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When the Gold Bugs Start Selling, Look Out!
By EconMatters
Where are all the Gold Bugs?
The decline in GDP saw gold and silver spike yesterday with the thought that the fed will still be around a little while longer. But before that report traders have been selling into any Gold & Silver rally with the thought that the economy is getting better, risk appetite is gaining, funds are unwinding the safe haven trades, and ultimately interest rates are going to start rising.
Gold Selling into Rallies the new sport?
This is the reason that prior to yesterday Gold and Silver have not been participating in the Risk On rallies in markets. Sure they spike a little at the beginning of the year, or week, etc. but soon are sold into rather heavily.
Now granted gold and silver haven`t been putting in new lows, but are sort of just stuck in trading ranges. However, it is to be noted that they are underperforming other asset classes right now. All of which brings me to the question of whether Gold should be sold into on any spike upwards?
Have we seen the Near-Term Top in Gold?
Have we seen the near-term top for Gold and Silver markets for two, three, five years? I think it is too soon to tell as Spain and Greece`s troubles I expect need to be dealt with sometime this year, and then we will start to have fund flows back into bonds and Gold and Silver on European Solvency issues. However, I have serious doubts that Gold will put in a new high for 2013.
The Gold Thesis still Valid
I understand the underlying arguments concerning currency debasement by central banks around the world. I understand that mining costs are rising long term as well. But this has been the case for the last 200 years as well.
Price Action different from Fundamental Thesis
All this can still be true, and for a myriad of reasons Gold still goes down from here. Arriving at “fair value’ for any commodity is tricky, but from a trading standpoint Gold acts very weak.
If bonds start to break through 2.25 & 2.50 for the 10-year in yield, Gold could break to the downside through the $1500 an ounce level as traders anticipate a change in fed policy in the latter half of this year.
Inflation Rises: Where does that leave Gold?
If the CPI and PPI numbers start to rise the next couple of months I anticipate further weakness in the Gold and Silver Markets. Could we see $1000 Gold before $2000? Actions speak louder than words, and if Peter Schiff is selling gold, then maybe you should too!
Further Reading - The Market Rally Tells Us Nothing about the Economy
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Who is the real author?
what a crap article.
He might be right about not seeing a higher top of this bullmarket this year. But 1000$ gold? If we see 1000$ gold (real gold) I´ll eat my one week worn shorts with mayo. There will be no real gold for sale at that level. If we see 1000$ gold (paper) I would like to think the papermarket is about collapse.
+50K gold coming to a town near you before 2015 is over, that´s my forecast :)
EconMatters is that Joe Weasel guy maybe?
Peter Schiff has always been selling gold, that's his business.
That is why anything said by Peter Schiff has to be taken with some skepticism.
Gold is not a magic bullet or a panacea for anything, it is an investment asset, albeit a natural resource. How it fits into any future grand economic scheme is impossible to say ... other than it is a natural resource that depends upon cheap petroleum to acquire, without which there will be less/no more new gold.
Let me restate that: there is little- or no more cheap petroleum any more, anywhere in the world. This means there will be less and less gold (which requires massive amounts of cheap petroleum to gain metal from less-concentrated gold plays).
Come to your own conclusions ... but be skeptical of the 'hyperinflation' or 'collapse' sales' pitches.
Wait what? Rising CPI will lead to lower gold price?
You are definitely doing it wrong.
Give us a break! All Mr Schiff´s business is doing is holding a ¨Sale¨ promotion (like many retailers do) to attract new customers or simply for publicity. To make the absurd asumption that this lowering of premiums in someway indicates that PM bugs are going into sell mode is about as absurd as you can get. More likely, I suspect the author/firm responsible for this article is ¨short¨ and trying to influence prices down. I assure you Peter Schiff remains more bullish than ever on all PM´s! Note: I´ll remember to ignore any future yellow journalism coming from EconMatters.
"......and if Peter Schiff is selling gold, then maybe you should too!"
Regardless of my stand on the precious metals this sentence is pure and simple bullshit. Schiff sells Gold bullion (mostly coins) as part of his brokerage business. Schiff is talking about discounting the premium he usually charges when he sells coins.
Pure bullshit and not worthy of ZH.
This title is extremely misleading. Schiff has a brokerage that buys and sells gold. You make it sound like he is selling his personal holdings of gold or the gold holdings he maintains for investors.
No yellow journalism on ZH please.
Schiff has a brokerage that buys and sells gold...
Exactly. He's one of the good guys in my book. He's fighting the good fight and directing his constituency into an investment vehicle that will not depreciate and will use the proceeds to replenish his inventory in order to grow his business further. Does a service station go out of business after they sell the gas in their tanks?
In a recent interview he said the current price is still only reflective of the cost of mining. The impact of the massive global currency debasement has yet to be realized as evidenced by the continued moribund trading ranges. This is probably why he is offering his current "discount" himself.
I am far more concerned with the collapsing of central bank interest rates and qe activities. The way these central banks around the world are feverishly discounting their products, it reminds me of the gas wars our local service stations would engage in as a kid. Pretty soon, they'll be offering dishes and blue chip stamps.
As for the actual price of gas, that 15 gallon fill up in 1964 would have cost you about US 3.00. If you were to use that exact same currency today, it would cost US 2.30., including taxes. (And that's just melt value, no numismatic feature added.)
I'll be sure to ignore "EconMatters" in the future.
It's like saying Goldman Sucks are net sellers of stocks this week, you better get out of the market now. Alert us when you find someone selling standard AK or AR 30 round magazines for $15. a piece (which was the price 2 months ago). Otherwise take this bullshit elsewhere.