Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19
The IPO Market Is Nowhere Near a Bubble - 9th Oct 19
US Stock Markets Trade Sideways – Waiting on News/Guidance  - 9th Oct 19
Amazon Selling Fake Hard Drives - 4tb WD Blue - How to Check Your Drive is Genuine  - 9th Oct 19
Whatever Happened to Philippines Debt Slavery?  - 9th Oct 19
Gold in the Negative Real Interest Rates Environment - 9th Oct 19
The Later United States Empire - 9th Oct 19
Gold It’s All About Real Interest Rates Not the US Dollar - 8th Oct 19
A Trump Impeachment Would Cause The Stock Market To Rally - 8th Oct 19
The Benefits of Applying for Online Loans - 8th Oct 19
Is There Life Left In Cannabis - 8th Oct 19
Yield Curve Inversion Current State - 7th Oct 19
Silver Is Cheap – And Getting Cheaper - 7th Oct 19
Stock Market Back to Neutral - 7th Oct 19
Free Market Capitalism: Laughably Predictable - 7th Oct 19
Four Fundamental Reasons to Buy Gold and Silver - 7th Oct 19
Gold and Silver Taking a Breather - 7th Oct 19
Check Engine Warning Light ECU Dealer Diagnostic Cost - Land Rover Discovery Sport - 6th Oct 19
Natural Gas Reloads For Another Price Rally - 6th Oct 19
Understanding and Purchasing different types of Plastic Building Materials Online - 6th Oct 19
Craig Hemke: Ignore the Elliott Wave “Buffoons” Calling for a Gold Crash - 6th Oct 19
Stock Market 6 Month Trend Forecast Conclusion - Video - 6th Oct 19
The True Causes Behind the Yield Curve Inversion and Gold - 5th Oct 19
Strategies on how to be a Successful CFD Trader - 5th Oct 19
Gold Stocks Correction Underway - 5th Oct 19
Climate Change When the Levee Breaks - 5th Oct 19
Federal Reserve Bank ‘Guarantees’ Dow Will Not Sink Below 26k - 5th Oct 19
The Russell and Transportation Tell A Completely Different Stock Market Story - 4th Oct 19
Confidence Drives the Economy and Trump’s Trade War Is Killing It - 4th Oct 19
ADL Predicts Crude Oil Prices Will Fall Below $40 - 4th Oct 19
Investing Money? Why You Need a Reputable Accountant - 4th Oct 19
Stumbling Manufacturing and Rising Gold – Now or Later? - 4th Oct 19
Silver Eyes Fourth Quarter Rebound - 4th Oct 19
Gold Price Forecast to Exceed $10,000/Ounce - 3rd Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Gold and Silver Extend Their Price Rallies Amid Escalating Chinese Demand

Commodities / Gold and Silver 2014 Feb 21, 2014 - 06:26 PM GMT

By: Alasdair_Macleod

Commodities

This week has seen precious metals prices rise strongly, with the bears caught on the hop. The chart below shows gold which at the time of writing has been consolidating under overhead supply in the $1330-50 level.


Gold Daily Chart

The squeeze in silver has been more dramatic, the price rising 15% this month so far. Again, there are signs of consolidation before silver goes on to challenge supply at the $22.4-23.0 range.

Silver Daily Chart

As I've stated before, the change in sentiment from the gloomy forecasts at the recent year-end is remarkable. More and more technical analysts are coming round to the likelihood that prices are bottoming out and gold may be establishing a new uptrend. This tends to feed into opinions expressed by investment strategists, who then come up with explanations as to why gold is going better in the context of broader markets and why it is likely to continue to do so. This is all part of the changing psychology behind markets.

Inevitably these strategists tend to pigeon-hole markets into annual categories. Thus, 2013 will become the year of redistribution between weak holders into stronger hands. It follows that if the current uptrend is maintained, 2014 will soon be described as the start of a new bull market, possibly multi-year, all weak holders having been taken out of the market.

This is important, because precious metals are seriously under-owned, the only bulls being die-hard fans of gold and sound money. This extreme will eventually be corrected as prices are driven upwards when investors buy into the new trend: it always is.

Chinese demand for gold continues apace, and final deliveries for January are 246 tonnes, the highest ever for any month. This is nearly double the rest of the world's monthly mine production, and is shown in the bar chart below:

SGE Monthly Gold Deliveries

The point is Chinese demand is still accelerating, which tells us physical gold is too cheap. It seems amazing that this demand goes unrecognised. However, even the yearbooks issued by the Shanghai Gold Exchange clearly state DELIVERY IS DEMAND. Sorry about the capitals, but most analysts have missed the point, commonly stating that Chinese demand last year was only 1,100 tonnes, when SGE delivery alone was twice that. Furthermore, add in Hong Kong and we know from government statistics that total public demand in China, including 50 tonnes of coins, tops a massive 2,800 tonnes.

Why Western analysts persist in beliefs that demand in China was less than half this is their affair. Presumably this is the information that the bears have not bothered to verify, but at least GoldMoney customers are better informed.

Next week's major statistical releases.

Monday. UK: Nationwide House Prices. Eurozone: HICP.

Tuesday. UK: BBA Mortgage Approvals. US: FHFA House Price Index, S&P Case-Shiller Home Prices, Consumer Confidence.

Wednesday. UK: GDP (2nd est.). US: New Home Sales

Thursday. Eurozone: M3 Money Supply, Business Climate Index, Consumer Sentiment, Economic Sentiment, Industrial Sentiment. US: Durable Goods Orders, Initial Claims. Japan: CPI, Real Household Spending, Unemployment, Industrial Production, Large Retailers Sales, Retail Sales.

Friday. Japan: Construction Orders, Housing Starts. Eurozone: HICP, Unemployment. US: GDP, Chicago PMI, Pending Home Sales

Alasdair Macleod

Head of research, GoldMoney

Alasdair.Macleod@GoldMoney.com

Alasdair Macleod runs FinanceAndEconomics.org, a website dedicated to sound money and demystifying finance and economics. Alasdair has a background as a stockbroker, banker and economist. He is also a contributor to GoldMoney - The best way to buy gold online.

© 2014 Copyright Alasdair Macleod - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Alasdair Macleod 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