Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
Gold & Silver Prices in

Gold signals trouble ahead

IMG Auteur
 
Published : May 22nd, 2012
330 words - Reading time : 0 - 1 minutes
( 2 votes, 4.5/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...

 

 

 

 

Precious metals are still struggling to gain ground in the face of persistent fears about the eurozone and the threat of a 2008-style market meltdown. The CFTC’s latest Commitments of Traders Reports for the gold and silver futures market in America shows managed money (read: hedge funds, commodity trading advisors, etc) holding their largest short positions in these markets since September 2008. Is The Great Crash coming?

The GotGoldReport comments, however, that if recent history is any guide these large short positions are more often that not an indicator that we are getting close to a bottom, as the chart below suggests:


Gold remains trapped in a range between $1,550 and $1,600, after failing yesterday to settle above $1,600. Silver is holding above $28 just about, but it’s not going to take much in the way of selling to take the price down to just above $26 if we get more depressing economic news. The plunge in the newly issued Facebook shares is an apt metaphor for the broader malaise affecting markets at the moment.

Why, you may ask, are precious metals – and in particular, gold – not doing well in such an environment? Isn’t gold supposed to be a hedge against financial Armageddon?

As John Butler addresses in a new article at the Cobden Centre Blog, as far as financial regulators are concerned, it is not a safe haven asset. Crucially, it is not counted towards banks’ “Tier 1 capital” – those assets such as highly liquid government bonds that regulators deem the “safestinvestments. This means that when the going gets tough, banks are forced to sell gold, silver, and other liquid non-Tier 1 assets in order to raise Tier 1 capital.

Over longer periods of market strife however, this is negated by the fact that trust in financial assets is lost, meaning that precious metals increase in value relative to manypaperassets. But violent corrections are inevitable on the road to peak precious metal valuation.

 

 

<< Previous article
Rate : Average note :4.5 (2 votes)
>> Next article
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
100 Items That Disappear First in a Disaster
23 Markevthorne
68, 69 probably not that safe - particularly if you're growing your own vegetables - keep a Maine Coon cat instead: does the job automatically.
Farage Interviews Le Pen: “Prison of the EU”
21 Marneville
BRITANNIA RULES THE WAVES AND NOW BREXIT WAIVES THE RULES. GO FOR IT FRANCE AND RID YOURSELVES FROM THE CHAINS OF IDIOTS. NOT SIN...
How the Fed Operates — And Why It's a Problem
20 Marramasart
In a nutshell, the Fed facilitates the theft of the value of the dollar, as they can control the increase in supply which at the same time inverts ...
How the Fed Operates — And Why It's a Problem
20 Marneville1
With all due respects for outlining how the crooked american Fed works or should work. From all our research we find the following the Fed...
Sparta - Gold prohibition in a collapsing economy
18 Markevthorne
You've answered none of the authors points: your comment is flat rubbish.
America Too Broke to Fix Crumbling Infrastructure? “Bridges, Roads,...
16 MarCameron Waugh1
Just like the leaders of the Bolshevik revolution were not Russians, those formulating belligerent US foreign policy are not Americans, and they ha...
POTUS at SOTUS
16 MarDRGEORGE1
Try explaining that to my patients dying on public waiting lists or getting ripped off by exorbitant private specialist fees!
POTUS at SOTUS
08 MarS W.0
I don't know what hallucinogens Dr G is on but my experience, both working in, and using the health system in Oz is that it is very bloody good.!
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS