Gold seems rangebound between $1350 and $1400 with no real signs of a breakout up or down, but recent developments in the physical markets may suggest a change ahead.
LONDON (MINEWEB) – Those looking for a sharp upwards reversal in the gold price given the continuing high levels of demand for physical metal, principally from the East and Middle East have so far been disappointed with the yellow metal struggling to retake the $1400 level, so far unsuccessfully. Price setting seems to be remaining well in the hands of North American markets where all that seems to be seen is the continuing offloading of inventory from the big gold ETFs in the light of artificially high stock markets, boosted by siren songs from the politicians and bankers and ever-continuing Quantitative Easing.
There is certainly a degree of continuing nervousness in the precious metals markets with many commentators predicting further falls in gold and silver ahead. What may, however, reverse the trend could be the figures for Chinese gold imports from Hong Kong for April as these may prove to be absolutely enormous.
While purchasing from the Asian markets has steadied a little now, after April’s mega rush, eastern demand mostly remains strong, although that in India has slowed somewhat as the government turns the screws on gold traders, and the farming community – responsible for much of that country’s gold purchasing and hoarding – is now in crop planting mode which tends to reduce demand at this time of year.
I spent some 48 minutes this morning belatedly listening to and watching Grant Williams’ recent presentation to the 66th annual CFA Conference in Singapore and I would recommend anyone interested in the global economy and the gold market to take the time to do so too. Click here to access the youtube recording which carries the sound and all the charts and graphics referred to in his speech, which is both frightening and illuminating.
Frightening in terms of all the maths suggesting that the world’s major stock markets are due to see a big downwards correction/crash as history, economic theory and simple mathematics are all pointing in this direction. It is illogical, Williams avers, that markets should be rising when virtually every other economic indicator is pointing in the other direction.
In his view a market fall of significant proportions is imminent – the only thing holding it up is the naivety of investors in the true interpretation of the utterances from the U.S. Fed, the ECB and Bank of Japan et al and where their policies will ultimately lead us.
The final quarter hour of his presentation was devoted to gold and his comment that the gold price and the price of gold are not the same. The former is that set by the main bullion markets, COMEX and the LBMA and is very much dominated by activity in the paper gold market, while the latter relates to the price an investor in physical metal actually has to pay for it – a sharply higher figure given the high premiums currently abounding for delivery of actual bullion.
He also took time to analyse, statistically, the enormous take down in the gold price seen in mid April, which has very much set the scene for the ‘gold price’ since. In straight statistical terms, the strange trading action in the markets over the two short days trading which saw the fall in the gold price from close to $1590 to below $1350, accomplished by the unloading of vast tonnages of paper gold on the markets, represented a standard deviation from the normal trading pattern over the years of just below 8.
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