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For months we’ve been writing about the major bottom to come in precious metals. It appeared we finally saw it in late June as the metals and the stocks surged during the summer. Yet, these markets trailed off in August and it continued into October. The equities were down seven straight weeks. That gave way to an oversold bounce. Unless precious metals can close above their October highs on a weekly basis, the outlook remains bearish. While this bear market is finally coming to an end, don’t expect it to end quietly. At present Gold looks eerily similar to both Gold in 1976 and the SYP in 2009 prior to their major bottoms.
The first chart below shows Gold in 1975 to 1976. Gold’s sudden decline that began in August 1975 took it from over $160/oz down to $128/oz. It was a 20% drop in one month. After it rebounded it formed a marginal new low (A) and traded around $130 for about five months. Once Gold failed at the declining 50-day moving average and lateral resistance it plummeted to its final low.
Gold in 2013 has formed a very similar pattern. The first panic low occurred in April which was followed by another low several months later. Gold then recovered back above the first panic low to point B. Point C labels the decline below the first panic low and a temporary bottom. Just like in summer 1976, Gold rallied up to a strong confluence of resistance (lateral and 50-day moving average) and failed. Full Article.
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Comments Off on Real signs that the paper gold movements dont reflect the real demand for physical
Submitted by Michael Snyder of The Economic Collapse blog,
The crash of the price of paper gold on Monday has unleashed an unprecedented global frenzy to buy physical gold and silver. All over the planet, people are recognizing that this is a unique opportunity to be able to acquire large amounts of gold and silver at a bargain price. So precious metals dealers now find themselves being overwhelmed with orders in the United States, in Canada, in Europe and over in Asia.
Will this massive run on physical gold and silver soon lead to widespread shortages of those metals? Instead of frightening people away from gold and silver, the takedown of paper gold seems to have had just the opposite effect. People just can’t seem to get enough physical gold and silver right now. Those that wish that they had gotten into gold when it was less than $1400 an ounce are able to do so now, and it is absolutely insane that silver is sitting at about $23 an ounce. If the big banks continue to play games with the price of gold, we are going to see existing supplies of physical gold and silver dry up very quickly.
And once reports of physical shortages of gold and silver become widespread, it is going to absolutely rock the financial world. But this is what happens when you manipulate free markets – it often has unintended consequences far beyond anything that you ever imagined.
The following are 10 signs that the takedown of paper gold has unleashed an unprecedented global run on physical gold and silver…
#1 According to Zero Hedge, the U.S. Mint set a new all-time record for the number of gold ounces sold on Wednesday…
According to today’s data from the US Mint, a record 63,500 ounces, or a whopping 2 tons, of gold were reported sold on April 17th alone, bringing the total sales for the month to a whopping 147,000 ounces or more than the previous two months combined with just half of the month gone.
#2 Precious metals dealers all over the United States are having a really hard time keeping up with demand right now. According to Chris Martenson, many are warning customers to expect waiting times of five to six weeks at this point…
In the U.S., all of the dealers I talk to are reporting huge demand and brisk buying. Silver in any form is quite hard to come by unless you want to pay premiums of 20%+ per ounce above spot price. Delivery times are 5 to 6 weeks out now – that’s an unusual situation. If this recent slam was designed to scare people away from gold, it did not have that desired outcome; in fact, just the opposite.
#3 Individual dealers all over the country are confirming that we are seeing a voracious appetite for precious metals at the moment. For example, the following is what a spokesperson for JM Bullion had to say…
We still have certain things in stock, like 10 oz bars, while others, like Silver Eagles, are a bit of revolving inventory.
The shipments are going out as soon as inventory comes in.
Our main challenge right now is actually getting the silver into the boxes and shipped out – we have been experiencing astounding volume. This appears to be a widespread phenomenon. Just check out what other dealers are reporting…
“There has been a marked increase in demand since the plunge,” said Mark O’Byrne, executive director at Dublin-based investment and bullion specialist GoldCore, referring to the drop in gold prices seen Friday and Monday. Gold futures lost more than $200 an ounce, or over 13%, on those two days. They were at $1,392 an ounce, moving higher ahead of the close on Thursday.
GoldCore has seen more buying than selling on Wednesday and Thursday, with buy orders “lumpier and from high net worth clients, and with most of the selling in small orders of less than 50 ounces, said O’Byrne.
On Wednesday, David Beahm, executive vice president at Blanchard & Co., said his precious-metals investment firm has seen “2008-like demand” for gold since Monday.
#4 Large international banks are also experiencing tremendous demand for physical gold and silver by customers right now. The following is what Keith Barron told King World News about what he is hearing…
Precious metals rallied Friday to secure lofty August gains that settled to 4.5% for gold, 12.6% for silver, 8.5% for platinum and 6.6% for palladium. Many analyst have predicted gold finishing between $1750 and $2250 for the year so this could be the start of a brisk bull run. However Lexi Capital continues to point to diversification and intelligent acquisitions
Gold prices closed to a more than five-month high and near $1,690 an ounce while silver surged $1 to a more than four-month high above $31 an ounce.
Precious metals for much of August gyrated to stimulus-related news. Friday was a tipping point when U.S. stocks and commodities initially dipped following a speech by Fed Chairman Ben Bernanke in Jackson Hole, Wyoming. Markets then rebounded as his remarks were bullishly digested with stimulus bets heightened.
“The stagnation of the labor market in particular is a grave concern not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years,” Bernanke said Friday at the annual meeting of central bankers.
The following grid offers the most recent daily, August and year-to-date bullion figures as published by the United States Mint.Sales of US Mint American Eagle and Buffalo Bullion Coins Daily Gains August Gains YTD 2012 $50 American Eagle Gold Coins 0 29,000 342,500 $25 American Eagle Gold Coins 1,000 3,000 59,000 $10 American Eagle Gold Coins 2,000 4,000 58,000 $5 American Eagle Gold Coins 0 20,000 210,000 $50 American Buffalo Gold Coins 0 9,000 88,000 American Silver Eagle Coins 55,000 2,575,000 22,245,000
Investors Business Daily author Trang Ho recently gave 5 reasons why this is one of the best times to invest in gold in some time. Specifically in the new world international economy, it’s easy to understand the connectedness of all economies around the world. Trang argues,
There’s no shortage of money managers telling clients to stampede into gold in response to Europe’s credit crisis and slowing growth in the U.S. Of the $18 billion in year-to-date inflow into commodity funds this year, nearly $16 billion went into gold funds like SPDR Gold Shares (GLD), EPFR reported.
GLD is 15% off its 52-week high, has found support near 150 and is testing resistance at its 50-day moving average. Here’s an overview of catalysts that could drive gold prices higher:1. Central banks are hoarding the yellow metal to diversify their holdings. In the 12 months through March 31, central banks bought 400 metric tons, a 156% increase over the year-ago period, according to the World Gold Council. They haven’t been major gold buyers since 1965.
Hong Kong shipped about 112 tons of gold to mainland China in April. That was a 62% month-over-month gain and marked the second-highest monthly export, the Hong Kong Census and Statistics Department reported June 4. The flow of gold from the mainland to Hong Kong jumped 38% to about 38 tons.
“We are more likely to see shortages of the physical metal occur, unless the price moves significantly higher to offset the buying binge,” said Peter Spina, president of Goldseek.com.
2. Rock-bottom interest rates are likely to continue. When interest rates are low, there’s less opportunity cost in buying gold vs. parking money in risk-free bonds. Benchmark 10-year bond yields have tumbled to 1.6% — a record low — and could even fall south of 1%, says David Levy, economist at the Jerome Levy Forecasting Center. He sees a global recession over the next two to three years. Full Article Here.