Precious Metals Take a Hosing; Other Markets Line Up Hard Against Them
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Gold was strong in the overseas markets, peaking at $975 at the mid-point of the London session, but once New York opened it got taken down in a big hurry, dropping $30 in a near-straight line into the noon hour, then easing more slowly to finish at $944.00/oz., down $25.80. Overnight, gold is sharply lower.
Platinum hit $1880 in Hong Kong, but it too endured a savage beating in New York, falling straight through before leveling off in the Globex and ending at $1797/oz., down $35. Overnight, platinum has fallen off.
Silver mimicked gold’s trajectory very closely, trading at $18.78 just before New York opened, then crashing as low as $17.84 before rising slightly to close at $17.93/oz., down 48 cents. Overnight, silver has declined further.
(Click here for charts)
It was a bleak Tuesday, as gold and silver gave back all of Monday’s gains and then some, and platinum just prolonged its freefall. The usual suspects all lined up in opposition to the metals, with oil slipping, the dollar strengthening, and equities bouncing back.
“Conditions changed as soon as Paulson and Plosser injected a fresh dose of adrenaline into the U.S. dollar with their comments,” said Kitco’s Jon Nadler.
“We saw oil and the commodity complex undergo a bout of selling on the news, and quite promptly,” Nadler said. “No one wants to fully bet on an imminent rise in the greenback; however, the official statements did manage to overcome the dollar weakness that was seen early in the day.”
But for Mark O’Byrne, executive director at Gold and Silver Investments Ltd., it was more about oil.
However, O’Byrne said that, “While oil remains an important factor in influencing the gold market, we remain confident that there will be a gradual decoupling between oil and gold in the coming months.”
Gold will outperform oil, O’Byrne maintains, since oil is a commodity that is “far more subject to demand destruction in the face of a sharply deteriorating global economy than gold.”
And Credit Suisse analysts wrote that gold prices are taking direction mainly from the euro/dollar exchange rate and U.S. bond yields. Since gold is a non-yielding asset, rising bond yields are a negative for the metal.
But Credit Suisse believes that a renewed test of $1,000 an ounce is “increasingly likely during the third quarter,” and that “the rally will likely start turning into a consolidation as we move into the fourth quarter.”
Source: Precious Metals Take a Hosing; Other Markets Line Up Hard Against Them
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Tags: Doug Casey, Gold Prices, silver pricesAbout the Author
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.