PM Daily Market Commentary - 9/9/2015

By davefairtex on Thu, Sep 10, 2015 - 4:31am

Gold fell -15.60 to 1105.30 on heavy volume while silver dropped -0.19 to 14.58 on moderate volume.  Gold's descending triangle pattern finally broke lower, encouraged by significant moves lower in the commodity complex.

Gold is dropping now on increasing volume; having broken below 1115 support, gold now appears headed for a retest of the 1080 level.  We can hope it will stop short of this point, but right now gold is showing little sign of any buy side support.  Rallies have been brief and uninspired, and selling has been on increasing volume.  We are now waiting for a swing low in gold once again.  Still, gold is now a bit oversold; buyers at COMEX haven't shown up yet, but they should, somewhere between now and the 1080 support line.

Silver is looking a stronger than gold at this point - instead of breaking lower, it appears to be more or less moving sideways, with any rally attempts capped by the 50 MA at 14.94.  The gold/silver ratio continues to fall, albeit more slowly now.  I think if copper continues rallying, silver might actually follow along.

Miners were hit hard by gold's drop today, with GDX dropping -3.10% on moderate volume, while GDXJ fell -3.74% on moderate volume too.  Miners now appear to be in a descending triangle pattern, which as we saw with gold, often ends badly.  Miners are quite close to support, and I suspect any serious sell-off in gold will result in a break of support for the miners, leading to several days of heavy selling as traders bail out and await a more bullish chart pattern.

The USD rallied strongly today but could not hold its gains, leading to a failed rally and an inverted hammer candle print.  USD ended up +0.02 to 96.01.

SPX opened strong, but sold off for the rest of the day, ending down -27.37 [-1.39%] to 1942.04.  Selling was heaviest in energy and the mining shares.  The US market was the worst-performing market today.  I figured that yesterday's rally would end up being more than just one day long, but it appears that there are still a lot of traders that want out.  VIX rose +1.33 to 26.23.

Bond ETF TLT opened low, but rallied strongly all day long as the equity market sold off.  TLT ended up +0.48%, finally showing some strength on the equity market weakness.  This could be a low for bonds.

The CRB (commodity index) lost -1.31%, dropping below its 9 EMA for the first time in two weeks.  Overall, commodities are more or less moving sideways, but the chart itself looks weak - a sort of descending triangle is forming, which often ends with a breakdown.  And that 9 EMA breakdown looks a bit bearish.

Copper may have topped out today, at first rallying strongly only to lose all its gains, falling -0.23% and printing an inverted hammer candle - such candles sometimes mark tops when they come at the end of a multi-week rally.

WTIC (oil) sold off hard today, dropping -1.62 [-3.54%], dropping through its 9 EMA and is starting to look bearish once again.

HAA has 100 oz gold bars right now in NYC at 1130.80/oz [+2.20% over spot], and 1000 oz silver bars right now in NYC at 15.29/oz [3.79% over spot].  I'm not seeing a big bar shortage just yet.

Oil is correcting, gold has broken support but may find a low soon, silver is moving sideways and is outperforming gold, and the miners are once again quite close to a major support break.  Its tough to know where things go from here, with the equity market up big one day, and down big the next.  While I hear a whole lot about silver eagle premiums (and I see them too on the HAA site: 35% seems awfully high), the retail coin shortages have not yet made their way into big-bar-land.

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HughK's picture
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1 KG silver bar premiums in Switzerland

While I hear a whole lot about silver eagle premiums (and I see them too on the HAA site: 35% seems awfully high), the retail coin shortages have not yet made their way into big-bar-land.

Thanks, as always, Dave, for the market commentary.  

In Switzerland, the current sell price for a physical 1 kg silver bar is 536 Swiss francs.  Spot silver in kilograms is currently 461 Swiss francs, a 16% premium.  In 2012, the premium was approximately 14%, but I have not tracked periodic changes in the premium between now and then.

There is also an 8% value-added tax on silver here, but that comes after the sell price listed above. Luckily, there is no capital gains tax on Ag, although it's been a few years since the terms capital gains could be applied to silver.  :)

While the bank's sell premium on these 1 kg bar is rather high, the bank's buy price for such a bar is currently 455 francs, which is only a 1.4% discount off the 461 spot price.  I think this is better than what I could get if I were to sell 10 oz silver bars, for example, back to a US dealer such as Blanchard, but the US dealers that I have looked at tend to be much less transparent when it comes to buyback prices than the banks here, which publish updated sell and buy prices.  So, currently, the total spread between sell and buy prices on 1 KG bars offered by Swiss banks is about 17.5%.

Does anyone know the normal spread between sell and buy prices on silver offered by US PM dealers?

Truthoutthere's picture
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1KG Silver bar premiums in Switzerland

The spread with one of the big suppliers here in Australia for 1KG bars is and has been for the last couple of years approx. 10%.

KugsCheese's picture
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Markets Convulsed Overnight

E-Mini SP500 Futures halted twice around 5:50 a.m. - 6:10 a.m.  Currencies flip flopped.

sand_puppy's picture
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Premiums at local coin ship

Good Morning Hugh,

My local coin ship has a web page and a price board listing buy and sell prices for each item.

Jefferson Coin

The 100 oz (2.8 Kg) silver bar sells for 10.8% over spot and will be bought for -4% under spot for a 14.8% spread.

One of the new developments in the state of Virginia is that there is no longer any sales tax on purchase of precious metals over $1,000. 

However, over $10,000, they are required to file a report of the sale to the IRS.

One of the big questions for PM holders is the plan for converting PM's back to real stuff, via fiat or barter.

HughK's picture
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Posts: 764
sand_puppy wrote: My local
sand_puppy wrote:

My local coin ship has a web page and a price board listing buy and sell prices for each item.

Jefferson Coin

This is way more transparent than Blanchard.  I'd use Jefferson if I were in VA. Thanks, SP!

robie robinson's picture
robie robinson
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Bluestem farms

would take PM's in exchange for grass finished beef and lamb.

davefairtex's picture
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spreads in asia

Asia has a much better spread on gold.  In Thailand, for example, there is a 100 baht spread between the buy price and the sell price for 0.964 purity gold bars bought at that particular shop.  Each shop puts their own stamp on the bars they create.

Here is a webpage that carries the national bid/ask price for bars; the common sizes are approximately 2.5 ounces, and 5 ounces.  Each store has the national price scrawled in paint on the window of the shop.  The price moves throughout the day.

Currently, gold is trading for 18,900/19,000 or about an 0.6% spread for bars, and 18,630/19,400 for gold jewelry, which ends up being a 4% spread.  Even jewelry in Thailand is better than Gold Eagles in the US in terms of resale value.



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