Gold, Will it or Won’t it?

October 30, 2013 | By | Reply More

Only fifteen days ago gold sank to $1265 an oz on the spot market. Prior to that many of us felt that gold had sustained a floor at $1300 and that this would be a kick off point for the next upward trend. It was not to be! In fact many of the leading analysts, Morgan Stanley amongst them, were predicting gold to fall below $1200, even down to $1100 an oz. In the last fifteen days gold has risen to over $1350 an oz. that is ninety dollars, at the time of writing.

Has anything changed in the last fifteen days?

Well not really, the basic fundamentals are just what they were two weeks ago, two months ago and more. Chart watchers may recognise an upside down head & shoulders forming or vice versa, candlesticks telling their tale, support and resistance levels being penetrated and so on.

But at the end of the day the question remains, gold, will it or won’t it now break out to the long awaited resumption of its long term up trend or is this just another blip before another reversal to the $1250 level or lower.

QE Making Large Profits For the Few

Either scenario is on the cards in this extraordinary financial world that we now live in. With talk that quantitative easing is here to stay for the next six months and with even a possibility it may be increased. With more and more evidence that this new money is not reaching small businesses and Joe Public and so reducing unemployment, with the banks and professional stock market players the only exception as they trouser huge profits, the result so far is that inflationary fears have taken a back seat.

Market Manipulation Suspected

Actually there is a good argument that it is inflation the US government is anxious to encourage in order to make paying off its massive debts a little easier. Be that as it may, gold has been the enemy of banks and brokers since Nixon took the country off the gold standard all those years ago.

Can this explain why gold has looked like breaking out of its down trend on numerous occasions in the last quarter as sharp falls have followed steadier rises. It seems that large forward contract sell orders have hit the market at quiet periods which account for the price plunges. A practise that makes losses a far more likely outcome than profits !

Changes in India & China Will Have Little Impact on Gold Prices

Right now there are factors to the downside for gold. The first is the prohibitive import tax levied on the metal by India just as the gold gift season gets under way. Smuggling will take care of this so will have little impact on the price in the rest of the world.

There is the question of whether the rise in interest rates charged by Chinese banks will impact on sales of gold to the Chinese public. We believe that it will make little difference as it is China’s central bank that is amassing the metal in preparation for its assault on the dollar.

The Fed Ignores Market Logic

If logic takes its natural course, the eventual outcome for the price of gold and other precious metals will be very, very positive. In the meantime it is clear that logic is having a hard time as the Federal Reserve, in the form of Mr Bernanke and his acolytes the big Banks and the Wall Street Mob twist and distort the markets with shameless ease and with no thought for future generations.

Insure Your Finances With Gold & Silver

We have no doubt that the market will win in the end but when that will be we have no idea. In the meantime our advice is to have at least 10-15% of your portfolio or savings in gold or silver physical metal. Purchase and trade bullion easily through bullionvault.com or invest in coins through a reputable dealer and feel secure that you have insurance against whatever the future may bring.

In the short term, gold, will it or won’t it rise or fall is irrelevant, precious metals should be held for the long term so now is as good a time as any to gain peace of mind in your financial future.

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