustment added 205,000 payrolls to May’s data. Private Payrolls rose 216,000.

 

All of this week’s other economic reports:

 

Initial Claims - 5/31

312K v. 304K

 

ISM Services - May

56.3 v. 55.2

 

Productivity - Q1

-3.2% v. -1.7%

 

Unit Labor Costs - Q1

5.7% v. 4.2%

 

Trade Balance - April

-$47.2B v. -$44.2B

 

ADP Employment - May

179K v. 215K

 

Factory Orders - April

0.7% v. 1.1%

 

Construction Spending - April

0.2% v. 0.7%

 

ISM Index - May

56.0 v. 54.9

 

Next week’s economic highlights include Wholesale Inventories and JOLTS Job Openings data on Tuesday, the Treasury Budget on Wednesday, Initial Jobless Claims, Retail Sales, Import and Export Prices, and Business Inventories on Thursday, and PPI and Michigan Sentiment on Friday.

 

The Markets:

 

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

 

Oil saw slight gains along with the U.S. dollar index on steady jobs data that sent the Dow, Nasdaq, and S&P higher.

 

Among the big names making news in the market Friday were BNP Paribas, Vodafone, UPS, Fannie Mae and Freddie Mac, Hertz, and Netflix.

 

The Commentary:

 

Yesterday was "one down, one to go". Today was the "one to go" day. We got the employment numbers and they came in stronger than the number that the market was looking for. The reported number was 217K for the month of May beating analyst expectations of a 210K increase. The unemployment rate fell to 6.3%.

The response of both the Dollar and the gold price was very interesting. The Dollar initially bumped up while gold dropped slightly but then both reversed course with the Dollar moving lower and gold moving higher. Both markets then reversed course once again. The result of this is to provide evidence that investors/traders are uncertain in their outlook for both interest rates and inflation.

I find this price action noteworthy enough to repeat something that I have been writing about for some time now - that the main factor preventing any inflationary pressures from gaining a foothold in the US economy has been slack in the labor markets.

Along this line, let me make a special note here - coming from the emails that I receive blasting me for being (insert unprintable curse words here) 'stupid enough to believe the government's numbers'.

Whether it is the stated inflation rates coming from the CPI/PPI, the GDP numbers, or as is the case for today, the employment numbers, I am constantly insulted and reviled in private for detailing what the feds are reporting and how the market is responding to such numbers, as if reporting on those and commenting on those is now considered by that crowd to be "consorting with the enemy".

I have said it previously and will repeat it here however, those GIAMATT perma gold bulls had better STOP ROOTING for lousy economic numbers as if somehow that is going to be bullish for gold, and had instead better be rooting for evidence of growth that is strong enough to generate inflation.

They can repeat their mantra that QE is going to last forever and that the Fed is never going to end it until the cows come home but the facts are quite simple - the Fed has engaged in 4 rounds of QE (if you count operation twist in there you could change that number) and is now tapering the last round. The commodity markets, including gold and silver, both rallied strongly during rounds One and Two, as most everyone on the planet expected that policy to produce a rate of inflation that the Fed was looking for. It DID NOT. Why should any more QE (as they affirm constantly is guaranteed) going to produce something different, namely no inflation? Answer - it won't - at least not until the employment picture improves in my opinion. That has been the problem all along - namely that the liquidity that the Fed is providing has not made it into the broader economy in a large way as evidenced by the falling Velocity of Money rate.

People must have jobs and they must feel that their jobs are secure enough before they are going to dig themselves deeper into debt by taking on new credit. It is that serious growth in consumer credit that is needed to at least, at the bare minimum, put in place the groundwork necessary for Velocity of Money to increase. Without that, inflation is not going to be an issue.

Traders/investors who dig deeply into such things understand this. This is the reason gold (and silver for that matter) have gone nowhere the last few years. Not because they are constantly manipulated at the Comex or regularly smacked down by evil bullion banks doing the bidding of the government but because investors have NO EXPECTATION of GROWTH fast enough to generate any upward inflationary pressures. If you doubt that, go back and reference that TIPS spread chart that I have provided as evidence. As far as the broader market participants are concerned, it is a near perfect environment for stocks - slow and steady growth with little inflation and extremely low interest rates.

If gold is going to mount a sustained rise, it will at least need inflation to be a concern in the minds of traders, not that it is the best inflation hedge out there (I happen to think that crude oil is actually a better one). Nonetheless that means any pickup in interest rates must lag the inflation rate and we need to have an environment in which the general commodity sector as a whole is rising. We have had neither. Simply put, inflation is no where remotely a concern of most traders and the reason it is not, is because of the employment picture and the data connected to that (consumer credit, VM, etc.).

I am wondering, now that we have gotten some back to back readings of +200K job gains, if the market is now beginning to take a look inside the headline number of these jobs reports and keying in on the "Average Hourly Wage Growth" number. The jury is still decidedly out on this, based on the movement in the bond markets today with yields actually declining. Still, that being said, the YoY (year over year) rate of growth for that hourly wage is 2.1%. The Average Workweek came in a 34.5 hours but it is that former number that has peaked some interest. Neither number is evidence that growth is anywhere near strong enough along that front to fan inflation pressures; yet. That average hourly wage growth number is going to take on increased scrutiny in the upcoming months in my view. Investors are going to be looking to see if these wage gains can get back to the level that they were PRIOR to the 2008 Recession.

I guess what I am trying to say here, and perhaps not clearly enough through all of the statistics that I am referencing, is that investors might be coming around to accepting that job growth, while not setting the world on fire, is at least steady enough so that they can now shift their focus somewhat to wage growth or the lack thereof. In other words, they are less concerned about the outright employment numbers and perhaps becoming more interested in whether or not the ingredient to push inflation into the mix is beginning to appear- namely, increasing wages.

We'll have to see if that is the case but that will require that we get no more sub 200K job number readings. There is a bit of chatter out there today that the rebound in this month's readings were due somewhat to pent up job demand that resulted from the inclement weather early in the year and that there is a risk of this demand leveling off somewhat resulting in the number in subsequent months to actually decline from this month's reading. Again, that may be the case - we will just have to wait and see.

I will get some more up later on as the session progresses and we get to see the action across more of these individual markets. For now (and this could change) traders are buying stocks, interest rates are ticking slightly lower (no inflationary concerns), the Dollar is slightly firmer, and gold is a bit lower. Silver has fallen below $19 once again, which is now serving as overhead resistance and copper is down nearly 2%. That China news is dominating the red metal. Let us hope for the sake of the gold bulls out there that China does not turn its attention to gold-backed loans! If you want to see what might happen to the yellow metal should they do so, just look at copper.

Corn and especially wheat, are higher today. Looks to me like some pre-weekend short covering is occurring right now after their big drops this past week.- Dan Norcini, More at http://www.traderdannorcini.blogspot.com/

 

GATA Posts:

 

 

Alasdair Macleod: Asian gold strategy clarifying

 

The Statistics:

Activity from: 6/05/2014

Gold Warehouse Stocks:

8,265,765.075

-

Silver Warehouse Stocks:

175,635,720.499

-18,756.364

 

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

787.076

25,305,269

US$31,552m

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$5,562m

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$449m

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: 162.47: -0.04 change from yesterday’s data.

 

Silver Trust (SLV) Total Tonnes in Trust: 10,354.58: -4.51 change from yesterday’s data.

 

The Miners:

 

Midway’s (MDW) completed offering and Timmins Gold’s (TGD) proxy fight were among the big stories in the gold and silver mining industry making headlines Friday.

 

WINNERS

1.  Tanzanian Royalty

TRX +3.37% $1.84

2.  Allied Nevada

ANV +3.26% $2.85

3.  MAG Silver

MVG +3.19% $8.08

 

LOSERS

1.  Timmins

TGD -6.92% $1.48

2.  Comstock

LODE -2.98% $1.63

3.  Almaden

AAU -2.96% $1.31

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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 -- Published: Friday, 6 June 2014 | E-Mail  | Print  | Source: GoldSeek.com

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