Gold Retreats as Distress Sales Continue
Oct 28th, 2008 | By Doug Casey | Category: Gold MarketGold declined through to the close in Hong Kong, falling below $710 at its nadir, then about-faced and rose until the close of the Comex, peaking at $746, but then eased through the Globex to finish at $728.60, down $5.70 from Friday. Overnight, gold is sharply higher.
Platinum sank as low as $740 in the European market, rose to $785 at the close of the Comex, and then eased a bit to end at $781/oz., down $13. Overnight, platinum is trending higher.
Silver had a rough day, dropping as low as $8.70 in the far East, pushed back above $9.20 on the Comex, but lost ground on the Globex, closing at $9.05/oz., down 32 cents. Overnight, silver has fallen off. (Click here for charts)
There wasn’t much out there capable of buoying up the precious metals yesterday, as the usual suspects—a strengthening dollar and slipping oil prices—lined up in opposition.
Gold’s chart for the day accurately reflected equities’ rollercoaster, as it rose in tandem early. “As stocks rally, it eliminates some of the liquidation pressures that we’ve seen in gold,” said Frank McGhee, of Integrated Brokerage Services in Chicago. “People have been selling metals to fund losses in other markets.”
But then, as the stock market crashed in the last half-hour, gold turned down with it in electronic Globex trading.
However, once massive leveraged positions around the world are unwound, “gold and silver will probably rise very sharply,” said Jeffrey Christian, managing director of CPM Group in New York.
What’s happening in the paper gold market bears little resemblance to the physical world. Indian sales sharply underline the point, with about 50 metric tons of the metal sold during the first three weeks of October. That contrasts with a bit more than 80 tons sold in whole of last year’s fourth quarter.
Even in US dollars, gold is holding up rather well compared with other commodities, at down 11% on the year. The Reuters/Jefferies CRB Index of 19 raw materials has fallen 27%.
While gold’s long-term fundamentals are strong, uncertainty rules other time horizons. “The week ahead looks set to remain volatile and could prove pivotal to gold’s medium-term direction,” wrote James Moore, of TheBullionDesk.com.
Source: Gold retreats as distress sales continue - Physical demand in India explodes
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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.