Gold climbed $9.90 or 0.71% yesterday to $1,412.00/oz and silver’s gained 0.71%.
Gold is mixed today after two consecutive daily rises. Gold futures in Shanghai jumped 1.5% at the open rising to 283.09 yuan per gramme prior to determined selling that capped the rise.
Gold looks set to have a third week of higher closes and is heading for the longest run of weekly advances since March. Gold is up 1.6% in U.S. dollars and 2.3% in Australian dollars due to concerns about the outlook for both the U.S. and Australian economies.
Markets await the U.S. nonfarm payroll data at 1330 GMT which will help inform as to whether the U.S. is heading into another recession which seems likely and whether the Federal Reserve would wind down its market supporting monetary stimulus.
There has been a decline in the volume of selling in gold ETF’s which suggests that the worst may be over in terms of liquidations.
However, further weakness in the gold price could result in another bout of liquidations from gold ETFs. This is, in and of itself, is a negative for the gold price. However, ETF sales are just one facet of the supply demand equation and coin and bar demand from Asian and international store of wealth buyers is a positive factor which is being overlooked given the focus on ETF liquidations.
There is also the important matter of central bank demand and this combined with international coin and bar demand may be enough to stabilize prices at these levels and contribute to gold's recovery.
Significant technical damage has been done to gold in recent months and momentum players and more speculative minded players are still the dominant force in the market.
However, as has been seen in the course of the bull market, in the long term gold's price will be decided not by speculators but rather by broad based global physical demand which remains quite robust despite the decline in ETF holdings.
Gold has been hovering like a magnet at the $1,400/oz level since mid-May. It will need a convincing weekly close above $1,400/oz resistance level in order to embolden bulls and this should then lead to gold challenging the next level of resistance which is at $1,500/oz.
A failure to close above $1,400/oz on a weekly basis may embolden the shorts and could see gold pushed back down to test support between $1,320/oz and $1,340/oz. A close below these levels could see further stop loss selling and gold testing long term support at $1,200/oz.
$1,200/oz was the resistance level between November 2009 and August 2010 and this should provide long term support, especially given robust physical demand.
France Prohibits Sending Currency, “Coins And Precious Metals” By Mail
France has prohibited the sending of currency, “coins and precious metals” by mail.
In new legislation which was enacted May 23rd, the French government decreed that it is forbidden to send all forms of currency - coins and cash and all forms of precious metals – coins, bars and jewellery by mail.
The legislation was published on Legifrance, the French government entity responsible for publishing legal texts online and can be seen here.
It was not announced by the government and not covered in the media. There were no communications and nobody in the government justified or explained this decision.
The legislation says that “the insertion of banknotes, coins and precious metals is prohibited in mailings, including the insured items, registered items and items subject to formalities certifying deposition and distribution. "
Some have suggested that the decree is to limit what is known in France as “the anonymous market”, the market in which no taxes are paid and people are free to trade without the supervision of banks and government.
However, euro coins and notes and gold bullion coins and bars attract no tax in France and therefore this is more likely to be an attempt to discourage the ownership of gold bullion and cash outside of the banking system and is a form of capital control.
It may also be an attempt to restrict the growing private market in France of people buying bullion online through Ebay which is increasingly popular.
The freedom of people to trade amongst themselves is a form of civil liberty as is the right to privacy.
The selling and the buying of precious metals in France are already subject to strict regulations.
Until September 2011, citizens could easily buy and sell gold coins and bars with cash but this was forbidden then when French citizens were forbidden to buy with cash in person and had to buy precious metals by trade mail, crossed cheque and by wire transfer or be “punished by a fine of fifth grade” which is a fine of some €1,500/oz.
The government decree does not specify that other independent companies cannot send gold and or silver coins or bars by mail. Indeed, it is only the French public company or national post company, La Poste that is forbidden in the decree.
However, 3 months ago in March, Fedex began stopping French people from taking delivery of precious metals.
At the start of the year, UPS began stopping French people from taking delivery of precious metals.
Perhaps not coincidentally, in recent days Fedex have stopped allowing companies and individuals to send or receive gold and other precious metal bullion coins and bars by insured mail in Germany and the UK.
This is an important story that bears watching as it appears that governments internationally, from India to France are attempting to control, restrict and make it difficult for their citizens to own bullion.
Gold Traders Most Bullish Since Bear Market Began - Bloomberg
Australian Gold Miner Takes Big Hit as Price Slides – The New York Times
Roubini Seriously Misguided on Gold – Safe Haven
Planet’s Imminent Plunge Into Recession – LEAP – Global Europe Anticipation Bulletin