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Good Morning,
Precious metals turned slightly less precious overnight, as profit-taking became manifest after a relatively tireless run in gold to the mid-$900 area this week. Bullion prices slipped to lows near $932 ahead of the New York session's opening, and technicians envisioned a correction to the $915/$920 levels before further progress can take place. A successful breach of $952 is seen by many as a harbinger of at least $980 gold.
A close today, at or near the 945/950 area, would set the stage for a likely run to the aforementioned target. Background conditions did not show too much in the way of change, as the dollar lost marginal ground on the index, oil took very tentative steps forward, but was still mired near $34, and global stocks drifted amid lack of interest by investors. Something else that was of no interest? Gold to Indian buyers. Not at this price. The country imported no gold this month, following an import number of only 1.9 tonnes in January. Evidently,
New York gold trading started off with a $10 loss on this Friday the 13th, but investors are viewing the pullback as anything but unlucky, and are likely welcoming the pause as a sign that the march to $1K is hopefully more orderly than has been the case on occasion. Spot gold was quoted at $937.20 per ounce as it left the starting gate.
Silver lost 14 cents to open at $13.36, while platinum fell $7 and palladium lost $1 to $213 per ounce, respectively. The only news of import on noble metals' players minds for today, are the severe cutbacks and other signs of difficulties over at Toyota North America. That, and the European car market's 27% slippage in January. Toyota now pays the few remaining sales personnel in some dealerships strictly on what they actually sell. Which, is about half a car a week...
We noted a couple of exciting, but also potentially disturbing trends in gold vis a vis currencies, of late. While there is much encouraging news to note in gold's latest romancing of the dollar and vice-versa, these strange bedfellows may disappoint those who seek the hot relationship to maintain its Valentine Day's-flavored closeness, when and if the tables turn, and the dollar slips out of bed. It is not likely that we can have it both ways, so to speak.
The fact that very little is being made of the fact that conventional punditry did not (at all) expect a gold price near $1K without a concurrent coma in the dollar, speaks volumes. The record shows that expectations were for gold to make these types of front-page headlines while the dollar made only the obituary columns, thus confusion about the parallel honeymoon is obviously being masked at this time.
The only noises being made these days, are about how brilliant it is that gold can coexist with the greenback as the perfect safe haven. We could not agree more, (please note the italics before shooting off various e-mails) but ponder the opposite scenario (as was seen on a couple of occasions lately). Just a thought for food...when you recall the words of sage Paul Van Eeden who once said: "There is no such thing as a gold price" - when referring to the metal as a barometer of the dollar's state of health at any given time.
Meanwhile, the economic quagmire is fast becoming the top object of fear around the world. Marketwatch did an extensive expose on the "D" word in this morning's roundup. We will not delve into it for now, but you may find it at:
http://www.marketwatch.com/news/story/The-Spiral-Deflation-brings-bad/story.aspx?guid=%7B4D772178%2DB28C%2D4542%2D84C7%2D22B07866BB78%7D&dist=SecMostRead
On the other hand, we do want you to take note of the following conclusions:
"Global economic turmoil and the instability it could ignite has outpaced terrorism as the most urgent threat facing the United States.
There is concern not only about the fallout from the economic crisis around the globe, but also about long-term harm to America's reputation. The crisis that began in American markets has already "increased questioning of U.S. stewardship of the global economy."
The economic downturn is being singled out as "the primary near-term security concern" for the country, and if it continued to spread and deepen, it will contribute to unrest and imperil some governments.
"The longer it takes for the recovery to begin, the greater the likelihood of serious damage to U.S. strategic interests."
These stark findings (courtesy of Reuters) came from...? Dennis Blair, Director of U.S. National Intelligence. Are you and yours ready for "The War on (Economic) Terror?"
We've included the photo below in an attempt to illustrate how protests are carried out in cool and calm Iceland (classy, as one would expect), but also to warn that similar undertakings in other countries may not look nearly as placid, when and if they materialize.
Jon Nadler
Senior Analyst
Kitco Bullion Dealers Montreal
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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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