BLOG WATCH

As a follow up to our 9th May Blog Watch where we reported on the demand situation The Perth Mint was (or was not) experiencing, Commodity Online report Edel Tully (UBS) as saying that they saw “some physical buying on Tuesday, but the response wasn’t heavy, suggesting buyers may want even lower prices.” That accords with what we are experiencing. Edel thought that good demand may return if prices went “as far back as $1550”, at which point, “given that physical demand has been so underwhelming of late, its return (when that happens) could well trigger a greater reaction from leveraged players.”

The Fundamental View is more pessimistic, saying that if the $1,535 “level is breached on a closing basis, or if it falls significantly through that level, then the next potential stopping point for gold could be at the $1,300.00 level.” That is not out of the ballpark as $1,300 is just on the bottom range of gold’s 10 year log trendline.

He says that “the inverse head and shoulder pattern is still in play but is admittedly looking uglier and less proportional as each day passes. Although I feel it is unlikely to play out, gold cannot fall below $1,535 if we are to keep that pattern in play.”

But he notes that the death cross - when the 50 day moving average falls under the 200 day moving average, which it did mid-April - “usually implies that the trend has officially reversed indicating that further declines are very likely. Not until the 50 day cross back above the 200 day in what is known as the golden cross, will I be going heavily long.”

Sunshine Profits disagree, concluding that since “the situation in the general stock market is mixed for the long term and a bullish scenario seems a bit more likely than the bearish one for crude oil” it means that gold “seem to be a bit more bullish than not at this time.”

Download today’s full Blog Watch (pdf 234kb) for more reviews:

DON’T FIGHT THE ALGORITHM

Michael Kosares (Centennial Precious Metals) feels the algorithms have taken over.

INDIAN JEWELLERY MARKET

The Economist has an article on a move by large Indian business to set up jewellery chains in competition with the traditional local small jeweller. Why?