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Is the gold bull market still intact, or did we enter a bear market? Investors should rely on the following checklist offered by Rick Rule. His answers on those questions suggest that the situation in precious metals has remained unchanged. The most acceptable conclusion is that we are not at the end of the bull market; we are rather in a cyclical decline in a secular bull market.
The metals have been subject to the same type of trading behaviour. It became blatant once again today. In fact, it is the third time this week that we witness extreme speculation in the metals. Silver, for instance, saw its peak today at $23.20 and its lows at $22.15, a difference of almost 5% intraday. Note that the peak on the charts was during the speech of Mr. Bernanke. A bit later, prices came down triggered by one specific sentence in the speech.
Ted Butler: I believe that the big buyer of the 10 million ounces of gold liquidated in the GLD was JPMorgan, either alone or with other collusive commercial banks. The same methodology I’ve previously attributed to a potential Mr. Big in SLV (also probably JPMorgan) is at work in GLD.
31.8 million troy ounces. That is the number of physical gold that the Russian central bank is holding at the end of April 2013. The Russian central bank just published their latest figures. Russis has added some 200,000 troy ounces of gold to their reserves. In less than 7 years, the Russian gold holdings have risen almost threefold. New holdings have been added in an accelerated way in 2009 and 2010, after which the growth has been steady.
Now the gold and silver futures markets are not being used for their original purpose, but are being used to manipulate prices by some entity that does not want to see prices of precious metals move higher. It is widely known that central banks and other major financial institutions have been manipulating Libor, bonds, equities as well as the foreign exchange market. So, it is absolutely plausible that they are manipulating precious metals, in particular gold and silver. What does this mean for investors?
Short covering, triggered by rumours of a potential US downgrade from Moody’s, are sending gold and silver prices vertical. The move higher comes after a very suspicious spike this night in which the silver price was pushed 10% lower within the first hour of Asian trading (with a bank holiday in Europe). The charts show the price action in today’s trading sessions. In our own words: folly of the highest degree, or the metals being subject to greediness of traders.
The silver price has recovered most of its losses of Asian trading. For now, we believe that the downward pressure on the metals prices has reached a point where a bounce (at least a temporary one) is imminent. Too many technical traders are in the bearish camp. Meantime, the commercials have positioned themselves increasingly long. It seems that they are ready to extend their profits on a rally, after their gigantic profits during the crash mid-April. The ferocity of a potential short covering should be the main theme at the desk of the commercials right now.
At the time of writing, it is midnight GMT (London) / 7 PM EST (New York) / 8 AM in Tokyo. The Asian market opened less than an hour ago. Large parts of Europe have a bank holiday today. So that means very thin trading. What happens? Really seconds after opening of Asian trading silver falls down from $22.3 to $20.8 in a matter of minutes.
As there is no significant yield elsewhere, equities and US dollar could have a long way to go before they correct. Hence, gold and silver could see a long way down, before they reverse. Gold and silver investors should think about the reasons why they are holding the metal. If it is for monetary protection, then they should be able to ignore short to mid-term price action, even if the price will go lower. There are too many contradictory signals out there right now. Participants in the ongoing uptrend should be careful.
An important figure from these data is the $55.7 trillion representing government debt. As discussed above, the government debt worldwide is already 80% of the global GDP. The global governmental debt level is ridiculously high and close to a system problem even from a global point of view. This is related to gold in a direct way. The bigger the debt problem, the higher the counterparty risk, the higher the value of physical gold.
According to Mineweb gold imports to India “jumped by 138% in April to $7.5 billion, massively pushing up the trade deficit. In another gold center the East, Dubai, various estimates suggest that demand in the past few weeks has been nothing short of astronomical, surging by 10 times the normal demand. Interestingly, as visualized by Zerohedge, the ETF continues its decline while the gold price has stopped its decline.
The latest participant in the game is Russia. Not coincidentally is it the next country in the BRICS complex, one that was hit particularly because of the measures in Cyprus. The message from the BRICS appears to be very clear: the urgent dismantle of the dollar system.
We are in the merry month of ‘sell in May and go away’ so we could experience a sell-off in the general stock market which in turn would take the mining stocks lower. We also need to be aware that the summer doldrums are upon us and gold tends drift lower until August.
Notably gold and silver are behaving in a very counterintuitive way. Somehow it is not surprising as there are opposing forces in the markets out there. On the one hand, gold and silver are under pressure because of declining commodity prices, a rising stock market, and a relatively strengthening US dollar. On the other hand, easy monetary policies should support precious metals.
Gold Settles Higher On May 23d – Finds Support From Drop In Dollar
With the present economic conditions in the US, there are various ways in which the fluctuations in the price of dollar will make the gold price rise and fall according to the rates. If you’re an investor, you should take into account the bigger picture so that you can take an informed and measured decision in the long run.
Gold & Silver Price Overreact to Fed Speech
The metals have been subject to the same type of trading behaviour. It became blatant once again today. In fact, it is the third time this week that we witness extreme speculation in the metals. Silver, for instance, saw its peak today at $23.20 and its lows at $22.15, a difference of almost 5% intraday. Note that the peak on the charts was during the speech of Mr. Bernanke. A bit later, prices came down triggered by one specific sentence in the speech.
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Gold Settles Higher On May 23d – Finds Support From Drop In Dollar
With the present economic conditions in the US, there are various ways in which the fluctuations in the price of dollar will make the gold price rise and fall according to the rates. If you’re an investor, you should take into account the bigger picture so that you can take an informed and measured decision in the long run.
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