Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19
Crude Oil Price Fails At Critical Fibonacci Level - 15th May 19
Strong Stock Market Rally Expected - 15th May 19
US China Trade Impasse Threatens US Lithium, Rare Earth Imports - 15th May 19
Gold Mind Reader's Guide to the Global Markets Galaxy: 'Surreal' - 15th May 19
Trade Wars and Other Black Swan Threats to Your Investments - 15th May 19
Our Long-Anticipated Gold Momentum Rally Begins - 15th May 19
Defense Spending Is Recession Proof - Defense Dividend Stocks - 15th May 19
US China Trade Issues Will Drive Market Trends – PART II - 14th May 19
The Exter Inverted Pyramid of Global Liquidity Credit risk, Liquidity and Gold - 14th May 19
Can You Afford To Ignore These Two Flawless Gold Slide Indicators? - 14th May 19
As cryptocurrency wallets become more popular, will cryptocurrencies replace traditional payments? - 14th May 19
How US Debt Will Reach $40 Trillion by 2025 - 14th May 19
Dangers Beyond a Trade War with China - 14th May 19
eBook - Greatest Tool for Trading? - 14th May 19
Classic Pitfalls for Inexperienced Traders - 14th May 19
Stock Market S&P 500 Negative Expectations Again - 13th May 19
Why Rising Living Standard in China Offers Global Hope - 13th May 19
Stock Market Anticipated Correction Starts On Cue! - 13th May 19
How Chinese Trade Issues Will Drive Stock Market Trends - 13th May 19
Amazon SCAM Deliveries for Fake Verified Purchaser Reviews "Brushing" - 13th May 19
Stock Market US China Trade War Panic - Video - 13th May 19
US Stock Market Leading Macro Economic Indicators Update - 12th May 19
SAMSUNG - BC94.L - Investing in AI Machine Intelligence Stocks - 11th May 19
US Increases Trade Tariffs Against China – Stock Markets, Gold, and Silver - 11th May 19
Who Has More To Lose In A No Deal Brexit? - 11th May 19
Gold at $1,344 Will Start Real Fireworks on the Upside - 11th May 19
Make America’s Economy Great Again - 10th May 19
Big US Stocks’ 2019 Fundamentals - 10th May 19
Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - 10th May 19
Stock Market Shake-Out Continues – Where Is The Bottom? - 10th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

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