Gold, Silver Stumble
May 19th, 2009 | By Doug Casey | Category: Gold MarketGold was essentially unchanged to mid-morning in New York on Monday, at which point it tumbled more than $11, moved slightly higher into the late Globex, and finally fell again to finish at $917.40/oz., down $13.50. Overnight, gold has edged higher.
Platinum was flat until the second hour in New York, but then took off in the opposite direction from gold, shooting higher straight through the Comex before leveling off on the Globex to end near its intraday high at $1129, up $28. Overnight, platinum is trending higher.
Silver peaked at $14.05 at the London open, moved jaggedly lower from there to mid-morning in New York, rallied back to the late Globex but eased at day’s end to close at $13.76, down 19 cents. Overnight, silver has pushed higher. (Click here for charts)
Though platinum fared very well, it was a disappointing day for gold and silver, which fell off even though the usual suspects were supportive, with the buck weakening and oil pushing higher.
Analysts cited the big stock market rally, which had investors jettisoning safe haven holdings for riskier assets.
As Kitco’s Jon Nadler put it, gold is “once again characterized by more of an economic recovery anticipation motivation and less of a safe-haven-oriented one … Some of the funds that have been piling into gold in the last few weeks have pulled the profit trigger once again after the rally.”
Hedge-fund managers and other large speculators increased their net-long position in New York gold futures by 6.8% in the week ended May 12, according to the Commodity Futures Trading Commission.
Nadler added that, “There’s a tug-of-war going on now between: Do we see an economic recovery and do we still see safe-haven flows,” and as of the moment, “People see the gains in stocks and they think, ‘Let’s take a little bit of money off the gold table and put it into where the action is’.”
Also factoring in was slowing jewelry demand in the past week, which may mean “gold above $920 an ounce is too pricey for many buyers,” wrote John Reade, an analyst at UBS AG in London. However, he added, “this is the first time we have seen any noticeable jewelry demand above $900 an ounce, and in particular, the buying from India suggests that demand later in the year should increase a lot ahead of the Diwali festival [in October].”
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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.