Will they taper won’t they taper? That is the question. Meanwhile gold, together with silverand the PGMs suffer whichever way the wind blows.
The analysts employed by the big banks are calling for a fall at anywhere between $1200 and $1000 an oz. over the next few months. Another doomsday prediction is that the Chinese are not buying at the rate they were the last time gold slipped down to the $1260/$1280 range. Never mind that they are now overtaking India as the worlds largest buyers and are set to better last years purchases makes no impact. Right now there is the prospect that gold will fall flat on its face.
Support for Gold May Be Fading
For example we saw gold down to $1268 at yesterdays Comex close but in the after market it rose $16 to $1284 an oz.. This mornings’ Far East and European trade confirmed this level until midday, the time of writing. Our take is that there is still some appreciable demand, probably from retail investors underwriting prices at this level, our hope is that their optimism will not prove to be misplaced.
Don’t Be Tempted to Sell Short
Meanwhile though we are tempted, we will not start disposing of our stash of bullion, tempting though it is to think we can replace in a few short months at a much lower price. Selling short a precious metal ETF is also an option but there is a chance that the metals will fly, particularly if ending or tapering QE bursts the stock market bubble.
We are also very aware that for the average man in the street, the much publicised notion that the recession is behind us is not backed up by more jobs, and wages not keeping up with the inflated price of necessities. Both of which could become more severe when, inevitably, interest rates resume the norm.
Oscar Wilde Got it Right
Here is a quote that we like by Oscar Wilde that sums up the present US political scene and its all embracing influence on markets we believe should only be influenced by supply and demand and not the weasel words emanating from politicians, bankers and Wall Street who have only their self interests to promote.
“High hopes were once formed of democracy; but democracy means simply the bludgeoning of the people by the people for the people.”
Beware of Luxembourg
On a final note and only with the preservation of the financial status of our readers at heart, may we warn you not to invest or deposit money in any financial institution, particularly banks, based in or registered in the Grand Duchy of Luxembourg.
This tiny European country has built a self proclaimed reputation as a financial centre of excellence but recent examples coming to light of alleged malfeasance in the banking oversight regulatory body and other official parties including the judiciary strongly indicate that the interests of ordinary folk who have put their faith in Luxembourg are subordinate to those of the institutions trading there and its government.
There is also a question mark yet to be resolved over its elite citizens complying with the judicial authority of its fellow members of the EEC.