Precious Metals Physical Demand Jumped Yesterday

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The first half of 2015 ended with a stellar day for our corner of the financial world as physical demand picked up sharply yesterday on a global level. The lower price points and ongoing concerns in Greece certainly had investors and traders seeking the diversity and security an investment in physical metal can offer. This morning finds good and slightly better than expected economic data out of the U.S. continuing, which is fueling a rally in the USD and sell-off in bonds which are weighing on gold and silver as they probe lower and re-test support at $1,165.00 and $15.50. The surprise of the day comes from palladium which rallied sharply during the Asia trading day and briefly traded above $700.00. A rumored large physical order got the market moving higher which may have forced buy stops to be elected on the electronic trading platform.

This morning finds palladium is still up $25.00 at $698.00 and it appears to be assisting platinum, which is up $11.00 at $1,091.00. With liquidity already decreasing in front of a long holiday weekend in the U.S., the rest of the week could bring fireworks as we will receive the June U.S Employment Report tomorrow and the market will continue to trade on Friday. Physical demand should continue to support the market on the dips towards $1,155.00, but a break below $1,150.00 in gold likely signals a revisit of the low $1,100.00s. Technical resistance from the 10-, 50- and 100-day averages, which are currently residing between the low $1,80.00s through low $1,190.00s, should be stiff, but a break above $1,200.00 could see shorts running to cover along with momentum buyers jumping in, so the rally could be significant.

Happy July 4th to all who celebrate and to everyone else have a good weekend. My next commentary will be on Monday.

Roy


Greek Headlines Briefly Impact Precious Metals

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News over the weekend that talks broke down between Greece and its lenders sent gold and silver higher when trading resumed yesterday. Gold and silver briefly chipped away at resistance above $1,185.00 and $16.00, but it was short lived and in early U.S. trading gold, silver and platinum are back to Friday’s closing levels while palladium is down $8.00 at $670.00. The short and sweet on Greece is that debt repayment tomorrow is very unlikely. The government of Greece has imposed capital controls and closed the country’s banks through July 6. The citizens of Greece will have access to their deposits only by visiting an ATM machine where they will be limited to withdrawing 60 Euro per day. On July 5, Greece will vote on a referendum where they will decide what their future will be within the EU.

While it is not receiving nearly as much news today as Greece, stories are breaking that Puerto Rico is on the verge of default as it is unable to meet debt obligations tied to bonds that were sold to finance the government. Today brings us to the beginning of the “summer holiday season” and, while today may offer no indication of where prices are headed, I continue to think we will see increased volatility in July, August and beyond.


30 Years of HELPing

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For thirty years, HELPS International has provided enduring programs of practical, social and spiritual value to the people in the developing world through a system of partnership and mutual responsibility. HELPS was cofounded by Dillon Gage President Stephen Miller.

HELPS Projects include:

  • Helping women and families through installing the ONIL cooking stove and water filters in their homes. This translates into an economic benefit in disposable income increase for Guatemalan families of $100,000,000 per year.
  • Giving approximately 1,200 surgeries through “MASH” style medical teams
  • Putting money in people’s pocket through agricultural programs that tripled corn production for 3,000 farmers.
  • Providing education for rural students in the Guatemalan Highlands
  • Saving 180,000 trees a year or 12,000 acres of forest with the wood savings from the ONIL stove

HELPS is a non-profit organization with over 8,000 volunteers that was launched in Guatemala. Today, HELPS has operations in Guatemala, Nicaragua, Honduras, El Salvador, and Mexico. HELPS work has been recognized with Guatemala’s Order of Dr. Rodolfo Robles Award, The Tech Museum Health Award Laureate, the Ashden Award and, as a result of its work with HELPS International, Dillon Gage was nominated for the 2010 International Community Service Award from the U.S. Chamber of Commerce. For more information, please visit the Helps International website: HelpsIntl.org.


Impressive U.S. Econ Data Weighs on Precious Metals

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As the trading week draws to a close, precious metals continue to probe lower as good U.S. economic data has been impressive and weighs on our market as the yield on the ten year bond is now at 2.46 percent. The uptick in physical demand with the lower spot prices has been impressive and the low volume being seen in the futures market would indicate the pace of speculative selling is slowing. These two factors would indicate, as we approach the lower end of the recent trading range, that a move back up may be in the cards for next week.

When trading began in Europe this morning, silver spiked lower, but held support at $15.50. It has since bounced and is currently at $15.80. As the June 30 deadline for Greece is just around the corner there is still no resolution on debt repayment. Another emergency meeting is scheduled for tomorrow as all markets await news early next week.

Have a good weekend,

Roy


American Eagle Sales as of June 25

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The following chart includes the year to date totals from the U.S. Mint as of 5pm on June 25th and the amount of change since our last report on June 18, 2015

Gold
Coin Sales in oz. /#coins + from 6/18/15
One oz.
186,500
186,500
12,500
12,500
Half oz.
17,500
35,000
500
1,000
Quarter oz.
16,500
66,000
0
0
Tenth oz.
38,000
380,000
2,000
20,000
Total
243,500
634,000
15,000
33,500
Silver
Coin Sales in oz. /#coins + from 6/4/15
One oz.
20,226,000
20,226,000
680,000
680,000

Several Factors Weigh On Silver and Gold

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Gold and silver moved lower yesterday with several factors weighing heavily as we move towards the lower end of the recent trading range. Here are the factors, in no particular order: silver’s failure to hold $16.00 was disappointing for the longs and brought speculative sellers back to the table, the situation in Greece appears a bit calmer as headlines would indicate progress is being made over debt repayment, and the USD moved higher as did rates with the yield on the 10-year bond again above 2.40 percent. The good news for our corner of the market is that physical demand picked up sharply on the dip as it continues to do, but the bad news may be that the bottom is not far off and a rally from here means demand will slow down as we move towards the middle or upper end of the trading range.

In a bit of a surprise yesterday, Fed Governor Powell said two rate hikes this year remain a possibility. If hawkish comments like this continue during July and August, the likelihood is the USD will strengthen and, during a period where many market participants are on vacation, gold and silver could be vulnerable to spikes lower as speculators increase short positions during a period where liquidity is not great. In the short term, I would expect the market to test $1,155.00 and $15.40 where I expect it to hold, at least initially. Resistance levels are not far away and gold should face plenty from $1,185.00 through $1,195.00 while silver can expect resistance from $16.05 through $16.15 and again as it approaches $16.50.


Silver Solos Higher This Morning

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Trading resumed yesterday on a quiet note as China was closed for a holiday and all market participants waited for the latest news on Greece. While the potential for a default still exists and headlines are mixed, it does appear as a bit of progress was made today as the deadline for debt repayment draws closer. While gold traded steadily on Friday, it was unable to close above resistance at $1,205.00, which I thought was necessary to get this week off to a good start (for those rooting for higher prices). It appears that many short term position traders may have had the same view as gold’s failure to move higher overnight has brought sellers back to the market with gold now working its way through support which runs from the low $1,180.00s through the mid $1,170.00s.

Platinum and palladium are continuing their move lower this morning as palladium has fallen below $700.00 while platinum has fallen to a $120.00 discount to gold. Silver is the highlight this morning as it is up on the day despite its 3 siblings being sharply lower. News that speculative silver short positions continued to increase last week on the futures exchange while physical demand is increasing may indicate the “shorts” are growing nervous this morning as they look to lighten up. The gold silver ratio, which was at 75.00 last week, is now at 73.30. If the ratio continues to move lower, look for silver to take a run at $16.75 in the coming days.


FOMC Goes Dovish – Precious Metals Rally

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The FOMC / Chair Yellen gave us a dovish report Wednesday afternoon, which brought a rally to our market that has continued as the USD weakened and interest rates moved lower. While it still appears a rate hike is coming this year and some voting members would actually support two hikes this year, it was comments about forward projections that all markets focused on. Specifically, the FOMC has lowered their target federal funds rate in 2016 and 2017, which means they foresee fewer rate hikes over the next two plus years. Chair Yellen made reference in her press conference to international economic conditions adversely affecting U.S. GDP in the coming years, in addition to making comments about inflation levels likely to not meet target levels.

Gold has been the leader of the pack as it has broken through $1,200.00 as many short positions have likely been covered along with a strong pick up in physical demand globally, but strong technical resistance still looms through $1,215.00. The news out of Greece continues to worsen as protestors have taken to the streets, which only adds to their economic woes. The IMF continues to take a hard stand, telling Greek officials that repayment must begin on June 30th, but the meeting that took place yesterday produced no results and another emergency meeting is scheduled for Monday. Today feels like a summer Friday, as volume is surprisingly light, but a gold close above $1,205.00 could set the stage for a break above resistance next week and a run beyond $1,225.00.

Have a good weekend,

Roy


U.S. Mint Eagle Sales as of June 18th

US-YTDSales-compressor

The following chart includes the year to date totals from the U.S. Mint as of 5pm on June 18th and the amount of change since our last report on June 11, 2015

Gold
Coin Sales in oz. /#coins + from 6/11/15
One oz.
174,000
174,000
18,000
18,000
Half oz.
17,000
34,000
1,000
2,000
Quarter oz.
16,500
66,000
1.500
6,000
Tenth oz.
36,000
360,000
2,000
20,000
Total
243,500
634,000
22,500
46,000
Silver
Coin Sales in oz. /#coins + from 6/4/15
One oz.
19,546,000
19,546,000
975,000
975,000

How Will FOMC Impact Precious Metals Today?

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Precious metals moved lower yesterday in light trading as the market was unable to build on Monday’s gains. The weak platinum and palladium market appear to be weighing on gold and silver as well with platinum falling to a six-year low and trading at a $105.00 discount to gold.

Today is FOMC day, and while a rate hike today would be a shocker, the press release later today will likely address the committee’s current take on the recent upturn in economic data, its forecast for job growth, economic activity, and inflation, and perhaps even a comment on the ongoing problems within Greece as it relates to the IMF and Eurozone. I expect the statement to continue stressing that a rate hike decision will be data driven, but when we read between the lines I think the conclusion will be a single rate hike is coming this year sometime between September and December. As is always the case, a hawkish tone will rally the USD and pressure our market, while a dovish tone should bring a move higher. In the end, like you, I am rooting hard for any news that brings us direction and a new trading range.