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Gold Falls 2.5% But Up 21% YTD – Technical’s Short Term Bearish; Long Term Bullish
Submuitted By GoldCore
Gold Falls 2.5% But Up 21% YTD – Technical’s Short Term Bearish; Long Term Bullish
Gold is trading at USD 1,727.10, EUR 1,278.60, GBP 1,090.30, CHF 1,579.20, JPY 132,590 and CNY 10,970 per ounce.
Gold’s London AM fix this morning was USD 1,730.00, GBP 1,093.00, and EUR 1,279.87 per ounce.
Yesterday's AM fix was USD 1,756.00, GBP 1,115.70, and EUR 1,304.12 per ounce.
Gold in USD – 1 Year Daily and DMAs
Gold has bounced 0.5% today, after falling 2.5% yesterday. Gold is down 2.6% week to date and is headed for its first weekly loss in four weeks which would turn the short term technicals bearish.
Spot gold has rebounded above the 50-day moving average that it fell below yesterday. The 50-day MA is moving close to crossing below the 100-day MA, which can be seen as a bearish technical signal. However, the last time gold’s 50 dma fell below the 100 dma in February 2011 it was prelude to rising prices in the coming months (see chart above).
However, while the short term technicals may turn bearish, the long term technicals remain positive as does the all important fundamental picture as seen in the global gold supply and demand figures yesterday.
The data was extremely positive but there was an element of ‘buy on the rumour’ and ‘sell on the news’ as the positive demand backdrop may have been factored into prices.
Official intervention as ever cannot be ruled out and there is now a frequent pattern of somewhat odd sharp sell offs prior to options expiry – options expire next Tuesday.
Yesterday’s sell off was attributed to risk aversion due to concerns of contagion after Fitch warned that US banks face a “serious risk” from Europe’s debt crisis. This led to sharp sell offs in equity and many commodity markets which likely resulted in traders, hedge funds and other speculators closing gold positions and moving to cash.
Massive uncertainty, counter party and systemic risk is leading to some speculators and fund managers opting out of the paper or leveraged gold market and moving to cash. Some are also moving into the safety of physical bullion in the form of allocated accounts.
The Wall Street Journal mentioned how the continuing liquidation of holdings by former MF Global clients, as accounts become unfrozen by the trustee, helped pressure precious metal prices lower.
The trustee of the troubled brokerage, which filed for bankruptcy protection last month, has been transferring client holdings to other clearing firms with only partial margins, or collateral deposits, as around $600 million of client money was reported missing. Clients who are unable to post additional margins with the new client firms are being forced to sell their holdings, according to the Wall Street Journal.
The MF Global fraud looks set to lead to thousands of clients losing their investments and has claimed some brokerages as victims.
Counter party and systemic risk is on a scale never seen before in modern financial history (or indeed in all of history due to the globalised and massively integrated nature of financial markets today) and this will lead to more investors avoiding brokerages who offer leveraged paper gold vehicles via the official exchanges and opting to buy physical bullion over the counter.
It may also lead to further questioning of some of the gold ETFs due to their many custodians and sub custodians and the high level of indemnification in their prospectuses.
The Shanghai Gold Exchange lifted silver margin requirements to a very high 18% of a contract’s value, up from 15% previously.
Some believe this may have exacerbated the sharp selloff in silver yesterday. It’s not clear when the new margin requirements come into effect, but a report by Reuters said it would likely be from Monday.
Arbitrary and incomprehensible margin increases will likely lead to traders in the spot and futures markets opting for physical bullion as they realize that the leverage offered by paper gold products is a double edged sword.
‘Return of capital’ rather than ‘return on capital’ will become a dominant theme in the coming weeks and months as contagion leads to the domino effect of innumerable bankruptcies globally.
Gold and particularly silver are ‘on sale’ at these levels (silver fell 6% yesterday) and buyers of bullion with a long term outlook will again be wise to buy this dip. Gold is just above the 100 day moving average at $1,708/oz and the 100 day moving average has proven to be a good entry point for buyers in recent months and years.
While gold fell 2.6% yesterday, it is important to focus on the long term and gold remains up 1% MTD, 4% QTD & 21% YTD.
Silver’s sharp fall yesterday mean that its monthly and quarterly performance are negative but year to date silver is up 4%. This is quite a performance after last year’s 80% gain and suggests that silver is consolidating prior to further price gains in the coming months.
Thus, the precious metals are again outperforming equity indices in 2011 showing their importance as a diversification for investor portfolios.
For breaking news and commentary on financial markets and gold, follow us on Twitter.
SILVER
Silver is trading at $32.34/oz, €23.80/oz and £20.38/oz
PLATINUM GROUP METALS
Platinum is trading at $1,592.70/oz, palladium at $609.50/oz and rhodium at $1,575/oz.
NEWS
(Reuters)
Gold steady; dollar, euro zone weigh
(Wall Street Journal)
Banks in Scramble to Buy Gold
(Wall Street Journal)
Gold 'Lures' Central Banks
COMMENTARY
(Mineweb)
Mineweb Interview Stoeferle - Investors moving to physical gold as macroeconomic concerns fester
(King World News)
Paul Brodsky - Gold Trading at 80% Discount to Intrinsic Value
(GoldSeek)
Gold & Whirlwind Crisis
(King World News)
Gerald Celente - MF Global...What about Gold ETF GLD & HSBC?
(ZeroHedge)
Watch Nigel Farage Dance On The Euro's Grave
(Bloomberg)
Video: Grubb Says European Debt Crisis Boosting Gold Demand
»
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'The MF Global fraud looks set to lead to thousands of clients losing their investments and has claimed some brokerages as victims.'
Next MF defaults COMEX.
Comex into my parlour, said the spider to the sheep.
ORI
Creative Journey
Shit he's right it is short-term bearish, my Krugs only weigh .95 ounces today! What the deuce?
no no don't panic! You just forgot to zero out your scale.
Was your scale recently calibrated by JPM?
www.pmbug.com
"there is now a frequent pattern of somewhat odd sharp sell offs prior to options expiry – options expire next Tuesday."
That would be the alleged criminal manipulators.
There is no criminal manipulation. Gold manipulation never happen on the Crimex...er Comex.
"somewhat odd sharp selloffs?"
NSS! No Shit Sherlock! Do ya really think?
If that goldcore line was supposed to be 'sarc' then it failed badly.
The EE and boyz are at it again.
paper games for paper guys.
Slowing German and Rising spainish yield make for perfect storm
http://capital3x.com/trades/a-slowing-germany-will-bring-down-the-house/
Charts farts.....when this falls apart..this sitcom we are all living and watching...Gold and Silver will be impossible to find....
Look, when real money's valuation in pieces of paper falls it's a good thing. It means you need fewer pieces of inked linen to buy more. Conversely, getting excited about an increase in gold's valuation in pieces of paper is silly. Every fall in the price of PMs is good and should be welcomed. Hell I would jump for joy if they could beat silver back down to $5/oz, and I didn't get in until $17.
Dont worry about gold.
It started going down as soon as I bought a little.
It will go up when I sell, but I am not ready to sell yet.
Meanwhile, in reality-ville:
China imports just under 2 tonnes of Gold per day
http://www.mining.com/2011/11/09/gold-goes-viral-in-china-as-imports-hit-just-under-2-tonnes-per-day/
and
http://www.globaltimes.cn/NEWS/tabid/99/ID/683022/Gold-imports-hit-record-due-to-growing-demand.aspx
The big default was in the gold and silver miners. F them.
Ca-ching, Ca-ching, Ca-ching!
Thats the sound of the cash registers in the far east ringing, as cheaper gold floods in.
Yes Siree Bob! 'gold4cash' just keep ona seelin that there gold for paper! Now wave goodbye!
Each time the EE smashes gold and silver down, it does the far east a huge favor.
who cares about short term when you "deal" with physical?
If you really believe that short term is bearish, the only thing that would change is you wait a little bit before buying more of the shiny stuff... but that would take all the fun out of it!
Buy the dip folks!
This is porobably not the biggest dip though.
1300 looks about right.
Yum, that should just about wipe out any more specs who think quick trades are available.
Besides the MF Global should hit around 9pm tonight through Sunday.
Remember the good old days in 2008 when every Sunday you had your heads handed to you?
Lock and load ladies. Welcome back to Sunday night haircuts
Corzine took down MF Global deliberately. He can't wipe his ass without first getting permission from Lloyd Blankfein.
Goldman is like the Crips and the Bloods the only way out is in a coffin.
Gold may have finished its correction with the downside ahead for the next several weeks. http://bit.ly/vPInuR
Game over. With the MFG takedown Blythe, Lloyd, and Jamie have won. No one will play Au/Ag futures anymore, causing paper prices of Au/Ag to go to zero. Better grab one of those McDonald's applications Wall St is throwing out the windows to the OWS crowd. Sit down, bend over and kiss your ass goodbye, all you wankers, wimps, pussies and 1% wannabe's. Your Au and Ag will be worthless.
Calm down Jamie...
The ripple effects of MF are just starting to hit and a lot of innocent clients will suffer because of it. The corruption systemic throughout the market, including the blind regulators, has been exposed for all to see. Confidence in the market is gone and since trust takes a long time to build but only a heartbeat to lose, it's going to be awhile before folks start wading back into this.
We really need to see Corzine doing a "perp walk", but I think we all know that's unlikely.
Corzine may be a pivot point here. Many of the Wall Street folk were/are oblivious to the shenanigans in the various markets -- blindly willing to be blind. Now that some of them, and/or at least one of the traders they know, have been royally shafted by the MF debacle, there will be that creeping skepticism that will erode the confidence base in the trading pits. That's where the proverbial rubber hits the legendary road. Watch out! Corzine might consider a little trip abroad, perhaps a visit to one of those sunny Greek islands -- one-way ticket in hand.
If you can buy something that doesn't exist, how can it be taken from you when the seller goes belly up?
Gold may be UP, Gold may be down, but it still is Around...do you know where your derivatives are hiding today?
Picked more up as it is my normal buying tme of the month. Glad I waited the extra day, but really . . . in the end it isn't about it being an "investment" for the PM anyway.
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Alexander Wang Bag | Alexander Wang Shoes | Alexander Wang Rocco Alexander Wang Frankie Creeper Short crude oil. The world is swiming in oil as everything else. Its elevated price is just a scam. The probability of war is zero. Uncle Sam can´t go to war against Iran because both its flanks are insecure. The left flank goes to the Straits of Hormuz and if that is closed this means crude price $300 and Stalingrad for US forces in Iraq and other US vassal states in the gulf. As for the right flank that supply line goes through Pakistan. It´s shaky enough as it is.