Precious Metals Hammered
Posted on: Jul 9th, 2009 | By Doug Casey | Filed under Gold Market
Gold was quiet until the mid-point of London trading on Wednesday, but then commenced a long, steady decline that didn’t bottom until about 1 p.m. in New York, at which point it bounced off of $905 and inched a bit higher through the Globex to finish at $909.10/oz., down $15.00. Overnight, gold is edging higher.
Platinum spent most of the day between $1100 and $1120, but slipped below the former mark late in Comex trading and didn’t recover, ending at $1097/oz., down $35. Overnight, platinum is sharply higher.
Silver followed gold’s path almost perfectly, falling as low as $12.75 before regaining a little upward momentum late in the day to close at $12.85/oz., down 24 cents. Overnight, silver is little changed. (Click here for charts)
After little change on Tuesday, traders handed the precious metals a pummeling yesterday, with all three suffering significant setbacks and gold plumbing a two-month low.
There really wasn’t anything to prop up the market, with equities spinning their wheels, the dollar reaping the benefits of a flight from currencies perceived as riskier, and crude prolonging its losing streak.
Continuing to weigh on gold and silver was this week’s announcement from India that it is doubling import taxes on both metals as the government seeks to use its citizens’ affinity for them to raise money. The move could certainly put a lid on India’s gold imports and pressure gold prices.
Gold’s recent weakness has “gold bulls on the defensive,” said Ralph Preston, a Heritage West Futures commodity analyst in San Diego. “I have a very specific trade recommendation to short the gold market on today’s break of $915 support.”
Preston is advising clients to short gold “at $912 with an $8 stop-loss at $920,” with “a price objective of $870, risk $8, for a potential profit of $42.”
Looking at yesterday’s trend numbers, Dan Norcini, writing on jsmineset.com, said that “gold broke down technically in today’s session once it pushed past the $920 level and downside momentum carried it even lower to violate the $915 level. With today’s move it is now solidly below all of the major moving averages with the short term trend firmly in favor of the bears. The broad consolidation pattern of the last 5 months shows support near the $890 level followed by more substantial support near $880. Those will have to hold to prevent a rout of the longs that could conceivably take it down as low as $865. It will take very strong buying from overseas to offset the speculative selling that has now arisen. It did seem to uncover some buying of a value nature just above $900 in today’s session.”
Source: Precious Metals Hammered
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.