It's time to start a gold blog, because I read so much and I need to say something to tie it all together, for myself as much as for anyone else.
Latest displayed prices from kitco.com: Silver 13.09, Gold 630.20 at 15:31 GMT.
What is the theme right now? The theme is: Gold is at $630 per ounce, up about $70 from its recent low and there is an almost total lack of interest everywhere. "Ho-hum."
What does that tell you? What do I mean by this? Well, attendance at the US and Canada gold shows according to discussons on Al Korelin's Economics Report, is pretty moderate. Not the huge crowds seen at the beginning of 2006.
More telling than this, Chuck Butler of Everbank, writes in his Daily Pfennig column at kitcocasey.com on November 21st, saying that,
"I received a few emails regarding my announcement last week that we will stop offering the Gold and Commodity MarketSafe CD's with the December issues... We are not stopping the issuance of these CD's because we are bearish on commodities/gold... Nothing could be further from the truth! While we might bring them back at some time in the future... The fundings were dwindling... "
See, I meant real lack of interest! Not the kind of investor fascination that you see in an asset near the top of a market, is it?
Another small but possibly significant finding from the kitcocasey website is their Explorers' League. New names were appearing on this list regulaly until recently. The site displays the last gold exploration personality to join. However, for the last several months, the website has displayed "Ron Parratt Inducted into the Explorers' League." In other words, nobody has joined for months!
Maybe it is a sign of lack of demand? In that case, we will see a gold supply surplus this year. However, we won't Mine supply is down in South Africa (again - it always is) and in other countries - Australia comes to mind. We contuinue to see a deficit of scrap and newly mined supply with respect to demand and this is, as always, met by Central Bank selling.
Is this a sign of a lack of speculative "froth" right now, meaning that most of the weak hands are not in this market? If true, then the gold is in strong hands at $630 and they aren't letting it go at this price. Compare the above with something on an entirely different scale: the British numismatic coin market. Take the most famous quinessentially British gold coin: the Sovereign. Supplies of high grade pre-1887 Sovereigns are short. None to be found? Well, hardly any. Try to get hold of a Mint State 1840s gold Sovereign and see how long you have to wait. Or for even more fun, try to get a Mint State William the 4th Sovereign (1831-1837). See if you can find any on Spink's latest auction list or even on ebay. These coins have been more scarce than acknowledged until fairly recently - now they are next to impossible to find. Is this a sign of lower or higher prices to come in this market? Just a thought... Prices have already risen substantially and the strong hands aren't letting go, yet.
Thursday evening (i.e. Later...):
I now stand contradicted this evening after reading the Marketwatch article entitled 'Friday will be historic day for gold.' On the Marketwatch Top 10 most popular articles, it is number 1 - and on Thanksgiving Day too. So I stand corrected. :- According to the author Peter Brimelow, the holdings of the StreetTRACKS Gold Exchange Traded Fund reached a high of 418.84 tonnes on Wednesday - indicating renewed buying interest - and perhaps indicating that many ETF investors had kept their gold positions through the recent severe pullback? It would be instructive to see how the ETF holdings progressed throughout the recent retracement period from the $725+ gold price peak earier this year.
Interestingly, tomorrow is billed as the first day that the Chicago Board of Trade (CBOT) will trade gold, whilst the New York COMEX will not. This is the end of my first gold blog day. More tomorrow...