Gold Sharply Lower
April 6th, 2009WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
The next significant support is around $850.
Via: Bloomberg:
Gold dropped to a 10-week low in London on speculation the world financial crisis may be easing, reducing the precious metal’s appeal as a haven. Silver fell.
Bullion has tumbled 5 percent in three days, wiping out this year’s gains, on expectations government efforts will revive the global economy. The MSCI World Index of shares has climbed 23 percent in the past month as the metal has lost 6 percent. The biggest exchange-traded fund backed by gold fell for the first time in two weeks.
“Risk appetite has increased further following the actions of various governments and central banks as well as the combined efforts of the G-20 nations last week,” James Moore, an analyst at TheBullionDesk.com in London, wrote in a note today. “While scrap gold sales have eased over the past week, data has shown ETF demand has stalled.”
Gold for immediate delivery slipped as much as $19.08, or 2.1 percent, to $874.08 an ounce, the lowest since Jan. 23, and traded at $878.99 by 1:04 p.m. in London. The metal had risen as much as 14 percent this year. June futures lost 1.8 percent to $881.30 an ounce in electronic trading on the New York Mercantile Exchange’s Comex division.
The metal dropped to $879.50 in the morning “fixing” in London, used by some mining companies to sell production, from $905 at the afternoon fixing on April 3. The commodity is trading 15 percent below the record $1,032.70 set in March 2008.
Investment in the SPDR Gold Trust, the biggest ETF backed by bullion, fell for the first time since March 23. Assets in the fund fell to 1,127.37 tons as of April 3, down from 1,127.44 tons on April 2, a level that had been unchanged for four days.
Awesome. Gold is dead. Time to get back to the casino where the real money is made. Everything is back to normal.
Personally, I see this as a buying opportunity.
The numbers are still grim. The notional value of the derivatives market is in excess of $1,400,000,000,000,000 and climbing. (http://www.mi2g.com/cgi/mi2g/press/190309.php)
If the US was willing to bail out AIG so that it could pay the counterparties on its CDS gambling, does that set a precedent for anyone else? AIG only had something like $300b in CDS exposure (off the top of my head). $300b as a percentage of $1.4q is pretty small. Who else out there is expecting to be made whole at the taxpayer expense?
In that sort of situation I’d rather put my trust in a cold lump of metal.
Yes, bloodnok I agree with keeping one’s trust in metal. I also see this as buying opportunity but am treading water. Wish some cash-trash to exchange.
All those zeroes look pretty scary.
I’m learning over the years since I’ve invested in PM’s: if those bastards are betting on low futures (e.g. June) they have a position to cover and are manipulating the market so their losses to pay off their future bets are kept to a minimum.
May through November will be a FAKE OUT. Hoping for another bubble to occur to wipe out the SINS of this last one, well hoping won’t make it so.
All those zeroes have a due date. Wanna bet Nov 2009?