For the best browsing experience on this site, we recommend you upgrade your browser
AboutSubscribe Your Editors Contact Us RSS

Breaking Down Gold's Comeback

You’ll find the price of gold moving higher again.

It’s only been two weeks since the big crash. But that hasn’t stopped the yellow metal from staging a comeback. For the first time in five weeks, gold ended trading Friday night with a weekly gain under its belt.

After a furious two-day drop that saw gold prices dive from more than $1,550 to the low $1,300s, gold has recovered to the $1,470s. Not a bad move for nine short trading days.

So that’s it? Gold has clawed back about half of what it lost during the two-day drop. It’s back. We can just forget about it and go back to our normal lives, right?

Hardly…

The drama is just beginning. You’ve already witnessed the unprecedented two-day drop. Now, you can add a snapback rally to the mix. I already told you to expect volatility in the coming weeks as buyers and sellers struggle to find balance after the drop. Now, things are getting interesting.

Big money is lining up to bet on lower prices — all while small investors embark on a massive buying spree.

‘Hedge funds accumulated their second-biggest bet against gold on record just as prices rallied the most in 15 months on surging demand for coins and jewelry and Goldman Sachs Group Inc. ended a recommendation to sell,’ proclaims Bloomberg.

Even with the overseas jewellery demand and a rush to buy coins closer to home, the precious metals market will have a difficult time overcoming the mainstream investor ditching his underperforming gold trading vehicles. ETFs have already flooded the market with more than $16 billion in bullion. If another round of selling takes hold, watch out…

 

Speculators will continue to push gold prices lower in the coming months. Hang on – it’s going to be a rough ride.

Regards,

Greg Guenther
for The Daily Reckoning Australia

From the Archives…

Gold Demand: The Great Disconnect Between Paper and Bullion
26-04-13 – Greg Canavan

Lest We Forget
25-04-13 – Greg Canavan

Praying for Government Incompetence
24-04-13 – Bill Bonner

The Cracks in Solidarity at the Recent G20 Gabfest
23-04-13 – Greg Canavan

How Central Planners are Committed to Ruining the Economy
22-04-13 – Joel Bowman

2 Comments

  1. Dennis Johnson says:

    You say “ETFs are flooding the market.” The main-stream media says investor are dumping their GLD shares to rotate into other investments. It is ALL bull.

    If investors are dumping GLD, why aren’t they dumping SLV? Fact: GLD physical inventories have declined dramatically in a very short time. Fact: SLV physical inventories are UP YTD.

    If you are China, or Russia, and want all the physical gold you can get your hands on, why wouldn’t you buy large numbers of GLD shares that can be delivered as physical upon demand? That is what is happening. It has nothing to do with small investors doing some kind of rotation rumba.

    Why isn’t that happening with SLV? The physical silver is ALREADY GONE.

    You say that big money is lining up to bet on lower prices. Maybe you should’ve been a little more specific there…… “Central banks are calling in all the favors owed them to help MANAGE the prices of precious metals before this all gets out of control” would have been much closer to the truth.

    Greg, you might want to think about who your audience is. Are you writing for the highly leveraged precious metals paper speculator, or to people like me — someone who holds and stacks fully-paid physical?

    I’m in no hurry to get my due, but I know that it is coming. I don’t have to worry about rolling futures contracts. Bernanke may be smart, but I doubt that he is smarter than many who controlled failed fiat currency systems in the long past history of that fraud.

    I don’t even have to be smart — I just have to know history.

    The present fraudulent system is going DOWN!

    Got physical silver??

  2. shortchanged says:

    Well said DJ, I am not as well read as you in matters PM, but I am with you on future outcomes. It would be interesting to read more on what you think.

Leave a Comment

Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.

If you would prefer to email the editor, you can do so by sending an email to letters@dailyreckoning.com.au

Receive our unique and useful investments ideas straight to your inbox for FREE, enter your email to sign up:

x