Tapering Talk Hurts Gold

In this 21st episode of the Mid-Week Precious Metals Market Update, Tom Cloud discusses some of the technicals and fundamentals that are impacting gold and silver prices with exclusive early access for FTM Insiders.

Audio Transcript Below

This is Tom Cloud with the Midweek Precious Metals Market Update.

The markets, as you know, have been going down, and we’re hoping for a bottom some time this week or in the next two weeks as the shorts expire in two weeks on the 19th. There’s still danger, but so far gold has been able to hold above $1200 and silver above $19, even though on Wednesday it did go down to $19 briefly, and gold went down to $1206 briefly. Both of them have been able to bounce back as I record this, but we could continue to see weakness in the market for another couple of weeks. I don’t see a whole lot of downside risk, but I don’t see it ready to break out to the upside yet.

I do want to reiterate two things today. I won’t take a lot of time because there’s not a lot going on.

Number one, when you have been hearing all week that on Friday, they’re going to tell you there’s over 200,000 jobs created in November, we’ve already seen that these numbers are not right. And, then they’ll talk about tapering again, and, for some reason the public thinks that when you cut QE from $85 billion a month to $75 billion, that is something significant which it’s not at all. I highly doubt they’ll do it. This will be the sixth month they’ve said they are going to taper, and we’ll see if they finally do. That’s one thing that’s hurt gold, saying the economy is strong when it’s not and leading people to believe that things are getting better so they will spend more money and run up more debt.

Number two, as I said, it’s very important to see if the shorts get out in two weeks or whether they roll over and stay short. On the silver market, it’s hard to imagine staying short when the cost is below $9 in most mines in the world. So, we’ll just have to watch that and see what happens the next two weeks.

The two things I want to mention in the end is that palladium has held just like we said last week. It looks like it’s very close to breaking out, and once again with the shortage of physical palladium, with any kind of demand from the eight new car factories in China in the last 18 months, we’re going to see a big demand for palladium. As we’ve talked about many times, with the mining problems in Siberia and Russia, the mines are being closed currently until next spring, and the only place producing palladium is South Africa which has a lot of labor problems. We look for palladium to break out. It has been the top performing metal for last year and this year, and we think it can easily be next year. For the ones of you that don’t have palladium, we strongly urge you to get some.

Lastly, the biggest news I bring to you today is the big gold meeting going on in China the first three days this week. I’ve been in close contact with what’s going on there, and it seems evident and apparent for the announcement that China meant it was going to go into commercial industrial business. This is huge for us because, today, you can’t buy 100 ounce gold bars or 400 ounce gold bars in the United States. It’s strictly a big boy fraternity where, unless you’re a central bank or a big industrial user, you’re not going to be cleared to get these 400 and 100 ounce bars. Now that the China mint realizes the importance of the future, and they, as early as the first quarter, will be selling 100 ounce and 400 ounce commercial gold bars in addition to the kilo which is 32.15 ounces.

Today, when you buy from us, we can sell you fractional gold like a quarter ounce or one-tenth ounce, one half ounce, one ounce or even ten ounces. The biggest we can sell you is the kilo, or 32.15 ounces. This is going to be very, very significant for the gold market next year as China sees into the future where we don’t and realizes how important it is to make that available. A lot of accounts will buy it and leave it in China for storage or have it moved to a major depository in Europe. This is very, very exciting news that has broken in China that I haven’t even seen in writing yet. This came straight from someone at the meeting that I talked to on Tuesday.

So, hopefully, 2014 is going to be a very good bounce back year for metals. It reminds me of 2008 when silver went down 22% and then bounced back and went up 92% the next year. I’m not saying it will do that much, but, certainly, at this price, there is very little risk in silver and gold. Wait to see if it’s moving, for the ones who want to be sure it’s moving before they get back in. Watch gold when it gets back over $1250 and silver when it gets back over $20.25. We think that will launch it back into much higher numbers.

Hopefully, this has been helpful, and if you need to contact me directly, you can reach me at 800-247-2812.

With this week’s midweek precious metals market update, this is Tom Cloud signing out.

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