Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20
Facebook (FB) AI Mega-trend Tech Stocks Investing 2020 - 10th Feb 20
The US Constitution IS the Crisis - 10th Feb 20
Stock Market Correction Continues - 10th Feb 20
Useful Tips for Becoming a Better Man - 10th Feb 20
Will CoronaVirus Pandemic Trigger a Stocks Bear Market 2020? Part1 - 9th Feb 20
Could Silver Break-out like it did in 2011? - 9th Feb 20
The End of the Global Economy - 9th Feb 20
Fed to Stimulate in Any Crisis; Don’t Let Short-Term Events Bother You - 9th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Credit Crunch Meltdown and For Gold the Trend is Your Friend

Commodities / Gold & Silver Oct 25, 2007 - 10:13 PM GMT

By: Gold_Investments

Commodities Gold
Gold was trading sideways in Asia and early in Europe and is trading at $764.50. Resistance is at last week's 28-year high of $770, while support is at $750 and there is strong support at $725. Gold's price oscillator (PPO), is showing that gold is not particularly overbought. It is still below 3 whereas after the last serious move in the gold price into the May 2006 highs, the PPO reached as high as 6.


The PPO is a popular technical indicator system which is like the MACD or using moving averages to better show a market's trend and momentum. The fundamental tenet of technical analysis of all markets is to make the trend your friend. The trend in gold remains firmly up.

There is much talk of a record long position in gold being bearish for the price in the short term. This traditionally is the case in any market - when everyone is long, the buying move is generally exhausted and the market is likely to sell off. However, it is not as simple as that in gold. As along with the record long position there is a record short position. Therefore there is a titanic struggle taking place between the gold longs and the gold shorts. This battle has in recent years been won by the gold shorts. However, given the extremely strong fundamentals and some extremely determined buyers this may not be the case this time.

Of huge significance and unacknowledged by many analysts is the increasing likelihood that central bank gold reserves cannot be mobilised in order to cap the gold price. This was recently outlined by two Citigroup analysts, John Hill and Graham Wark, who wrote that central banks faced a choice between a global recession and their continuing “control” of gold. They said that the avalanche of central bank bullion sales earlier this year was “clearly timed to cap the gold price”, which is the Gold Anti-Trust Action Committee's (GATA) long held contention. But central banks have chosen to focus on staving off global recession. “We believe that the policy resolution to the credit crunch will take the form of a massive, extended ‘reflationary rescue' in a new cycle of global credit creation and competitive currency devaluation which could take gold to $1,000/oz or higher.”

Thus, the record long position is bearish in and of itself however in conjunction with the near record and massive commercial short position it can be construed as bullish as if the shorts are forced to cover their positions as they were in 2005 we could see a commercial signal failure when faced with massive losses on their short positions, the commercial shorts are forced to panic cover en masse creating a massive surge in the gold price. This eventuality is looking increasingly likely, especially in the light of the very significant macroeconomic and systemic risks facing the U.S. and many western economies.

• The Bank of England warns in its latest twice-yearly financial stability review that equities are vulnerable to a possible economic slowdown and warns the U.S. dollar might fall sharply “if the change in investor sentiment towards U.S. securities experienced recently were to persist”.
The UK financial system also “remains vulnerable” to new shocks from the global credit squeeze in an unexpectedly severe assessment of risks still facing banks and financial institutions. The Bank picks out the commercial property sector, where prices are already falling, for being “particularly prone to further shocks and to rises in the cost of finance”. There has never been a banking crisis in the UK, such as the one that led to the downfall of Northern Rock last month, without a simultaneous commercial property crisis.

• The ramifications of the incredible losses of Merrill Lynch and the fallout from the mortgage crunch which worsened substantially yesterday, with single-family home sales plummeting to the lowest level since 1998 have yet to be realised by many in the markets who remain in denial.

Merrill Lynch reporting an unprecedented $7.9 billion write-down for bad loans — the latest in a weeklong series of setbacks for the economy and the markets. Standard & Poor's Ratings Services cut its ratings on Merrill Lynch & Co. citing the company's "staggering" third-quarter writedown. Standard & Poor's credit analyst Scott Sprinzen said the downgrade follows Merrill's "startling announcement" that it booked a "massive" loss during the quarter. The news from Merrill Lynch — which reported the biggest quarterly loss in its 93 years of existence — was particularly "startling" and "staggering," said Standard & Poor's Corp., as the world's largest brokerage had been considered healthy and relatively immune to the mortgage virus infecting other big banks on Wall Street.

The huge loss gives the firm the dubious distinction of suffering the biggest meltdown as a result of this summer's credit crunch. The Wall Street Journal reports that it eclipses even the roughly $5B write-down the much-larger Citigroup (C) took. To put the numbers in some perspective, it equals 19% of shareholders' equity, 14% of market cap, more than its entire net income in 2006. It's also nearly four times the firm's $2B of compensation expenses in the 3Q, which was down from $3.9B a year ago.

• We remain in the early stages of this credit crunch which will now almost certainly lead to a serious and prolonged recession in the U.S. Thus Jim Rogers', George Soros former partner, decision to sell all his U.S. assets and invest in yuan, yen and Swiss francs and commodities and precious metals, particularly silver, will be seen as prudent and wise.

Forex and Gold
The yen gained against both the dollar and the euro yesterday as increased risk aversion saw an unwinding of carry trades. The news yesterday of Merrill Lynch's first quarterly net loss in six years and $7.9bn in write-downs fuelled concerns about the ongoing impact of credit market problems. Meanwhile, yesterday's U.S. existing home sales data were weaker than had been expected, indicating that the U.S. housing market problems are far from over and reinforcing the view that the Fed will cut interest rates when it meets next week.

The dollar traded in a narrow range to the euro yesterday. Increasing speculation about Fed rate cuts continues to weigh on the U.S. currency. Comments from Warren Buffett that he expects further dollar weakness also exerted some downward pressure on the currency.

The trend in stock markets may well continue as a dominant feature for forex markets today. The state of the U.S. housing market remains under the spotlight with the release of new homes sales figures. Durable goods orders and weekly jobless claims numbers also feature.

Silver
Spot silver was trading at $13.74/13.76 (1130 GMT).

PGMs
Platinum was trading at $1445/1450 (1130 GMT).
Spot palladium was trading at $357/362 an ounce (1130 GMT).

Oil
Oil, which last week touched an intraday record of $90.07, rose Thursday in Asia, extending a price increase that came after figures showed large and unexpected declines in U.S. crude and gasoline inventories last week. Light, sweet crude for December delivery rose US$1.08 to US$88.18 a barrel in electronic trading on the New York Mercantile Exchange.

Gold Investments
63 Fitzwilliam Square
Dublin 2
Ireland
Ph +353 1 6325010
Fax  +353 1 6619664
Email info@gold.ie
Web www.gold.ie
Gold Investments
Tower 42, Level 7
25 Old Broad Street
London
EC2N 1HN
United Kingdom
Ph +44 (0) 207 0604653
Fax +44 (0) 207 8770708
Email info@goldinvestments.org
Web www.goldinvestments.org

Mission Statement
Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth.
We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.

Financial Regulation: Gold & Silver Investments Limited trading as Gold Investments is regulated by the Financial Regulator as a multi-agency intermediary. Our Financial Regulator Reference Number is 39656. Gold Investments is registered in the Companies Registration Office under Company number 377252 . Registered for VAT under number 6397252A . Codes of Conduct are imposed by the Financial Regulator and can be accessed at www.financialregulator.ie or from the Financial Regulator at PO Box 9138, College Green, Dublin 2, Ireland. Property, Commodities and Precious Metals are not regulated by the Financial Regulator

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.

Fair Use Notice: This newsletter contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of financial and economic significance. At all times we credit and attribute the copywrite owner and publication.
We believe this constitutes a 'fair use' of any such copyrighted material as provided for in Copyright Law. The material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for economic research purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.

Gold Investments Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules