Posted on 12/28/2011 1:50:43 PM PST by Sawdring
New York 28/12/2011 - Gold on the Comex division of the New York Mercantile Exchange moved sharply lower Wednesday after the euro plummeted on concerns that Europe is creeping closer to a deflationary recession.
Gold futures for February delivery were last down $30.50, or about two percent, at $1,565.00 an ounce. Trade has ranged from $1,563.90 to $1,595.00.
The markets have been under pressure ever since the euro smashed through the $1.30 level, Sterling Smith, an analyst with Country Hedging, said.
“The bulls are really nervous. They aren't comfortable getting long - especially considering this is a funny time of year for gold anyways,” he added.
In wider markets, the euro fell back to 1.2913 versus the US dollar - the lowest level since January 11 - while the Dow Jones industrial average and S&P 500 are near the day's low - down 1.2 percent and 1.16 percent respectively.
“There's this idea that 2012 will bring some sort of Greek credit event in the first part of the year. That would spell some major trouble for the euro and could lead to deflation - a big negative for gold,” Smith said.
Additionally, gold's short-term technical indicators remain lacklustre.
“Chartists don't take what happens this time of year too seriously but if we see significant trade below $1,550 for a sustained period then we're going to see some serious technical damage,” Smith said.
“But I don't think that will happen as the calendar and short covering at around $1,550 should save us,” he added.
Dennis Gartman, editor of the Gartman Letter, said that he remains cautiously neutral on gold, but warned that the highs made in August might hold for a “very long while into the future.”
“Simply put, the market must hold at the current levels and must do so quickly or this very, very well defined trend line shall be shattered,” Gartman said.
In the other precious metals, Comex silver for March delivery was down $1.36, or 4.7 percent, at $27.380 an ounce. Trade has ranged from $27.340 to $28.790.
Platinum futures for April delivery on the Nymex were down $39.60 at $1,398.30 an ounce, while the March palladium contract was at $647.45 an ounce, off $19.15.
(Editing by Martin Hayes)
At some point (may be happening already), real world markets will break from the paper markets.
Simple , one day you wake up and nobody wants the pretty rectangular pictures anymore. The money is destroyed by the governents actions that undermine trust.
Not going to happen.
Demand destruction plus supply creation in the USA has caused oil imports to decline steadily for the last couple years. So that today oil imports account for less than half current consumption.
This trend is going to continue. In under a decade the USA is going to be oil independent.
All energy independent countries have strong currencies.
We’re seeing the first bow waves of approaching energy independence. That is the topping out of gold.
That is the value of money. I understand how to destroy that, but how do you remove money from the system once it is in circulation?
We will see a dislocated economy, increasing debt, increased money printing, shortages of some commodities and worldwide turmoil as a result. MF Global is only the tip of the iceberg.
COMEX: The March To Irrelevance
The increasing reliance on domestic hydrocarbon production was planned decades ago. Hundred dollar a barrel oil is a significant development in that regard.
Better article title:
"KITCO: Hype to Pump Physical Gold and Silver"
In our case, the Federal Reserve would sell Treasury Bonds to its member banks for cash. That cash received would then be extinguished from the Fed's balance sheet.
Easy come, easy go.
Another way is for the Fed to increase the interest rate it charges member banks for loans. The banks borrow money from the Fed and use it as the basis to lend even more at a profit. By increasing the interest rate on those loans, the Fed effectively reduces loan activity. And since even the act of lending is money-creation, the money supply is reduced.
The Fed can also increase required reserves. That also reduces a bank's ability to lend.
Of course, none of these has been tried in ages. We're stuck in money-creation mode.
That is a bunch of economically-ignorant hooey.
Just this past week, the European Central Bank announced that it would print €700 billion (almost $1 trillion) to unglue the banking system. That's why the Euro is tanking. It has nothing to do with "deflation"; the ECB is following our lead and inflating like mad.
I don't know why gold's dropping -- may simply be year-end profit-taking. But I assure you that it has nothing to do with fears of European deflation. It's just people running for their lives.
For certain.
If you aren't holding gold or silver in your hand it's not gold or silver.
Look at what is happening to MF Global gold investors. They had to sue to stop MF from attempting to use their gold to pay off some of the missing (stolen) $1.2 billion. Now they will take up to a 28% "haircut" (loss) plus a likely additional loss at the time they liquidate as the market price has dropped since their accounts were frozen.
MF Global Holders of Physical Gold to Get Their Assets: Lawyer"People liquidating their assets will have to accept a 28 percent reduction in the amount of assets, although Schmeltz clarified that percantage might go down if he was succesful in convincing the Court that "physicals ought to get treated as a class unto themselves." The haircut, as it is called, results from the fact that more than $1.2 billion dollars that should have been segregated in MF Global's customer accounts is missing, and bankruptcy court has not yet fully determined if shortfall will be shared equally among accountholders."
"The unfreezing of physical assets is little solace to some market participants, who stand to lose money both from any haircut and as a result of having their assets frozen during a time of high volatility in the physical metals market.
" "Gerald Celente, a well-respected market forecaster who publishes The Trends Journal -- and who says he held a six-figure position in physical gold prior to the broker's collapse -- described the saga befalling physical gold traders like himself as "bulls--t."
If you're holding paper, at least it will always be worth the paper it's printed on. ;)
Call me crazy, but I'd much rather hold physical unless I'm just speculating...
Celente was pissed!
You could be right if the federal deficit remains high for five more years.
But the other calculation is that in 2013 a pubbie will get the white house and likely the pubbies will get both houses of congress. The result will be that early in 2013 the deficits will come down dramatically.
Between now and 2013, the troubles in Europe will tend to put upward pressure on the US dollar—which is a negative for gold.
So, I think its likely that Gold will trend sideways to down for the next year or until there is some resolution to the uncertainties currently plaguing the gold market.
Money today is debt owed to the Federal Reserve. Default on the debt, and the money dissappears.
Thanks for the great reply.
That is the value of money. I understand how to destroy that, but how do you remove money from the system once it is in circulation?
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Declare the old stuff invalid and replace it with new paper pictures with smaller numbers.. do a reverse split..
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