Thursday, April 05, 2007

 

US$ Bears "Remain Firmly In Control"

The Associated Press reports on currencies. "The 13-nation euro rose to a two-year high against the U.S. dollar on Thursday, before the Easter holiday, after Washington reported increased unemployment. In late European trading the euro hit as high as US$1.3442, the highest since March 2005, before retreating slightly to US$1.3425."

"The British pound dropped to US$1.9707 from US$1.9753, after the Bank of England held interest rates steady at 5.25 percent, while the dollar rose slightly to purchase 118.69 Japanese yen from 118.67 in New York."

"The euro has been trading near its all-time high of US$1.3667, set in December 2004, on concerns over the U.S. economy and the massive trade and budget deficits."

From MarketWatch. "Dollar bears 'remain firmly in control,' said Sophia Drossos, currency strategist at Morgan Stanley. 'Our sense is that it was a combination of thinner than usual liquidity, given the holidays, and overwhelming dollar pessimism that pushed price action.'"

"'In light of the tone of dollar weakness that has dominated recent trading sentiment, dollar bears appear to already be anticipating a weak non-farm payrolls report tomorrow,' she said."

"Late in New York, the dollar was quoted at 118.71 yen, compared with 118.68 yen late Wednesday. The British pound traded at $1.9706 vs. $1.9754. The dollar changed hands at 1.2149 Swiss francs, compared with 1.2196 francs."

"Timothy Mazanec, senior currency strategist at Investors Bank & Trust Co., said 'even if payrolls number is strong tomorrow, that doesn't change the outlook' for the U.S. economy and interest rates."

"'People are still going to speculate about when the Fed will cut rates and when the European Central Bank, the Bank of England and all the other central banks will be raising rates,' he said."

"Gold futures closed higher Thursday to tally a two-session win of almost $10 an ounce with traders unwilling to sell the precious metal ahead of the long Easter holiday. Gold for June delivery rose $2 to close at $679.40 an ounce on the New York Mercantile Exchange, its strongest closing level since Feb. 27. The contract is up $9.60, or 1.4%, from Tuesday's closing level."

"'Gold prices continued their ascent, albeit at a slower pace,' said Jon Nadler, analyst at Kitco Bullion Dealers. 'Market watchers now believe that gold received a new lease on life by virtue of its passing over previous resistance levels and a close above $672 per ounce.'"

"'At least on the surface, it appears that gold is executing a de-coupling from oil (content near $64 and rising prospect of $60 in the cards), the U.S. dollar (weak but not terminal by a long shot) and from geopolitics (the Iran drama basically came and went without being the primary catalyst for substantial movements in the price of gold),' Nadler said."

"'The return of fund interest to the market has finally allowed gold to clear the $668-$670 resistance area and should now look to propel the metal back toward the highs of February ($689) and potentially beyond,' said James Moore, metals analyst at TheBullionDesk.com."

"A slight weakness in crude failed to put pressure on gold. May crude fell Thursday, extending Wednesday's decline as traders unwound the risk premium built into prices during a 13-day standoff between the U.K. and Iran."

"Other metals prices closed higher Thursday. June palladium rose $2.25 to close at $356.40 an ounce, and the July contract for sister metal platinum added $7 to end at $1,265.90 an ounce. May silver rose 12 cents to close at $13.74 an ounce."

"'Although we expect to see this bull run extend considerably further in the months ahead, we feel that we are in the short-covering squeeze part of the rebound at the moment and that things may pull back once the shorts have covered,' William Adams, analyst at BaseMetals.com told clients. 'We do not think the environment is as bullish as it was this time last year and therefore we should be prepared for some volatile trading,' he said."

"Regular metals trading on the exchange will be closed Friday and reopen Monday following the Easter holiday."

Comments:
what happens if the euro hits 1.37?

also, eric bolling the other day said that he was perplexed by the movement in gold. he said something like "I don't know what's going on in gold but it's bullish."
 
I've had nothing but buyers in my store. Usually we get an equal mix between people buying gold/silver and those selling. For the last two months it has been all buyers, many of them people who have never bought bullion before.
 
Hi Jim,

Experiencing any shortages of selected items?

BTW, if you don't mind, could you describe how you got into the business? What kind of products you carry? How do you readily judge the authenticity of what you are offered by customers?
 
This is a family business, my father started it 40 years ago and I have been involved for the last 15. He started with a rare coin business and branched off into jewelry. We still do both but the coin business was dead during the '90s and has gotten very strong in the last 5 years. We carry all varieties of numismatic items, mostly U.S. coins, both old and modern.

For bullion related items judging authenticity is easy. Get yourself a gram scale and a millimeter gauge. All the weights and diameters of the bullion coins and even the numismatic coins are published. You can easily measure these quantities to determine authenticity. After you handle a few, you will get used to how they should feel and look and will know immediately if they are real or not. The numismatic items can be more difficult. If you are going to pay a premium on a coin based on rarity or authenticity and not just metallic content, you need to learn how to grade coins. This takes more time and study. I think most readers of this blog are interested in bullion coins anyway, although there are much better profits to be made with the numismatic stuff.
 
Forgot to mention about shortages. Bullion items are readily available if you are willing to pay a small premium. Properly graded, reasonably priced key date numismatic items are harder to find than honest politicians. Even some of the recent modern low mintage stuff is difficult to find, such as any of the 2006 20th anniversary American Eagle sets or any of the "W" mint mark uncirculated gold, solver, or platinum eagles.
 
Jim,

I have always been curious about buying 'junk' gold and silver from the public (broken chains, etc). Do you have any knowledge of how to do this or a book/website you could direct me to?

Also, you mentioned fakes. How often do you get presented with these and how common do you think they are out there?

TIA
 
Ben,

99% of what I know I learned from my Dad or trial and error. Buying scrap gold is pretty easy once you get a little experience. There is a lot of fake gold out there such as costume jewelry that someone has stamped 14K or just brass junk somebody tries to pass off as real gold. Real gold is dense and will feel heavy in your hand. Brass, steel, copper, zinc, and other base metals are much lighter adn you can quickly tell the difference. Determining karat fineness is a little more subtle. 10K and 14K look almost hte same but 18K has a stronger yellow and the 21-24K stuff I see around here looks completely different. The color almost looks fake but the extremely high density and malleability tells you it is gold.

You can buy a gold identification set from a jewelry supply company. It consists of a stone and various acids. You take the object to be tested and scrape it on the stone. Then you test the scraping with the acid. If the acid dissolves the sample it is not gold. If the scraping stays it is gold. There are different strengths of the acid to measure 10K, 14K, etc.

There are many more fake numismatic coins out there. The coin fake du jour is the missing edge lettering Washington dollar. It's really easy to grind off some metal on the edge to remove the shallow incuse lettering. I have had many scammers try to sell these to me and have seen many people who have bought them on ebay. There is a large quantity of fake U.S. trade dollars from China, most of these are purchased on ebay also. It's usually a case of greed, people are buying these coins for 10-20% of their usual value thinking they are making a killing when they are actually the one getting scammed. These are the same people who fall for the Nigerian money laundering scams.
 
'Scrap' gold was the word I meant to use. Hey, thanks a ton Jim!
 
Thanks, Jim! Very informative.

My curiousity stems from the fact that I believe PMs will be the next big bubble. Have you read "America's Bubble Economy"? In one chapter Eric Janszen (from iTulip) makes the case better than I can.

Obviously there's business and/or investment opportunities there. Like Ben, though, I worry more about what I don't know. It would appear to be a good time to be buying from the public provided you know what you're doing. *You* do, but I don't (yet). So, for the moment, my purchases are from established dealers.

Any good reading material you might suggest?

p.s.: You're right... I avoid the collectibles like the plague.
 
I don't know of any books that detail how to buy scrap gold. Hmmmm....I've always wanted to write a book.

I read Coin World and Numismatic News magazines every week. I believe they publish online as well. Anyone who is interested in bullion or numismatics should attend coin shows and join a local coin club. They are out there in almost every area of the U.S. and you will find many enthusiastic people willing to share their knowledge.
 
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