In the same category

Apocalyptic mood in the gold and silver pit

IMG Auteur
Published : December 21st, 2012
376 words - Reading time : 0 - 1 minutes
( 2 votes, 5/5 )
Print article
  Article Comments Comment this article Rating All Articles  
Our Newsletter...
Category : Market Analysis





Many market watchers are scratching their heads looking at the precious metals charts of the last trading days. Despite the fiscal cliff and possible downgrades of rating agencies looming over the US, and the Fed's announcement that it is going to be monetising debt at a rate of 1 trillion US dollars a year, gold just marked a new three-month low, falling below support at $1,700 and trading all the way down to $1,660 on Tuesday. Silver has been hit even harder and moved all the way down to $31 in yesterday’s session.

Many suggestions have cropped up as to why the metals are behaving so weakly, despite the overwhelming monetary fundamentals and against a falling dollar index, rising crude prices and robust equities: year-end book squaring, fiscal cliff hopes or the ratings upgrade for Greece. None of them really seem to qualify. A more likely explanation is that large commercial entities are using the low volume in the run up to the Christmas holidays to game the market. As pointed out in Alasdair Macleod’s recent analysis article, those banks hold a very large short position and therefore have an incentive to induce as much long liquidation as possible by raiding stop loss orders before covering.

Unfortunately this volatility is likely to continue in the four remaining trading days of this year. However as a physical investor this should not spoil your Christmas spirit. Long term participants in the precious metals will not be surprised by this behaviour, as they will recall last year’s price action when gold lost over $200 in December and silver dropped a full $6 up until the last trading day - only to recover as quickly as they dropped once January came around. To that extend it is encouraging to see a high level of despair in the metals pit, coupled with mischievous media attention as a contrarian sentiment indicator.

We must not forget that none of the debt problems in the developed world have been resolved in 2012 and the challenges for 2013 look even greater. With this in mind one could even regard the recent weakness in price as a window of opportunity to acquire some more shiny Christmas presents at a discount, in case you are still searching.



Data and Statistics for these countries : Greece | All
Gold and Silver Prices for these countries : Greece | All
<< Previous article
Rate : Average note :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
Stephen Hawking – Doomsday Prophet’s Top Five Predictions
19 MarThemis0
Stephen Hawking may have been brilliant in his own sphere of science. This does not necessarily equip him to make accurate pronouncements about ot...
Stephen Hawking – Doomsday Prophet’s Top Five Predictions
17 MarWatchdoctor2
In my opinion, yet another NASA actor promoting ''leaving the earth'' as a viable alternative to living in peace with our neighbours. Not even sure...
Drums Along the Potomac
18 MarThemis1
While I, too, don't give a hoot about the Skripals, the UK cannot tolerate foreign agents running amok and potentially endangering innocent British...
School Daze
15 MarJ.
@bfsiedel, While I agree with much of what you posted, regarding whether or not school is broken depends upon one's expectations of public school....
School Daze
12 Marbfsiegel1
The part that I find troubling in these conversations, regardless of perspective, is how much they revolve around the extremes. i.e. situations and...
School Daze
12 Marbfsiegel1
The part that I find troubling in these conversations, regardless of perspective, is how much they revolve around the extremes. i.e. situations and...
End Times at the OD Corral
08 Marprljr1
After all; ALL the POWERS ~ The Banksters, The Pentagon, Wall Street, The Israelis, The Oil Companies and the Quasi Rich ~ are getting EVERYTHING t...
Gold $10,000? Goldnomics Podcast Quotations and Transcript
07 MarS W.
So you swap your dollars for gold in the hope that it will go to 10,000 and then you swap your gold back and have more dollars. In the end you ...
Most commented articlesFavoritesMore...
World PM Newsflow