Gold price collapse points to 'engineered' move
The speed of the decline in Asia yesterday pointed to another ‘engineered’ fall, such as we have seen in the gold market often, says Julian Phillips.
Posted: Wednesday , 16 Apr 2014
JOHANNESBURG (Gold Forecaster) -
Gold Today – The gold price closed at $1,302.90 down $23.80 Tuesday, in New York. Asia pulled it down to $1,295 initially before lifting it back to $1,300 ahead of London’s opening, where it rose to $1,304. The gold price was then Fixed in London at $1,299.00 down $12.50, because of the stronger euro. In the euro, it Fixed at €938.584 down €11.847 as the euro was stronger at $1.3840 down from $1.3800: €1. Ahead of the opening in New York gold stood at $1,302.90 and in the euro at €941.40.
Silver Today – The silver price closed at $19.62 down 31 cents on Tuesday’s close, in New York. Ahead of New York’s opening, it was trading higher at $19.60.
Despite yesterday’s action in the foreign exchanges in the euro the euro is trying to go stronger today and is up to $1.3840 from $1.3800 yesterday. We expect currency swaps to be used to ‘manage’ the rate still, but clearly the flowing tide of funds into the euro will not abate. But in the gold market something strange happened yesterday. In Asia as the euro was weakening in New York, the gold price was forced down $32 before recovering. One explanation that was given was the People’s Bank of China reported money supply (M2) growth decelerated to 12.1% y-o-y. It is stretching our credibility too far to believe that the entire Chinese gold market would react in this way to such news. Gold buying is simple in China as confirmed by the World Gold Council report on the gold market there. The Chinese buy because it is, in their eyes, ‘safe money’. They don’t change this opinion because of the release of monthly money supply figures and sell gold. The speed of the decline in Asia yesterday pointed to another ‘engineered’ fall, such as we have seen in the gold market often. We see this continuing today too, but the support at $1,300 seems, so far to be holding. $1,280 is where support stepped in last week and we are encouraged that that support has moved higher. Indeed, the respected “Golden Cross” where the Technical picture confirms that the trend has changed to an upward one, was established last week. This is a significant number and shows that technically, such falls in the gold price are short-term and liable to be overwhelmed by the flowing upward tide of demand in the gold market.
What is not realized in short-term player’s minds is that whenever the gold price is pushed down it accelerates the transfer of gold from West to East. When that gold is gone it does not return. It assists China’s objective of acquiring as much gold as it can.
Yesterday saw purchases of 0.599 tonnes into the holdings of the SPDR gold ETF, but none from the Gold Trust. Their respective holdings stand at 806.820 tonnes and 164.41 tonnes.
Silver – The silver price fell back over 2% on gold’s fall, showing uncertainty, surprisingly.