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Gold Up 1.5% As Stocks Globally Fall After Nikkei Crashes 7.3%
Today’s AM fix was USD 1,386.00, EUR 1,074.92 and GBP 919.16 per ounce.
Yesterday’s AM fix was USD 1,385.25, EUR 1,071.43 and GBP 917.75 per ounce.
Gold fell $10.20 or 0.74% yesterday to $1,367.60/oz and silver finished up 0.07%. Click here to download our free guide to gold.
Gold is up today while stock indices globally are sharply down after the Nikkei crashed 7.3%. The stock crash in Japan is leading to weakness in European equities and will lead to losses when U.S. markets open.
The Nikkei decline is being attributed to the poor Chinese PMI data but the more likely reason is speculators profit taking leading to panic selling. Currency debasement and rampant speculation had led the Nikkei to increase by an incredible 85% in just over 6 months.
Bernanke hinting at reducing Federal Reserve bond buying and balance sheet expansion and a more prudent U.S. monetary policy and the still very fragile Japanese economy likely also contributed.
Gold is oversold on a host of benchmarks and was due a bounce and the Nikkei plummet and stock weakness in Europe, the FTSE is down by 1.9% and the CAC and DAX by more than 2.4%, have led to gold buying.
Stock losses appear to have contributed to speculators covering short positions and some speculators and investors buying gold again.
Silver too has benefitted from the renewed ‘risk off’ environment and risen 1.4%.
If there are sharp losses on Wall Street today –increased safe haven demand should be seen. Sharp falls in U.S. equities seem possible given the recent outsize gains despite increasingly poor fundamentals.
However, sharp losses on Wall Street could lead to further short term gold weakness if there is margin call selling.
There was short covering action yesterday and we expect more short covering however the scale of the losses in Japan overnight and risks of sharp falls in European and U.S. markets mean that in the short term, gold may be vulnerable.
There remains the risk of a massive short squeeze in the gold market as speculators such as Wall Street banks and hedge funds have made “the biggest bet ever against gold prices.”
This is likely to propel gold higher recovering much of the losses in recent months. It is likely to do so as the shorts are trend following speculators who are again completely ignoring the very positive gold fundamentals with massive demand for physical and rising premiums globally.
Gold’s price premium on the Shanghai Gold Exchange stood at $22/oz and remained above $20/oz for a fourth consecutive trading day overnight.
India is paying a premium of nearly $40 per 10 gramme bars. Dubai buyers are paying a premium of $7-10 per kilogramme.
Turkey is reported to be paying a premium of $25 an ounce over spot prices. Hong Kong and Singapore buyers are paying premium of $5 per ounce for gold bars.
Markets are becoming more and more casino like and are now the preserve of speculators.
For prudent pension owners, investors and savers this makes an allocation to physical gold more important than ever.
Precious Metals Currency Ranked Returns in USD – (Bloomberg)
Gold’s fundamentals remain sound and volatility in stock markets will lead to renewed safe haven demand for the precious metals.
Gold has had a difficult few months but will reassert itself as an important diversification and safe haven asset in the coming months.
NEWS
“Gold is up today, so far, while everything else is down” - Bloomberg
Gold rebounds from losses as Nikkei falls 7.3% - Reuters
Gold Halts Two-Day Decline as Stocks Drop Globally - Bloomberg
US Treasury Secretary Tapping Federal Retiree Pension Fund To Avoid Default – Washington Post
COMMENTARY
They Better Pray There Is No Short Squeeze... – Zero Hedge
Why Ounces Are More Important Than False Paper Prices – Max Keiser
Big Silver Shorts cover Madly – Got Gold Report
Jim Sinclair Gold Seminar - London, June 1 – JS Mineset
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And look at the us markets ignore this entirely. It's almost as if there's free money being given away and government manipulation forcing prices up higher for absolutely no reason at all while attacking any other asset class and punishing those who dare to invest in them.
But that would be tinfoil hat crazy now wouldn't it?
GoldCore, the gold shill, back with important "research."
So if I went to a real estate agent and asked for research on real estate I guess they would be fair and unbiased?
If I wanted the straight scoop on aspirin would I go to Bayer for that?
I hear ya, but on the other hand, will you go to your stock broker for advice on gold?
Or would do you think that Goldman, JPM or any of the other investment banks would give you straight dope?
As you probably already do, it is incumbent on each investor to or individual simply trying to protect assets to do their own homework based on the totality of the information they gleen from articles such as the original post.
Basing decisions solely upon the guidance of those with a vested interest in the product being promoted is a dangerous route.
I agree with your point. I'm a macro, I rarely even bother reading sell-side economists. Ditto with CNBC. Today they said the Nikkei was down the most "in two years." Missed it by 11 years, it was the worst day in 13 years. They were comparing it to the post-quake period, of at least a week, not one day.
Shills? They barely scratch the surface on gold issues. More like MSM puff pastry type stuff.
in Cyprus the deposits were simply stolen. This time they will be hyperinflated. this is a targeted attack as the bulk of Japanese investments are "domestically situated." good thing the USA has a massive trade deficit? "keeps savings in the form of actual money that has meaning" protected? hmmmm. so much learning still to do. none of it about "the better angels of our nature."
Gold is now up 1% and Silver is down 1%.
US Dollar is also down hard. When the USD heads back up (as the Euro and Yen fall), PMs will slide - gold has an inverse releationship to the USD.
Chart below shows this.
http://bullandbearmash.com/chart/spot-gold-monthly-inverse-relationship-...
Would you please STFU on this? It isn't true.
The USD and gold have both risen at the same time. Look at Aug 05 to May 06 when gold went from $450 to $700 (just one example).
'Flight to Safety,' my Broker says.
"Markets are becoming more and more casino like and are now the preserve of speculators"
Where have you guys been for the last 4 years? This started with the suspension of FASB 157 in March 2009. You aren't reaching anyone here with this.
Last man standing.