Gold, Silver Get Pounded
Apr 24th, 2008 | By Doug Casey | Category: Gold MarketGold held around $920 until just after London trading began, then went on a nosedive that took it below $900 in the third hour of the New York session Wednesday, after which it did manage to rally back a bit, finishing at $904.80, down $11.40. Overnight, gold has edged lower.
Platinum pushed as high as $2040 in the far East, but then it too was taken down, before bouncing off a low of $1990 in New York trading and ending at $2001/oz., down $24. Overnight, platinum is slightly lower.
Silver got sledgehammered down from its high of $17.80 in early London trading, falling all the way to $16.90 before some late buying shoved it back to a close at $17.00, down 51 cents. Overnight, silver has inched higher.
(Click here for charts)
After two straight days of disappointment, during which the metals were supported by the falling dollar and rising oil, when those two markets turned against them, they took a severe licking.
About all that can be said for sure is that there was a wave of liquidation, for whatever reason.
Stephen Platt, a futures strategist at Archer Financial Services in Chicago was led to say that, “Some of it is linked to a pullback in crude and pressure on the euro” … But, “In terms of upside potential, gold is limited.”
Silver, which has been beaten down more than gold, is already down 5.7% in the past five sessions, and that has some bears growling. The price may drop to $15.50 over the next 12 months, Goldman Sachs Group said.
Kitco’s Jon Nadler warned that the usual upward forces may not come through for gold.
“Fed watchers no longer expect a half-point cut next week and even a quarter-point cut is beginning to look less than certain,” Nadler said. “Participants continued to be frustrated by the metal’s recent lack of response to outside drivers and by investor apathy.”
“While the current pause is still seen as a period of consolidation, the risk of a breach of the $900 level remains in place and could take bullion to the $880/$890 area,” Nadler added.
Looking at the bigger picture, Zachary Oxman, of Wisdom Financial noted that there has been a significant decline in gold open interest since January, while holdings in gold ETFs have been stagnant since peaking in mid-March.
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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.