Gold brushing record highs

A fresh, gold-cautionary comment from a PBOC researcher brought up the prospect of central bank selling (including that of the United States) of the metal. The tiny news item was buried amid what appears to be uniformly bullish posturing among gold market times. Something that actually worries Marketwatch’s Marc Hulbert more than a bit –even if only in the short-term. Walls of worry, slopes of hope. What would the markets do without them? Don’t know, really, but at least one analyst was quoted to say this morning that this market really needs to turn up the ETF gold-buying spigot if it is to make advances past $1,265.00 an ounce. Like we said on previous occasions; a market addicted to fund funds, this has become.

At market opening time, silver was ahead by 2 pennies, quoted at $19.42 per ounce. Substantial gains were noted in platinum and palladium on the open, with the former rising $10.00 to start at $1531.00 and the latter climbing $8.00 to the $520.00 mark. Rhodium was flat at $2,080.00 the ounce. In the background, stock index futures were still looking robust, while crude oil advanced about eight-tenths of a dollar to the $72.75 level.

Noble metals added value on the back of news that South Africa’s NUM is about to strike at Northam Platinum and on fresh data indicating that auto sales – at least those in Asia – are looking robust. While the markets still await North American auto sales figures, the fact that Chinese dealers moved nearly one million units off their lots in August, and that those in Japan witnessed the third biggest monthly sales gain ever, encouraged funds to bid the complex higher this morning.

Add in figures from India, which shows a 35 percent growth in its automotive market for the first four months of its current fiscal year, and the news for the pgm group metals could not have been better at this time, although some analysts doubt that such momentum is sustainable, as Japan’s figures were largely attributed to the imminent expiration of government subsidies designed to stimulate sales. We ran across at least one article that projects a hefty slide (okay, a collapse) in Japanese car sales, to be led by the best-selling Prius model from Toyota.

Something else that may yet slide is the level of certainty about “imminent Fed asset buying sprees.” The Fed’s own members were shown as being at odds with signaling easier monetary policy following its latest August meeting. “A few members worried” the move “could send an inappropriate signal to investors about the committee’s readiness to resume large-scale asset purchases” is how this was described in the release of the FOMC minutes yesterday.

According to Bloomberg, Michael Dueker, head economist at Russell Investments in Tacoma, Washington, said there is an “even chance” of further quantitative easing, or use of tools such as asset purchases, before year’s end. “Chances are very low that they take more action in September,” said Dueker, a former member of the St. Louis Fed research staff. “Quantitative easing is a bigger step than a quarter- or half-point cut in the interest rate. This is going to require more evidence.”

In the interim, let’s wait for that evidence. There are three more days’ worth coming in the pipeline.

Happy reading.

Jon Nadler is a Senior Analyst at Kitco Metals Inc, North America

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About the Author
Jon Nadler Jon Nadler is a Senior Analyst at Kitco Metals Inc. North America
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