Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
Gerald Celente: Why You Still Need Guns, Gold, and a Getaway Plan... - 23rd Jun 18
Cheap Gold Stocks Bottom Basing - 23rd Jun 18
A Trade War Won’t Be Good for the US Dollar - 23rd Jun 18
SPX/Gold, Long-term Yields & Yield Curve 3 Amigos Update - 22nd Jun 18
Gold - How Long Can This Last? - 22nd Jun 18
Dow Has Fallen 8 days in a Row. Medium-long Term Bullish for Stocks - 22nd Jun 18
Trouble Spotting Market Trends? This Can Help - 22nd Jun 18
Financial Markets Analysis and Trend Forecasts 2018 - A Message from Nadeem Walayat - 21st Jun 18
SPX Bouncing Above Support - 21st Jun 18
Things You Need To Know If You Want To Invest In Bitcoin Now - 21st Jun 18
The NASDAQ’s Outperformance vs. the Dow is Very Bullish - 21st Jun 18
Warning All Investors: Global Stock Market Are Shifting Away From US Price Correlation - 20th Jun 18
Gold GLD ETF Update… Breakdown ? - 20th Jun 18
Short-term Turnaround in Bitcoin Might Not Be What You Think - 19th Jun 18
Stock Market’s Short Term Downside Will be Limited - 19th Jun 18
Natural Gas Setup for 32% Move in UGAZ Fund - 19th Jun 18
Magnus Collective To Empower Automation And Artificial Intelligence - 19th Jun 18
Trump A Bull in a China Shop - 19th Jun 18
Minor Car Accident! What Happens After You Report Your Accident to Your Insurer - 19th Jun 18
US Majors Flush Out A Major Pivot Low and What’s Next - 18th Jun 18
Cocoa Commodities Trading Analysis - 18th Jun 18
Stock Market Consolidating in an Uptrend - 18th Jun 18
Russell Has Gone Up 7 Weeks in a Row. EXTREMELY Bullish for Stocks - 18th Jun 18
What Happens Next to Stocks when Tech Massively Outperforms Utilities and Consumer Staples - 18th Jun 18
The Trillion Dollar Market You’ve Never Heard Of - 18th Jun 18
The Corruption of Capitalism - 17th Jun 18
North Korea, Trade Wars, Precious Metals and Bitcoin - 17th Jun 18
Climate Change and Fish Stocks – Burning Oxygen! - 17th Jun 18
A $1,180 Ticket to NEW Trading Opportunities, FREE! - 16th Jun 18
Gold Bullish on Fed Interest Rate Hike - 16th Jun 18
Respite for Bitcoin Traders Might Be Deceptive - 16th Jun 18
The Euro Crashed Yesterday. Bearish for Euro and Bullish for USD - 15th Jun 18
Inflation Trade, in Progress Since Gold Kicked it Off - 15th Jun 18
Can Saudi Arabia Prevent The Next Oil Shock? - 15th Jun 18
The Biggest Online Gambling Companies - 15th Jun 18
Powell's Excess Reserve Change and Gold - 15th Jun 18
Is This a Big Sign of a Big Stock Market Turn? - 15th Jun 18
Will Italy Sink the EU and Boost Gold? - 15th Jun 18
Bumper Crash! Land Rover Discovery Sport vs Audi - 15th Jun 18
Stock Market Topping Pattern or Just Pause Before Going Higher? - 14th Jun 18
Is the ECB Ending QE a Good Thing? Markets Think So - 14th Jun 18
Yield Curve Continues to Flatten. A Bullish Sign for the Stock Market - 14th Jun 18
How Online Gambling has Impacted the Economy - 14th Jun 18
Crude Oil Price Targeting $58 ppb Before Finding Support - 14th Jun 18
Stock Market Near Another Top? - 14th Jun 18
Thorpe Park REAL Walking Dead Living Nightmare Zombie Car Park Ride Experience! - 14th Jun 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Gold Sentiment Is Just Ugly

Commodities / Gold and Silver 2015 Aug 04, 2015 - 06:27 PM GMT

By: GoldCore

Commodities

The headlines are dramatic, ugly and depressing to anyone who holds gold right now. Broad market sentiment has shifted from disdain and dismissive to highly negative. Hedge funds are shorting gold aggressively, hedge funds that own gold are being “outed”. The market pundits are are sticking the proverbial knife in and twisting it with glee. The Financial Times published an interesting article over the weekend.


“Why gold has lost its shine for investors”

by Mohamed El-Erian. He is one of the world’s most respected investors and market commentators. In his piece he makes a number of interesting observations.

According to El Erian gold is falling because:

  • In a world of ETFs investors can mange risk more effectively and therefore do not need a traditional safe haven such as gold.
  • Gold does well in inflationary environments, we don’t have one right now, ergo, gold does poorly.
  • Central banks are not buying gold as aggressively as they once did; lower demand, lower prices.
  • Gold has not reacted as a safe haven as it should. Greece should have sent the price soaring but it did not.
  • Official and institutional demand for gold has not materialised.
  • Physical market demand at lower prices is not strong enough to create a firm bid for gold, there are not enough small guys in the market.
  • Gold’s recent price move up $1,000 from $700 in 2008 was the outlier and not the norm and gold is now priced more correctly then it was then.
  • But then he drops the biggest bomb of all. He states that gold could buck its recent trend and the reason he gives should give you all reason to take notice.

“This situation is unlikely to change soon but it need not be terminal. A shift would probably require a broader normalisation of financial markets, including a diminution in the direct and indirect role of central banks in determining asset prices and their correlations.”

Does this not strike you as a particularly insightful statement, from one of the world’s foremost investment minds no less?

I read it as follows, “the game is rigged until it is not rigged and then and only then will gold normalise to its true market value (straw poll please), as will other assets.”

Nearly all his previous points are rendered mute if in fact the market is rigged and we lack an effective fair price discovery mechanism.

The fact is the markets are massively dependent on central bank funding, central bank benchmark rates and central bank meeting minutes. The small matters of risk premia, allocations, efficiencies, debt levels, productivity, ROCE, even dividends are not so important any more. Just look at the rise of the Fed balance sheet and the S&P500. Literally, they are one for one.

Nope, its the unelected masters of the universe that now control the financial destiny of every human on the planet. Not one of them was ever elected. We are witness to the most extraordinary concentration of power that has ever existed, and our political representatives have allowed this to happen.

If you are foolish enough to trust in the markets’ internal risk pricing mechanism, efficient market theory, think again.

For example do a search on “Alladdin”. You will find that it is a centralised risk management service and asset manager monster that now controls a massive, circa $17 trillion, of the global capital market, or circa 8% of the world’s stocks, bonds and loans. 17,000 traders the world over rely on its risk models directly or partially.

We may all be witness to the first chapter of the MBA class of 2025’s required course “Failed Monetary Theories of the Last 100 Years”. Your grand kids may even ask you what it was like…. before the great reset.

Trust me this will get a lot worse before it gets better. I would wager that the central bank officials of the Fed and the BOE, BOJ and that intellectual vacant organisation that is the ECB, wear with great unease the new found power that they have.

If you need proof look at the number of market mechanisms that have been wholesale rigged for the past 15 years. These operators never operated in absolute secret. The watchers that watched knew and their silence implied unofficial sanction. Soon the banks again will be recapitalised, this time not with nameless tax payers but with your pensions and your savings. Bail-ins are coming, google “bail-ins” and read up.

Gold may well fall further in the near term and the powers that be may well keep the bus on the road for the near future, but if history teaches us anything is that you never bet against the wisdom of the crowd. Ultimately, these markets will be freed up and when they do gold will be bid up aggressively. On the other hand, the markets can stay irrational longer then you can stay liquid, so don’t put all your money into gold but do keep a small percentage (5% – 20%) and look at it as a firm of financial insurance. If it is falling in value then the rest of your assets should be rising and that is the essence of investing: asset diversification.

This update can be found on the GoldCore blog here.

Stephen Flood
Chief Executive Officer

IRL
63
FITZWILLIAM SQUARE
DUBLIN 2

E info@goldcore.com

UK
NO. 1 CORNHILL
LONDON 2
EC3V 3ND

IRL +353 (0)1 632 5010
UK +44 (0)203 086 9200
US +1 (302)635 1160

W www.goldcore.com

WINNERS MoneyMate and Investor Magazine Financial Analysts 2006

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: Past experience is not necessarily a guide to future performance. 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. GoldCore Limited, trading as GoldCore is a Multi-Agency Intermediary regulated by the Irish Financial Regulator.

GoldCore is committed to complying with the requirements of the Data Protection Act. This means that in the provision of our services, appropriate personal information is processed and kept securely. It also means that we will never sell your details to a third party. The information you provide will remain confidential and may be used for the provision of related services. Such information may be disclosed in confidence to agents or service providers, regulatory bodies and group companies. You have the right to ask for a copy of certain information held by us in our records in return for payment of a small fee. You also have the right to require us to correct any inaccuracies in your information. The details you are being asked to supply may be used to provide you with information about other products and services either from GoldCore or other group companies or to provide services which any member of the group has arranged for you with a third party. If you do not wish to receive such contact, please write to the Marketing Manager GoldCore, 63 Fitzwilliam Square, Dublin 2 marking the envelope 'data protection'

GoldCore Archive

© 2005-2018 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