Precious Metals Slammed Down
May 28th, 2008 | By Doug Casey | Category: Gold MarketGold held steady from the far East through London trading on Tuesday, but once the NYMEX opened it fell like a stone, and a modest rally off of $905 was snuffed out during the Globex, as it finished at $904.40/oz., down $19.80 from Friday. Overnight, gold has continued to decline.
Platinum had a similar late morning rebound, but it too went south after that, ending at its intraday low of $2115/oz., down $55. Overnight, platinum is sharply lower.
Silver tracked gold very closely, only more so, dropping some 4% and capping an exceedingly down day by closing at $17.42/oz., down 77 cents. Overnight, silver has fallen further.
(Click here for charts)
Despite that a firming dollar and declining oil lined up against the precious metals, the selloff was severe.
Traders also ignored the hard data that rolled out yesterday. As the Hightower Report noted: “The gold market started out soft and then came under more intense liquidation pressure as the session unfolded. While the Dollar didn’t exactly explode on the upside, the gold trade seemed to be disappointed in the Dollar’s capacity to bounce after another failed attempt to trade under 72.00. With oil prices under pressure and the US equity market at times showing impressive strength, it is possible that some flight to quality/safe Haven buyers of gold were simply pushed to the sidelines. With a host of scheduled US data showing weakness on Tuesday morning and the European numbers also soft, it would almost seem like the gold market was under pressure because of the fear of too much slowing.”
“It’s all about oil [yesterday],” said Frank McGhee, the head metals trader at Integrated Brokerage Services in Chicago. “The metals are susceptible to the ebb and flow of the oil market.”
The beginning of another correction? No, says Mark O’Byrne, of Gold and Silver Investments Ltd., who wrote that, “Gold was up 3% last week and silver surged nearly 8%, and thus profit-taking would be expected in the early part of this week.”
In fact, SPDR Gold Trust (GLD), the biggest exchange-traded fund backed by bullion, last week saw its inventory rise by 1.3%. Formerly known as StreetTracks Gold Trust, the company underwent the name change on May 21.
As well, hedge-fund managers and other large speculators increased their net-long position in gold futures in the week ended May 20. Commodity Futures Trading Commission data released on May 23 showed that net-long positions rose by 29,181 contracts, or 19%, from a week earlier.
Source: Precious Metals Slammed Down
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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.