Readings: Gold at 2-month lows, Breaking down?
The recent weakness in gold is not going unnoticed:
“We believe the gold price is being held back, not only by heavy and continuing sales from the European banks, but from the U.S. gold exchange-traded fund, StreetTracks, where over 30 [metric tons] of gold has been sold since the middle-of-April peak.”
A breakdown below the March “double bottom” at $640/ounce would spark a wave of selling. Fundamentally, the precious metal also faces several headwinds.
- Yahoo Finance: Investors Flee Gold ETF as Metal Loses Luster
The World Gold Council reported a 26% drop in the tonnage of gold purchased by investors during the first quarter compared with the year-earlier period. WGC tracks purchases of gold bars and coins, which account for roughly 28% of global demand.
. . . the U.S. Mint reports that dealers have only purchased 3,000 ounces of gold coins so far in May. That compares with 36,500 ounces for the whole of May 2006. April wasn’t much better, with sales of 11,000 compared with 27,000 a year earlier.
The Indian gold ETFs - GOLDSHARE and GOLDBEES - hit all-time lows (since launch) today, at ~ Rs 875 per unit.
But wait, there is hope: U.S. Dollar Collapse Not Imminent, But Start Buying Gold & Silver Now.
. . . the phenomenon of investors realizing that cash deposits don’t give them adequate protection from the loss of their paper money’s purchasing power and therefore rushing into any kind of asset is the same everywhere in the world.
The stance of emphasizing “economic growth” over “inflation targeting” would by then also be perfectly acceptable politically and thus would be welcomed by the “establishment” . . .
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