Precious Metals Rebound
Dec 3rd, 2008 | By Doug Casey | Category: Financial NewsGold fell in the far East on Tuesday, but bounced off of $760 and headed north with the open of London trading, pushing past $780, then traded tightly rangebound through both the Comex and Globex, finishing at $781.50, up $13.30. Overnight, gold is trending lower.
Platinum moved back over $800 just after Hong Kong closed, then traded all day within a $15 range, ending at $807, up $17. Overnight, platinum has moved higher.
Silver followed gold very closely, bottoming in Hong Kong, rising to the New York open, then going flat for the rest of the day, and closing at $9.55, up 32 cents. Overnight, silver has fallen off. (Click here for charts)
It was an encouraging day for the precious metals, as they reasserted themselves after Monday’s brutal selloff. Especially positive was that the usual suspects didn’t line up completely in support, as a falling dollar was counterbalanced by a further decline in the price of crude.
Rebounding equities markets likely provided some buoyancy, as well.
Matt Zeman, a metals trader at LaSalle Futures Group in Chicago, cited the falling buck and said that, “Gold looks good to keep going higher as long as we don’t have the panic selling we saw [Monday].”
That may be a bit of wishful thinking. In this market, the abnormal is the norm. There will be future panic selling, as there will be frenzied buying. Like it or not, it is the nature of the beast right now.
But might things begin to stabilize? Dan Norcini, writing on jsmineset.com, looks at the hedge fund liquidation going on, and observes that, “These guys were the ones that drove prices north when they first came in to buy as investors were clamoring for commodity exposure in their portfolios and now they are the ones driving prices south as those same investors sour on world of tangibles. Assuming there are any of them left when the dust settles, they will also be the ones driving prices back up again once the fallout from this quantitative easing begins and the Dollar gives up the ghost.”
Norcini is cautiously optimistic. He notes that gold open interest is “now down to levels last seen in August 2005,” and concludes that, “I am beginning to think that the bulk of the index fund liquidation is coming to an end.”
How quickly will buying resume once the forced selling ends? That is the question.
Source: Precious Metals Rebound
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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.