Metals Market Report 11-18-2014

The Mike Fuljenz Metals Market Report

November 2014, Week 3 Edition

Gold rose from below $1150 to over $1190 in four hours, from 9:00 am to 1:00 pm (EST) on Friday. The cause seemed to be a slightly weaker dollar and a small recovery in oil prices, but that kind of reasoning can’t fully explain a strong $40 rally in four hours. It’s more likely that some bargain hunters used a dollar rally as an excuse to get back into gold after the big hedge funds had unloaded almost half of their gold holdings in the previous month, driving gold down from $1250 to a $1132 low.

U.S. Mint Resumes Silver American Eagle Sales This Week

The U.S. Mint said it would resume sales of the silver American Eagle coins this week, starting Monday, November 17. Previously, the Mint ran out of coins, after selling a record pace of 39,381,000 ounces this year (through November 10). The Mint promised to have a million coins available this week, but that might only last a few days, if demand reaches the recent buying pace of over a million ounces per week.

Total sales in September and October reached 9,930,000 ounces vs. just 4,062,500 in July and August. The average price of silver in July and August was slightly over $20, with a range of $19.30 to $21.50. The average price of silver in September and October was under $18, with a range of $16.20 to $19.50. This tells us that silver coin investors are bargain hunters, buying much more silver when prices fall. It also tells us lots of new buyers are participating which is very good for the coin market in the short term and long term.

Greenspan: Gold Is Currency

Speaking to the Council of Foreign Relations last week, former Fed chairman Alan Greenspan reaffirmed his long-standing support for gold. When asked if gold is a good investment, Greenspan replied, “Yes... Remember what we're looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.”

Tyler Durden reported that the Greenspan comment was for some unexplained reason omitted from the official transcript of the Council of Foreign Relations session. “We can perhaps understand why,” Durden notes, “as Gillian Tett [the interviewer] concludes, ‘comments like that will be turning you into a rock star amongst the gold bug community.’”

In contrast to Greenspan’s view of gold, Durden recalls the response from Ben Bernanke when Congressman Ron Paul asked him if gold was money. “Bernanke almost swallows his tongue, stares blankly for a few seconds and then says, ‘no,’” Durden wrote. “Paul then asks why banks hold gold on their balance sheet? Why not diamonds? Bernanke says, ‘tradition, I suppose.’”

Durden wryly lampoons Bernanke’s lame answer. “So let me get this straight, banks hold billions of dollars of an asset that pays no interest or dividends on their balance sheet for reasons of ‘tradition.’ Nothing to do with anything else, just tradition. Uh, yea. That must be it.”

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