Gold See Saws for Three Months

November 28, 2012 | By | Reply More

It has been a gold see saw for three months. From the depths of $1650 an oz in early September it  then rose early October to within a whisker of $1800 an oz. followed by a fall back to $1675 at the beginning of November only to rise again to $1755 three weeks later and now that brings us to todays extraordinary events!

Gold at $2000 an oz Early 2013

Whilst the price moved up and down in tandem with its usual partner silver, many precious metal analysts, us included, felt strongly that this past two weeks price action heralded a sustained gold and silver break out and most were not slow in letting their followers know their thoughts. $2000 an oz by early next year was a favourite forecast, $2500 by summer was another. So what, if anything, has gone wrong.

Gold Plunges

Today at the New York open the gold price plunged $30 with silver down 90 cents to $33 an oz.

Nothing Changes Or Did It?

It was not the dollar, a frequent catalyst affecting gold,

as it made little progress either up or down, stocks ploughed their own furrow with little excitement, the news out of Europe was that the usual hot air from its politicos amounted to no more than delaying a climax to the Greek debt crisis solution while yet again compounding it and the rest of the Eurozones problems and no unexpected news of significance emanated from the US with the exception of a possibility of the Republicans reaching an understanding with the Democrats over the looming ‘fiscal cliff’ scenario.

A Serious Question

Now we pose a serious question, can these non events have such an adverse impact on the price of gold at a time when both the fundamental and the technical indicators are screaming “gold is a buy, don’t miss out!”

Buy Gold Remains a World Wide Favourite

Oh yes, we forgot to mention that the worlds largest gold holding ETF, SPDR Gold (GLD) announced yesterday that its holdings rose yesterday to a new all time record of 1345.8 tonnes.

South Korea, among many other countries, continues to buy gold, topping up the 40 tonnes bought in 2011 with another 16 tonnes and with more to come according to the local press. We have been trying to recall the last time a significant bearish fundamental news item appeared to undermine  faith in gold and technically it would appear that the charts are telling an almost overwhelming story of favourable indicators.

Did the Gold Fix Come From the Fed?

The blame for todays gold price plunge is said to lie at the door of speculative selling and algorithmic computer trading programs. We suppose that could tie in with the fact that at the beginning of the week open speculative gold calls increased by over 14000 contracts together with silver open interest reaching an increase of nearly 4000 and if that lot suddenly changed course  it could explain the plunge.

Of course, they would have to have a reason but that reason so far escapes both us, the media and the wider public.

Could it be more likely that the Fed felt that gold had to be stopped before it escaped and shot upward towards its true value and the likelihood of an agreement to fix, however temporary, the “fiscal cliff” was excuse enough to manipulate the market. Perish the thought!

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