Today’s AM fix was USD 1,254.00, EUR 921.04 and GBP 749.82 per ounce.
Yesterday’s AM fix was USD 1,265.25, EUR 928.83 and GBP 754.52 per ounce.
Gold fell $6.20 or 0.5% yesterday to $1,259.30/oz. Silver remained nearly unchanged at $19.04/oz
Gold extended losses to a third straight day yesterday and is down over 3% in three sessions. Gold bullion [12] in Singapore traded sideways prior to a bout of concentrated selling in late trading in Singapore (0615 BST) saw gold quickly fall from $1,258/oz to $1,252/oz prior to a slight bounce back to $1,254/oz.
It fell to 16 week lows, possibly due to slightly weaker physical demand in top buyer China and technical selling.
In China, gold premiums [13] ticked slightly higher to $2 to $3 per ounce. They have remained roughly the same since before the price drop, which suggests demand in China has not picked up on the price falls.
We are bearish in the short term and technically, gold is vulnerable to further falls. Potentially to test what appears to be a double bottom between $1,180/oz and $1,200/oz. Gold is particularly vulnerable in the very short term, in other words, today, tomorrow and early next week.
Gold in U.S. Dollars, Daily, 1 Year - (Thomson Reuters)
It is also worth considering seasonal trends and in recent years, June is one of the weakest months for gold. Gold's five year and ten year average performance in June is negative. We will look at this in more detail tomorrow.
While gold is vulnerable technically to further falls, it’s 14-day relative strength index (RSI) has dipped into very oversold territory, at 28.9 currently.
This morning Russia, Belarus and Kazakhstan signed the historic Eurasian Economic Union which will come into effect in January 2015. "The just-signed treaty is of epoch-making, historic importance,"Russian President Vladimir Putin said.
The Eurasian Economic Union expects Armenia to join within a month, Kyrgyzstan within a year.
Cutting down trade barriers and comprising over 170 million people it will be the largest common market across the ex-Soviet states. The troika of countries will cooperate in energy, industry, agriculture, transport and monetarily.
Special Notice Regarding Reduction In GoldCore Premiums [13]: Gold Bars Reduced To 1.6% Premium - Click Here
[13]“Massive Shortages” In Gold Coming and “Typical Investor” Will Not Be Able To Get Bullion - Rickards
Financial expert, Pentagon insider and bestselling author James Rickards has warned that “typical investors” may not be able to acquire physical gold when prices begin to surge hundreds of dollars a day as “massive shortages” will take place.
In another fascinating interview, this time with the always worth a watch Greg Hunter, formerly of ABC and CNN and now of USA Watchdog, Rickards said that gold will become the preserve of the “big guy” in the form of sovereign wealth funds and central banks.
This is something we have warned of since 2003. There is another risk in the form of ultra high net worth individuals (UHNWIs) in Russia, China and elsewhere also attempting to corner the physical gold and silver markets.
In the 1970’s, the Hunt Brothers made the mistake of not accumulating enough physical silver outside the reach of the U.S. authorities. Some billionaires today will likely not make the same mistake.
Rickards latest book, ‘The Death of Money’ predicts “the coming collapse of the international monetary system” and is being very well received. In recent days alone, Rickards has conducted a huge amount of media interviews with most leading financial networks.
One of the signposts of the coming collapse of the international monetary system is countries like Russia declaring it will no longer use the U.S. Dollar as a reserve currency in international trade.
Rickards explains, “Putin said he envisions a Eurasian economic zone involving Eastern Europe, central Asia and Russia. The Russian Ruble is nowhere near ready to be a global reserve currency, but it could be a regional reserve currency.”
Rickards is surprised at how fast the economic situation is unfolding. Rickards says, “If you ask me what has happened since you finished writing the book that comes as a surprise, I would say a lot of the things I talk about in my book are happening faster than I would have expected. Things that I thought would happen in the 2015 or 2016 time frame seems to be happening now in some ways. If anything, the tempo of events is faster than expected. “
“Therefore, some of these catastrophic outcomes may come sooner than I wrote about.”
Rickards told Hunter that “right now, we are on the precipice now”.
“When you are on the precipice, it doesn’t mean you fall off immediately, but you are going to fall off because you can see the forces in play. What I tell clients and investors is it’s not as if we are going to make some mistakes and some bad things are going to happen. The mistakes have already been made. The instability is already in the system. We’re just waiting for that catalyst that I call the snowflake that starts the avalanche. You don’t worry about the snowflakes; you worry about the snow and that it’s unstable and it’s just waiting to collapse. That’s what the system is right now; we are just waiting for a catalyst. People ask me all the time, what could it be? Technically, my answer is it doesn’t matter because it will be something. It could be a failure to deliver physical gold. It could be an MF Global financial failure. It could be a natural disaster. It could be a lot of things. The thing investors need to understand is the catalyst doesn’t matter. It’s coming because the instability is already there.”
On gold manipulation and when it will end, Rickards says, “It will end when the physical shortage gets to the point that someone fails to deliver; which, at that point, there will be a buying panic. There could be a buying panic or what some people call a demand shock. One of the things I said about gold manipulation is if I was the manipulator, I would be embarrassed at this point. The manipulation is obvious. The evidence is coming in from all directions. . . . The manipulation is clear. When will it end? It will end when there is a physical shortage that pops up somewhere, or it will end with a short squeeze.”
“We are going to get a very large demand shock coming from China and India”, said Rickards.
“Let me explain those two cases. We have a brand new government in India, and they are going to repeal the import tax on gold. We also have the wedding season coming up. . . . So, India is set up for a very large surge in demand in the fourth quarter. Now, over to China, this is one of the things that it’s happening faster than I originally thought. The credit collapse story is happening in real time. I said (in my book) this might be a 2015 event, but it looks like it is happening now. Defaults are piling up. We are seeing money rise. We’re seeing people march down to the banks . . . trying to get their money back. . . . So, if they can’t buy foreign stocks, domestic stocks, don’t want to put their money in the bank and are getting out of real estate, then what’s left? The answer is gold. . . . I see a demand shock coming from China. . . . You could see a scramble to buy gold. It is going on anyway, but you could see it accelerate. That will take down the manipulation. Once the markets prevail over the manipulators, then watch out.”
Rickards, Washington and Wall Street insider, is certain the collapse will happen. He is just not sure when it will happen.
“It is the thing you won’t see coming that will take the system down. Things happen much more quickly than what investors expect.”
“What will happen in gold is that it will chug along and then all of a sudden–boom. It will be up $100 an ounce, and then the next day it will be up another $200 an ounce. Then everyone will be on TV saying it’s a bubble—boom. It’s up $300 an ounce, and before you know it, it will be up $1,000 per ounce.”
“Then people will say gee, I better get some gold, and they’ll find out they can’t get it because the big guy will get it. You know, like central banks and sovereign wealth funds will be able to get the gold. The typical investor will run down to the coin shop and they will be sold out, and the U.S. Mint will say sorry, we’re not shipping.”
“You’re going to find out you can’t get it because the whole thing is set up for massive shortages in supply.”
Rickards interview with Greg Hunter is well worth watching and can be seen here [14]