Gold Off, But Silver Steady
Apr 28th, 2009 | By Doug Casey | Category: Gold MarketGold declined from Hong Kong through the first hour of New York trading on Monday, shedding about $15, rallied back until the noon hour, but then fell right through the Globex to finish at $906.20/oz., down $6.80. Overnight, gold has fallen off.
Platinum really hit the skids, plummeting straight through with little interruption, ending at $1140, down $35. Overnight, platinum is sharply lower.
Silver fared much better than its sister metals and, even though it too peaked in early far East trading, it managed to hold above $13 all the way through the Comex, before easing on the Globex to close at $12.90/oz., up a penny. Overnight, silver has fallen steeply. (Click here for charts)
Precious metals fanciers couldn’t have been too disappointed with yesterday’s action, given that silver held steady and gold fell only modestly in the face of both a rising dollar and slumping oil.
Most of the market talk yesterday centered on China’s surprise announcement late last week that it has been quietly building its gold reserves for years. And though officially it has bolstered stockpiles by 34 million ounces, many observers believe that the actual figure could be much higher than that.
Even if we’re getting the straight dope, “The Chinese government’s decision further demonstrates the leadership it is increasingly taking and its public recognition of gold’s proven role as a store of value and portfolio diversifier,” wrote Aram Shishmanian, CEO of the World Gold Council.
Julian Phillips, of Goldforecaster.com, went further: “By publicizing this information one has to ask, are they going to buy local supply in larger quantities? Will they take all the local production? If so this will mean a drop in supplies to the open market of a substantial amount. This will be extremely gold positive!
“It will also mean that not only is Russia buying around 4 tonnes a month for reserves but China is effectively buying over 6 1/2 tonnes of gold a month for reserves. Now add to that that the Central Bank Gold Agreement signatories are selling around 1 tonne of gold a month, with one signatory buying gold now, then it shows that Central Banks of importance are favoring gold far more than before. This does reflect [as the Bundesbank President said] that ‘gold is a useful counter to the swings in the $.’
“Certainly if the I.M.F. is to sell gold [not a foregone conclusion!] at an auction as they did in the past, then I would expect a central bank like Russia or China to be a buyer, at market prices. The implications for gold returning to a monetary role [reserve asset in support of currencies] are tremendous and gold price positive.”
Phillips then cautioned that, “If [gold] has such a role in the future then the possibility of governments taking over the gold market rears it ugly head.”
Source: Gold Off, But Silver Steady
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Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.