Is Fleeing Gold A Sign Of Dementia?

November 22, 2011 | By | Reply More

Spot gold and silver saw a modest upturn in Tuesday’s early morning trading in Europe with the yellow metal looking to attack the $1700 level before levelling off at $1693 by mid morning. Platinum Group Metals (PGMs) saw significant falls yesterday with palladium down 2.8% at $589.40an oz and platinum not far behind at$1552.40 an oz., off 2.6% with both trying to make up the lost ground by mid morning in European trading.

Market Activity Raises Questions

Among many questions Mondays market activity raised is whether yesterdays plunge in both stocks and precious metals was due to a flight to liquidity in the face of so many unresolved and mounting problems in the US and Europe or that dollar denominated bonds and currency offered better profit opportunities. In our view any thought of fleeing gold and going into the Dollar, Euro or their respective bonds is akin to suffering from early stage dementia, in other words short term memory loss.

Today is also options expiry day and its significance cannot be ignored.

It is, of course, the monthly opportunity for the market makers to really muddy the waters by taking advantage of option traders open positions.

Legalised Insider Trading

Unfortunately our analysis cannot take into account those who have insider knowledge. The legions of US politicians benefiting from having early access, and thus trading opportunities, to legislation that can affect markets without fear of prosecution sets them apart from us ordinary mortals.

It would be naïve to think that this early knowledge is not passed on the favoured banking and fund management community to the disadvantage of the vast majority of investors that are out of the loop.

Just another scandalous instance of transferring funds out of the pockets of unsuspecting Joe Public into those of the elite and there is nothing that we can do about it.

Will Gold Recover $1700 Support?

It will be interesting to see how today’s action in silver and gold pans out by the time the US market closes.

After hours Comex trading could be very revealing.

  • If, as our logic leads us to believe, gold pushes back above $1700 support and regains some high ground, our faith in the eventual integrity of the market system will be somewhat restored.
  • If the yellow metal continues to pull back towards support at $1605 our conclusion will be that there are market forces at work that the ordinary ‘man in the street’ retail investor and those higher up the fund management ladder are not yet privy to, while those in government and their contacts continue to line their pockets without having “their collars felt” by the law.
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