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Gold Supported At 144 DMA And By Negative Real Interest Rates in US - Charts Of Day
From GoldCore
Gold Supported At 144 DMA And By Negative Real Interest Rates in US - Charts Of Day
Gold is trading at USD 1,656.20, EUR 1,195.70, GBP 1,047.60, JPY 127,194, AUD 1,602.4, CHF 1,485.50 and CNY 10,564.
Gold’s London AM fix this morning was USD 1,651.00, GBP 1,045.14 and EUR 1,192.74 per ounce.
Yesterday’s AM fix was USD 1,658.00, GBP 1,054.64 and EUR 1,211.19 per ounce.
Gold prices have fallen marginally in all major currencies today on more unsubstantiated rumours.
Markets have ignored Spain's sovereign credit rating downgrade and a
plethora of rumours continue to confuse investors ahead of this
weekend's European Union crisis debt summit.
Risk appetite remains high as seen in gold’s weakness and equities strength.
With France's AAA credit rating looking shakier by the day and Spain
being downgraded by two notches, gold should be supported by safe haven
demand.
Every day that goes by without resolving the issue of too much debt
in the global financial system is a day closer to financial contagion.
Gold looks very well supported between the 100 and 144 day moving
average (simple) with the 144 day moving average providing strong
support for nearly three years - since January 2009.
Bullion dealers in Hong Kong say physical demand is robust at these
levels with one dealer reporting “a wave of physical buying” once prices
went below $1,630/oz.
Newsletter writer, Dennis Gartman again made negative sounds about gold’s prospects.
This is bullish in the short term as many of his short term calls in
recent months have been inaccurate. Indeed, some traders use him as a
good short term contrarian indicator.
As ever best to ignore the noise of traders, hedge funds, commodity
brokers and more speculative elements and focus on the importance of
gold as a portfolio diversifier and a safe haven.
Perhaps the most important driver of higher gold prices are negative
real interest rates. Savers and bond holders in the US and
internationally are seeing their savings depreciate as inflation is now
well above historically low interest rates in most western countries and
in many emerging economies.

Real Interest Rates and Gold – 1970-2011
The Chart of the Day (‘Real Interest Rates and Gold – 1970-2011’)
shows that gold prices rise during periods of negative real interest
rates in the U.S. as was clearly seen in the 1970s and again since the
early 2000s.
Until interest rates rise to compensate savers for the risk of saving
in an untrusted banking and financial sector, gold’s bull market seems
very assured. There is also the issue of savers concerns about the value
of fiat currencies such as the euro going forward.
As was seen in the late 1970s, interest rates will almost certainly
have to rise above real levels of inflation prior to any fall in gold
prices.
What is also interesting about the chart of the day is the strong correlation between inflation, interest rates and gold.
Contrary to consensus opinion on Wall Street and many in the
financial media, gold is correlated with rising interest rates in the
medium and long term. The mantra that ‘gold will fall when interest
rates rise’ is incorrect.
It is only towards the end of an interest rate tightening cycle –
when interest rates are above inflation and therefore positive - that
gold is subject to weakness.
Gold rose over 24 times in the 9 year period from 1971 to January
1980 (from $35 to $850) and it is quite possible given the scale of the
financial and economic challenges today that a similar performance may
be seen.
At $1,650/oz gold has risen a mere 6.6 times in 12 years which puts
gold’s relatively gradual appreciation in the last 12 years into
perspective.
The CPI inflation adjusted high of $2,500/oz remains a possible price
target and may be seen in 2012. Some analysts like Robin Griffiths
of Cazenove Capital believe that the RPI inflation adjusted high of
$8,000/oz may be a better long term record high price target.
Regardless of future prices of gold, the important fact is that as
long as there is no opportunity cost for holding gold (due to gold’s
lack of yield) then gold will remain in demand internationally which is
likely to lead to higher prices.
Negative real interest rates in the UK, the EU and the US is very
bullish and a factor that is being ignored by the less informed and
those simplistically calling gold a bubble.
For the latest news and commentary on financial markets and gold please follow us on Twitter.
SILVER
Silver is trading at $31.98/oz, €23.10/oz and £20.24/oz
PLATINUM GROUP METALS
Platinum is trading at $1,529.00/oz, palladium at $616/oz and rhodium at $1,525/oz.
NEWS
(Bloomberg)
Gold Falls for Third Day as Rescue-Fund Report Limits Demand
(Reuters)
Gold steady, awaits cues on Europe plan
(Bloomberg)
Gold Advances as Spain Rating Cut by Moody's Spurs Demand for Haven Assets
(Bloomberg)
Commodity-Speculation Limits Approved in 3-2 Vote by U.S. Regulator CFTC
(Reuters)
U.S. cracks down on commodity traders; will it stick?
COMMENTARY
(ZeroHedge)
Nassim Taleb On OccupyWallStreet And His Updated Views On The Global Banking System
(Kitco News)
The Great Silver Debate - Murphy V Christian
(Market Oracle)
UK Inflation Accelerates to CPI 5.2%, Bankrupt Britain's Stealth Debt Default Continues
(King World News)
John Embry - Gold & Silver Close to Taking Off
(Resource Investor)
Is There Any Gold in Fort Knox?
(Money Week)
If you don’t own gold, now’s a good time to buy
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Gold and Silver are still on clearance sale. Get it before it's all gone to China.
These people dont get it, why waste your time, they prefer to hold paper dollars.
Even less Gold for now.
http://www.theglobeandmail.com/globe-investor/agnico-eagle-suspends-quebec-operation/article2206097/
LJS, plenty here in Thailand but it's 96.5% and it's at a 20% premium. I had a friend try to sell a gold eagle but the buyer appeared to not know what it was and treated it like Thai gold.
Let’s see, Marc Farber thinks Gold is a great place to be, Billionaire Jim Rogers, agrees, the Chinese, India, Vietnam, Russia, and most other EDUCATED people buy and hold Gold yet we will forget these minds and focus on Dennis Gartman who writes a newsletter for advice on Gold in a world swimming in Debt. Go ahead, I will follow Rogers, Faber and the educated people and savers of the world and you can follow Gartman who is rarely right.
May also be a good idea to follow the advice of the con man from Omaha and buy some Bank of America stock now that they plan to privatize profits and dump all their shit on the FDIC?
Aside from who believes in gold and who does not, don't forget the tell. The only people who know what is going to happen with gold are lying. Ben Bernanke sat in front of Ron Paul and lied his head off. The central banks are stacking, and Ben is lying. That's all you need to know.
...yes...well...not sure.
PS Already own physical...could care less about moves iof 1600/oz. It's moves of 5000-50,000/oz that concern me more
Agreed. Even $100 moves are just noise in this market, the real story is the upside potential, and as this article points out, there's nowhere else to go. Real estate is perched on the edge of a cliff. Stocks are a perverse puppet show, and even ignoring counterparty risk, bonds are out because interest rates are negative when you consider inflation. Bernanke knows this, so he has tried to herd everyone into stocks and out of PMs, but it hasn't worked. If he pushes gold too low, he threatens to decouple the paper price with physical. He will also encourage smart money to swoop in and pick up bargains. The only doubt in my mind is whether the floor in paper prices has been established to lure weak hands back into gold so he can run their stops again. Who cares? In the end, it doesn't matter. Where this is going is now preordained. Margins can only be hiked so high, the premiums for physical continue to rise, and the giant snake that is global debt continues to tighten its death grip.
Anyone here google "Windle Stops Swindle"? Read a comment on this article in the WSJ. Just curious if there was anything to it...
http://online.wsj.com/article/SB1000142405297020365880457663948406236910...
Also on France...
http://www.ft.com/intl/cms/s/0/27a2ad84-f9aa-11e0-9c26-00144feab49a.html...
Ah yes, the 144 MA, that oft-cited mainstay of technical analysis.
LOL.
They are fitting an MA to the most likely support but it could just be coincidence.
If you want to see an indicator that confirms your belief youll find one, you just gotta screw with the numbers. 200? no, 150? no, 144? NICE!
These Goldcore reports are ridiculous, and I believe in the fundamental arguments for gold. But, it's one cheerleading report after another. It's the CNBC version of gold.
The article didn't state a belief.
It's merely a nice fit - no ongoing pattern was implied.
It's a nice Fibonacci number though.
I thought moving averge charts were supposed to de-evolve you into a braindead grayhound chasing a plastic bunny in 100 degree florida weather. If you can get past that though they seem to be pretty informative.
Inflation is running somewhere between 6% and 12%...and The Fed gives you 0.01%
People are running faster but still falling behind....too much partying...debt...and too little savings.
Arguably the biggest of the many financial crises is the currency crisis. With central banks the world over trying to out-do each other devaluing their respective currencies to achieve their stated and hidden agendas. In this environment to value paper over hard currency is madness and will surely lead to financial ruin.
gold will get crushed when this all goes down in deflationary flames.
yes. maybe it will. but only for a relatively short time until the current currency system implodes. There is no way around that, no matter how long you try kicking the can down the road.
After the currency system is reset, only people with real stuff, like precious metals or land, will have preserved their wealth.
Don't take my word for it. Check history.
The deflationary flat-earthers are nothing if not utterly ignorant and/or contemptuous of monetary history.
Let them continue preparing for drought even as the tsunami of inflation and currency collapse approaches.
What deflationary flames? Us debt grows at about a trillion every seven months and US debt and unfunded liabilities grow at $1 trillion every 42.4 days. And that is just the US. Europe and Japan have insurmountable debts too while Chineses real estate is probably about 200 trillion dollars. All the gold mined in history is $9 trillion and maybe about half is available as bullion. So to the about $5 trillion in gold bullion in this world add the $64 billion in silver bullion (about 2 billion ounces).
There cannot be much of a deflation in the price of gold. Massive inflation is almost a given.
But even "crushed" Gold will still be something at the end of the day unlike companies gone bankrupt and currencies gone kaput. I have always played my cards close to my chest and have rarely been a speculator. But I know good insurance when I see it.
Only governments outlawing its use would throw a klinker into the works. And that is why I also hold Silver, more speculative, but just one more tangible "ace in the hole".
Trust in God and metals of all sort, ballistic and otherwise.
Kito, your putative (I would say mythical) "deflationary flames" are nothing but a damp match compared to Ben's inflationary blowtorch.
We can not say with certainity what is goin to happen in weeks time with the economy, and yet, governments sell 30 year bonds with no trouble at all. And we discuss price of the gold.
I'm surprised Zero Hedge hasn't covered the position limits rule just passed yesterday by the CFTC. Probably because...for practical purposes it's meaningless. From what i understand, the banks get 60 days before actual implementation AFTER an agreement is reached concerning the definition of the term "swap".
There is no deadline imposed to define said term. Long live the mob!
I was about to post the EXACT same thought, RR.
Indeed, I find ZH's overlooking of the CFTC story quite curious, and rather inexplicable.
I'd be very careful at these levels. After a 3 plus year ride up gold's lift since 2008, we've closed out our long positions and are in the process of going short the PM in Asia tonight. Like in 2008, gold appears to acting more like a commodity versus a currency, despite rising inflation and currency debasement.
http://www.thebeareconomy.com