Last Updated : 21 February 2013 at 18:45 IST
'Jim Rogers, Marc Faber will accumulate Gold again on this dip’
Commodity Online
Less informed money is again selling gold or proclaiming the end of gold’s bull market. The smart money such as Marc Faber, Jim Rogers and those who predicted this crisis and have constantly advocated a long term allocation to gold bullion to hedge systemic and monetary risk, will accumulate again on this dip, said Goldcore in a market update.
Gold fell $40.30 or 2.51% yesterday in New York and closed at $1,564.30/oz. Silver slipped to a low of $28.28 and finished with a loss of 2.99%.
The report also rubbished gold’s death cross fears, a technical possibility in charts.
“Gold’s so called ‘death cross’ scare is simplistic, bogus nonsense that should be ignored by all. Gold experienced a ‘death cross’ in April 2012 and similar alarmist analysis was put forward about the death of the gold bull market and the likelihood of a 1980 style plunge.” the report argued.
This did not come to pass, nor will it come to pass now given the real world fundamentals driving the gold market.
Single technical indicators in and of themselves are completely useless. It is far more important to focus on the real fundamentals of a European and coming UK, U.S. and Japanese debt crises’, global currency wars and the real risk of recessions and a Depression.
It is far more important to focus on the hard facts and the hard data on money supply growth rather than mere words of central bankers. Currencies globally continue to be debased.
More speculative gold buyers appear to have been spooked by the FOMC minutes from the Fed’s January 30th meeting which “said the central bank should be ready to vary the pace of their $85 billion in monthly bond purchases amid a debate over the risks and benefits of further quantitative easing.”
Gold has come under pressure from heavy liquidation by hedge funds and banks on the COMEX this week. The unusual and often 'not for profit' nature of the selling, at the same time every day this week, has again led to suspicions of market manipulation.
Short sellers, technical and momentum traders have the upper hand and are pressing their advantage with momentum and sentiment on their side. Nervous longs are being stopped out through stop loss orders and concerns regarding the clear downward short term trend.
Gold market sentiment is the most negative that we have seen in recent years. The ratio of sell orders to buy orders was the highest it has ever been in recent days. Yesterday, for the first time ever we had all sell orders for gold and silver coins, bars and certificates and not one buy order.
This shows that many retail buyers are very nervous about the outlook for gold and concerned about the risk of further price falls.
There has been more selling from retail clients today and we are getting a sense of fear from clients that they have not had in the last ten years. Interestingly, long term buyers of gold and silver bullion, particularly high net worth individuals were evident this morning and flows from this demographic look set to continue.
Fear in the gold market and retail buyers selling their gold suggest that we are very likely to close to a bottom.
Still it is important to always remember the old Wall Street adage to " never catch a falling knife."
More risk adverse buyers would be prudent to hold off buying the dip until we get a higher weekly or even monthly close. Alternatively, they should consider dollar, pound or euro cost averaging into a position at these levels.
Gold’s ‘plunge’ is now headline news which is bullish from a contrarian perspective. As is the fact that many of the same people who have been claiming gold is a bubble since it was $1,000/oz have again been covering gold after periods of silence.
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Gold Continues to Break Channel Supports Focus is on Dec. 2011 Low
Daily Bars
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
Commodity Analysis: I wrote yesterday that “action at the downward sloping channel (if reached) will determine whether or not I stay bearish. A daily close below the channel would warn that the decline is accelerating towards the December 2011 low.” Gold closed well beneath the channel and thus focus is on 1522.50. Watch the former resistance trendline (now an internal trendline), which crosses this level over the next few days. Today is a large range down day which may be the beginning of at least near term capitulation.
Commodity Trading Strategy: Risk on shorts is moved down from 1655 to 1610. 1570/85 is now estimated resistance.
LEVELS: 1478 1523 1548 1572 1585 1595
February 20, 2013 - 05:41:19
PST
Investors will examine the wording in the minutes of the U.S. Federal
Reserve's latest policy meeting, due at 1900 GMT.
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By Phoebe Sedgman - Feb 20, 2013 2:05 PM GMT+0800
Gold advanced, snapping a five-day losing run, on speculation that the U.S. central bank may prolong stimulus in the world’s largest economy amid a weaker-than-expected recovery.
Spot gold gained as much as 0.3 percent to $1,609.25 an ounce and was at $1,607.40 at 2:03 p.m. in Singapore before the release later today of minutes from the Federal Reserve’s latest policy meeting. The price dropped to $1,598.23 on Feb. 15, the lowest since Aug. 15. Bullion for April delivery rose 0.2 percent to $1,606.70 an ounce on the Comex as the dollar fell.
While claims for jobless benefits in the U.S. have declined this month, industrial production shrank in January. Confidence among U.S. homebuilders dropped in February from a more than six-year high, according to a report yesterday. The Federal Open Market Committee will release minutes from the Jan. 29-30 meeting, which may detail members’ views on the timeframe for ending debt purchases, known as quantitative easing.
“Economic problems haven’t gone away and they won’t go away anytime soon,” said Gavin Wendt, a director at Mine Life Pty in Sydney. “People are looking for whether the economy is standing on its own two feet, and what is the Fed doing in terms of pulling back.”
Gold has slumped 4.1 percent this year on signs economies from the U.S. to China are improving, and after filings showed billionaire investors including George Soros pared holdings last quarter. The run of five daily losses to yesterday was the worst streak since January 2011.
Members Divided
The minutes of the Fed’s Dec. 11-12 meeting, released on Jan. 3, showed members were divided between a mid- or end-of-year end to easing. The central bank said in a statement after the January meeting that it’s still committed to buying about $85 billion of government and mortgage securities a month.
The Dollar Index, a gauge against six counterparts, declined as much as 0.2 percent today, dropping for a second day. Gold usually trades counter to the U.S. currency.
Cash bullion of 99.99 percent purity fell 0.4 percent to 325.64 yuan a gram ($1,622.80 an ounce) on the Shanghai Gold Exchange. Most-active futures dropped 0.2 percent to 29,983 rupees per 10 grams ($1,724.56 an ounce) on the Multi Commodity Exchange of India Ltd.
Platinum for immediate delivery fell 0.4 percent to $1,687.50 an ounce. Silver for immediate delivery climbed 0.3 percent to $29.5631 an ounce. Palladium was little changed at $764.90 an ounce.
To contact the reporter for this story:Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net
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