Jelly Bean Magnate Introduces...Gold-Plated Jelly Beans

The founder of the Jelly Belly bean line, David Klein, has come up with an unusual luxury treat: jelly beans, with exotic flavours, that are coated with 24-karat gold. The price tag is $500 per jar.

They're not just blinged-out candy, though. The beans are supposed to represent "deconstructed meals," bursting with exotic flavors, like Thai Lemongrass Curry and Indian Mango Chutney.

Needless to say, the bulk of reactions balked at the price tag.


Well...it can now be said that you can eat gold if you want to. Some tony restaurants are already including gold-flecked dishes in their menu.

Underperforming Gold Stocks Leave Many Puzzled

Gold stocks have been underperforming gold itself for some time now, and that's got a lot of people perplexed - including some of those companies' CEOs.

Amazed at what has transpired, the producers are scrambling to generate any sort of interest in their stocks. “We are seeing ever increasing inclusion of ounces into mine plans where the degree of confidence associated with their location and existence is lower than previous consideration,” [CIBC World Markets analyst Barry] Cooper noted. “In many cases, the mine plans are now incorporating ounces that have not even made it to an inferred category let alone the usual required measured and indicated classification.”

For that reason, Mr. Cooper worries that net asset value could become less useful as a valuation metric, because no one can really trust the number.

Mr. Cooper himself believes that the stocks will eventually bounce back because the metrics he uses definitely say they're cheap.


It is an odd state of affairs. Gold stocks did much better than gold itself in the early stages of gold's bull market: from 2001 to 2007. Needless to say, the crisis of '08 wrecked the gold stocks, pushing them down much farther than gold itself. Since then, there have been times when the producers have outperformed gold but there have also been times, like now, when they've underperformed.

Since the '08 crisis, junior exploration issues with real deposits have done much better than the majors, although the mini-mania came to an end late last fall.

Indian Physical Gold Demand Weak For Yet Another Day

According to a Reuters India report, Indian gold demand remained weak as wedding season moves to a close.

"Households are not buying, while jewellers were waiting for correction," said a Mumbai-based dealers with a private bank dealing in bullion. "For the last few days trading activity has gone down and it seems it will remain like that for next week."

A strengthening rupee, which eases prices for buyers, didn't help.

Gold Rises Due To Sinking Greenback

The U.S. dollar tumbled last night, which gave enough energy to gold for it to rise above its sub-$1,520 close to $1,525. The greenback's action also boosted silver into a range between $37.50 and $38; WTI crude oil got a lift up to $101. After gold reached $1,525, around midnight ET, it stayed stuck around that level as the greenback recovered slightly. Fitch put another national government on negative credit watch, but not one in Europe. Japanese sovereign debt got that flag because debt levels are so high. Inflation in Japan for the month of April was reported as 0.6% from a year earlier, a shift from the no-inflation norm that's prevailed for the last two decades. Japanese GDP shrunk 0.9% in the first quarter of this year, making for a technical recession in the country since GDP also shrank in the fourth quarter of last year.

Gold did manage to make it as high as $1,529.90 around 4 AM, after recovering from a slump of as low as $1,522.20 just prior to that peak, but overall it stayed close to $1,525. As of 8:18, the spot price was $1,526.90 for a gain of $7.50 on the day. The Kitco Gold Index attributed -$2.70 to predominant selling and +$10.20 to a weakening of the greenback.

The U.S. Dollar Index, as noted above, plunged from the high 75.5s all the way down to 74.95. The tumble ended just before midnight, after which it snapped back to 75.05-75.15. After gaining enough strength to climb up to 75.35, it reversed and reintroduced itself to a sub-75 level. As of 8:25, it was still sinking at 74.97.

A Reuters report ascribed gold's recovery to safe-haven buying and a weaker greenback.

"The dollar is weaker, boosting commodities," said Peter Fertig, a consultant at Quantitative Commodity Research. "Also don't forget the situation in the euro zone, especially the latest comments from an EU official."

In the latest development on the Greek crisis, the head of euro zone finance ministers Jean-Claude Juncker said the International Monetary Fund could withhold the next slice of aid to Greece due next month.

"The chances of debt default by Greece are rising," a trader said, adding higher oil prices were also helping gold.

Holdings of the SPDR Gold Shares Trust stayed steady again at 1,214.08 tonnes.

8:30 saw the release of the consumer-spending report for April. Spending was up, but only by 0.4%: the same as income. Spending was hobbled by price rises, like at the gas pump, which are excluded from the core-inflation figures. Gold has already got a head of steam up, rising to the high 1520s on the sinking greenback, but the release of that report gave it a final boost that pushed it above $1,530. As of 8:42, the spot price was $1,530.30 for a gain of $10.90 on the day. The Kitco Gold Index assigned -$1.25's worth of change to predominant selling and +$12.15's worth to greenback weakening. The U.S. Dollar Index halted its decline on the news, but didn't rise. As of 8:46, it was stuck at 74.99.

Thanks to renewed pressure on the U.S. dollar, gold managed to reverse its declines from yesterday and come close to making a new three-week high. Safe-haven demand ebbing from the greenback, and consequent selling pressure, has actually helped the metal instead of hurting. Today's regular session may see some volatility, as a strong start tends to be a bad predictor of the rest of the session. Even if so, gold will still have held up fairly well.

Gold Ends With Sizable Loss, Falls With Greenback Rise And Then With Oil

Gold started regular trading with a slump, but picked up smartly when the revised number for U.S. first-quarter GDP hit the Net. Instead of being revised upwards, as many had expected, the number stayed at 1.8%. Any upward revisions were cancelled out by consumer spending being revised downwards to 2.2% growth annualized from 2.7%. Despite that morning push, though, the metal ended up slumping because the U.S. dollar jumped up, albeit discouting most of the rise in advance. When the greenback fell mostly back down, gold didn't benefit because crude oil slumped and gold was dragged down with it. More broadly, profit-taking dovetailed with diminished safe-haven demand to leave the metal sporting a loss on the day that was more than six dollars an ounce.

After being boosted by the GDP revision disappointment, the metal reached $1,526 at 9 AM ET as the greenback was pushed down by the news. Despite the fact that the currency didn't trough until almost an hour later, gold was blocked from rising any further as selling pressure came in. The metal actually tumbled before the greenback had finished jumping up from 75.35 to as high as 75.86. While the currency was making most of its run, gold snuck upwards in a rising channel below $1,520; as noted above, the metal discounted the rise before it was complete. When the U.S. dollar began slipping, the metal didn't react all that much to the upside at first. Evidently, the gold market had a more optimistic view of the greenback's performance than what actually transpired.

It wasn't until the greenback slump turned gentle at 75.6 that gold got enough energy to hoof up to $1,525. Then, it slipped and then slowly slid downwards for the rest of the afternoon. Not only profit-taking slipped it down but also a drop in WTI crude oil, which ended up at $100 from $100.75. Although the metal was supported at $1,520, the gentle pressure on it pushed it below that level near the end of the session. As of the close, the spot price of gold was $1,519.40 for a drop of $6.40 on the day. The Kitco Gold Index attributed -$13.60 to predominant selling and +$7.20 to a weakening of the greenback.

Gold's six-month chart, from Stockcharts.com, shows it declining for the second day in a row:



Despite that decline, gold's Moving Average Convergence-Divergence lines (found at the bottom of its chart) made a bullish cross today. It wasn't much of one, and that indicator tends to be a little late rather than early, but that cross shows that gold's weak uptrend is real. The metal bottoming at any price above $1,490 or so will make for a third higher low, which will further confirm that it's doing a little better than a straight consolidation. Despite the Eurocrisis-related safe haven demand coming in, that demand is iffy and not consistent. Gold won't be given a big boost by it unless another disaster erupts, like the Grecian government seriously threatening to default or unilaterally reschedule. The latter now sports the euphemism "reprofiling."

Turning to the U.S. Dollar Index: it was knocked down by the GDP news, slumping from the high 75.5s down to as low as 75.35. After a relief climb, it sunk again but double-bottomed. Then, it got its energy back and climbed above 75.85 by 11:00. Then sinking and topping at a slightly lower level, it turned south in early afternoon and slid into the 75.5s. For most of the afternoon, it was between 75.5 and 75.6 - about where it was before the GDP revision was released, making the regular trading session a wash for the currency. As of 5:15, it was recovering from a slump down to 75.505 to reach 75.54.

Its own six-month chart, also from Stockcharts.com, shows it declining for a third day in a row:



In so doing, it made its uptrend weaker and made my previous call for it to touch 76.5 before the end of the week unlikely. I have to say that I got too optimistic earlier this week. Although the Index sunk below 75.5 today, there was enough support at that level to push it above. The last short-term bottom was at 75.0. Should the Index keep declining and close at 75, its intermediate-term uptrend will become questionable.

Gold didn't make a fine show today, but declines come with the advances. Considering that its close today is almost exactly at a resistance level it would have been stopped at had it been merely consoldiating, today's decline can be taken as a sign that its short-term advance is weak but real. Since it's in decline mode, it may go farther - but it would have to bottom around $1,480 for its short-term uptrend to be impugned. The metal has a long way to go before sliding down that low; it likely won't. Tonight's overnight session may see more softening, but nothing alarming should take place.

Notice

Because of a personal commitment, the usual slew of gold-related news items won't be posted today. The next post will be the end-of-day wrap-up, which goes up around 6:30-40 PM. Thanks, and my regrets.

Despite Fall In Greenback, Gold Slumps Along With Silver

After peaking at about $38.75, silver lost more than a dollar and a half an ounce. Shortly after it began tumbling, gold did too. Despite the fact that gold didn't follow silver up by that much, the former metal followed the latter down when it got sold off. During the sell-offs, the U.S. dollar stayed in a range that was well below yesterday afternoon's values. The OECD recommended that most central banks raise their rates due to inflation pressures, now that the global recovery looks self-sustaining. It upped its inflation forecast for this year from 1.5% to 2.3%, and it urged the Federal Reserve to raise the Fed Funds rate to 1.0-1.25% by the end of this year. Jean-Claude Trichet's successor in November as President of the European Central Bank, Mario Draghi, is already advertising his credentials as an inflation-fighter.

Thriving on the greenback's slide, gold climbed a few dollars last night in a steady rise that extended as night turned into morning. From $1,526, its climb took it to a peak of $1,533.50 at about 2:30 AM ET. At that time, silver had already lost about twenty-five cents an ounce. Then sold off with silver, gold tumbled steadily without much recovery climbing until it reached a bottom of $1,514.60 a little after 7:30. A relief climb kicked in, but the metal had trouble reaching $1,520. As of 8:22, the spot price was $1,519.20 for a drop of $6.60 on the day. The Kitco Gold Index attributed -$13.20 to predominant selling and +$6.60 to a weakening greenback.

The U.S. Dollar Index, after a brief climb from 75.9 to almost 76.0, turned around last night and slid down to 75.6. It then entered a range between 75.67 and 75.5, whose top lowered to 75.6. As of 8:25, it was at 75.56.

A Reuters report said gold was knocked down from a three-week high by silver's plummet. The euro was strengthened by a report that claimed the government of mainland China was interested in buying Portugese government "bailout bonds."

"This is a major intraday reversal of some 8 percent, the potential right now is that we see one step forward and two steps back in silver and I think it can continue," said Commerzbank analyst Eugen Weinberg.

"The real problem is the price increase before was overdone and the market was overheated... speculative investors have not yet exited (their positions)," he said, adding: "This is a situation where the tail is wagging the dog."...

"We are in for a prolonged period of prices treading water and probably stagnating at around $1,500. I wouldn't be looking for as much positive dynamic going on, despite the demand for it as a safe-haven right now being fueled by the debt crisis," Commerzbank's Weinberg added.

Metals consultancy firm GFMS forecast that mainland China's imports of gold may be as high as 400 tonnes this year, as compared with 200 tonnes for last year. Holdings of the SPDR Gold Shares Trust remained at 1,214.08 tonnes yesterday.

A Wall Street Journal report said gold slumped along with silver, and noted that buying support might take lower levels to kick in definitively.

"Buyers of physical bullion from the Middle East and Asia have eased back on this run up to $1,530/oz in gold and we will need to see a more sizeable correction for them to come back in a big way," said Tom Kendall, vice president of commodities research at Credit Suisse.

However, confidence in gold's longer-term prospects remain high.

A European parliamentary committee voted unanimously to allow clearing houses to accept gold as collateral, bringing the metal closer to use as an alteranate currency. Although the measure has yet to be approved by the European parliament and the Council for the European Union, it's a step forward.

The weekly initial jobless-claims number came out, rising 10,000 to 424,000 for the week ending last Friday and confounding expectations for a mild decline. The number for the prior week was revised upwards by 5,000 claims. However, the total number of claimants receiving unemployment compensation dropped to a two-year low. Of more import was the Q1 revision for U.S. GDP growth. Despite expectations for an upwards revision, the number remained steady at an annualized 1.8%. Consumer spending growth was revised downwards, from 2.7% to 2.2%.

After slumping from around $1,520 to $1,517 when the pit session started, gold shook off its doldrum and jumped on the news. $1,520 was cleared easily. As of 8:49, the spot price was $1,523.60 for a drop of $2.20 on the day. The Kitco Gold Index assigned -$12.30's worth of change to predominant selling and +$10.10's worth to greenback weakening. The U.S. Dollar Index broke through the bottom of its range on the news, plunging to almost 75.35 before bouncing back. As of 8:51, it was still boucing at 75.40.

Gold did have a rough time in early morning, but it managed to best $1,520 again on the GDP news. Since it had put in a fair gain before its tumble, the loss on the day turned out to be not that bad. This regular-trading stretch may be volatile, but gold has a good chance of keeping its head above $1,520 when the day is done.