Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20
Does the Stock Market Really "See" the Future? - 12th Sept 20
Basel III and Gold, Silver and Platinum - 12th Sept 20
Tech Stocks FANG Index Nearing Critical Support – Could Breakout At Any Moment - 12th Sept 20
The Tech Stocks Quantum AI EXPLOSION is Coming! - 12th Sept 20
AMD Zen 3 Ryzen 4000 Questions Answered on Cores, Prices, Benchmarks and Threadripper Launch - 12th Sept 20
The Inflation Mega-trend is Going Hyper! - 11th Sep 20
Gold / Silver Ratio: Slowly I Toined… - 11th Sep 20
Stock Market Correction or Reversal? The Jury Isn't Out! - 11th Sep 20
Crude Oil – The Bearish Outlook Remains - 11th Sep 20
Crude Oil Breaks Lower – Sparking Fears Of Another Sub $30 Price Collapse - 11th Sep 20
Inflation by Fiat - 10th Sep 20
Unemployment Rate Drops. Will It Drag Gold Down? - 10th Sep 20
How Does The Global Economy Recover After This Global Pandemic? - 10th Sep 20
The Best Mobile Casino - 10th Sep 20
QE4EVER! - 9th Sep 20
AMD Ryzen Zen 3 4800x 10 Core 5ghz CPU, Cinebench Benchmark Scores (Est.) - 9th Sep 20
Stock Traders’ Dreams Come True – Big Technical Price Swings Pending on SP500 - 9th Sep 20
Should You Be Concerned About The Stock Market Big Downside Rotation? - 9th Sep 20
Options Traders Keep "Opting" for Even Higher Stock Market Prices - 8th Sep 20
Gold Stocks in Correction Mode - 8th Sep 20
The law of long-term time preference and Gold ownership - 8th Sep 20
Gold Bull Markets: History and Prospects Ahead - 8th Sep 20
Sheffield City Centre Coronavirus Shopping Opera Ahead of Second Covid-19 Peak - 8th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Have Gold and Silver Stopped Falling, What Next?

Commodities / Gold and Silver 2011 May 27, 2011 - 01:56 PM GMT

By: Julian_DW_Phillips


Best Financial Markets Analysis ArticleThis is the 'big' question investors all over the world are now asking.


Gold fell from $1,578 to $1,492 [5.45%] in the fall. In the euro it fell from €1,065 to €1,042 [2.16%]. The fall of gold in the euro painted a more accurate reflection of supply and demand, because the dollar rose against the euro, as gold was falling. This was simply a correction, provided the gold price has stopped falling now. A fall of 10% is a proper correction and a mid-trend correction fall should be around 20 to 30%.

We can identify that the fall was caused by a big investor and his following virtually dumping around 37 tonnes in a two week period into a market that is used to seeing around 6 tonnes a day from the producers. Pity he didn't have a better dealer. This seller appears to have completed his sales [If it was George Soros, then he has completed them, for he only held 30 tonnes apart from gold shares].


The fall from just about $50 to $32 rattled the entire market. After all, a fall of 36% is a major trend correction were it broad based from many investors over a period. But this drop was again due to awful dealing with 1,000 tonnes from the Silver Trust's holdings onto the market over two weeks, with the bulk dumped into the market in the second week together with another 7 tonnes from similar thinkers. With the silver price over $37 the drop is now down to a fall of 26% from the peak of $50. Again the selling has largely stopped with two-way traffic now in play.

The nature of the two markets

The gold market is a global, well centralized market based in London, where heavy sellers and buyers are brought together quickly and a well-priced deal made that cuts out the bulk of the volatility we see in the silver market. The London Fix is where potential buyers and sellers of physical gold sit on the end of their telephones twice a day and see what's on offer and what the bids are for it. Even the appearance of a large amount such as we saw from the States is swallowed up quickly and in an orderly fashion.

The value of an ounce of gold at 41 times the price of an ounce of silver increases the liquidity for the big players in the market, making it easier to move large amounts quickly. Silver has nowhere near that level of liquidity or depth of investors. The type of investor is wide from institutions to industry from the small investor to the large one and a fully global market at that. However, the day-to-day dealings, while well organized are not sufficiently large in two-way traffic to accommodate the sudden appearance of 1,000 tonnes in two weeks. This is why the market is so volatile and swings so widely, compared to the gold market. The silver market will, over time, see a lessening of volatility once prices are higher and silver more accepted as a precious metal more closely linked to gold. We would then expect to see silver prices move far closer to those of gold.

Have the Fundamentals changed?

Bearing in mind that the fundamentals for silver's traditional uses and industrial applications are either for investment, jewelry or much needed applications in industry, the fundamentals for silver are just as they were while the silver price was rising and are unlikely to change. These users will be delighted with any pullback, but tend to be price-insensitive. That means they need silver no matter what the price. As to the investment demand for silver, this is at its largest from the emerging world and is likewise relatively price-insensitive. People from this part of the world are buying in line with their increasing income and ability to buy. The price rises have simply confirmed the wisdom of such a policy.

The same applies to the gold market, but with the added feature that central banks are buyers as well. These too are price-insensitive buyers, simply taking up gold as it appears on the market, without chasing prices.

Have the gold and silver prices stopped falling now?

The prices of both gold and silver have risen from their recent bottoms and have begun to rise. This is a classic 'floor' finding exercise. Silver has been the slower mover and has waited for gold to lead the way. In the dollar the silver price is recovering and is now moving through the $37 level. In the dollar the gold price still has another $50 to rise to its peak levels too. This is another 3% more. Silver at $37 still has to rise another 26% to reach its peak. But what is hiding their moves has been the rally in the dollar itself. In the euro silver fell from €33.56 to €22.53 a fall of 33%. It now stands at €26.3 a fall of 21.6%. This shows it is recovering faster in percentage terms, once we extract the dollar gyrations.

It is clear then that support is now effective and holding up both the prices of gold and silver in the market.

Now take a look at the gold price in the euro. This week it rose to €1,086, a new record high. This tells us the new direction of gold. It's up!

Gold Forecaster regularly covers all fundamental and Technical aspects of the gold price in the weekly newsletter. To subscribe, please visit

By Julian D. W. Phillips
Gold-Authentic Money

Copyright 2011 Authentic Money. All Rights Reserved.
Julian Phillips - was receiving his qualifications to join the London Stock Exchange. He was already deeply immersed in the currency turmoil engulfing world in 1970 and the Institutional Gold Markets, and writing for magazines such as "Accountancy" and the "International Currency Review" He still writes for the ICR.

What is Gold-Authentic Money all about ? Our business is GOLD! Whether it be trends, charts, reports or other factors that have bearing on the price of gold, our aim is to enable you to understand and profit from the Gold Market.

Disclaimer - This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Gold-Authentic Money / Julian D. W. Phillips, have based this document on information obtained from sources it believes to be reliable but which it has not independently verified; Gold-Authentic Money / Julian D. W. Phillips make no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Gold-Authentic Money / Julian D. W. Phillips only and are subject to change without notice.

Julian DW Phillips Archive

© 2005-2019 - 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