Gold held below $900 an ounce on Tuesday, giving up some of the previous sessions’ gains, as easing risk aversion dampened interest in the precious metal. Spot gold was quoted at $898.65/900.25 an ounce at 1403 GMT, against $902.65 in New York late on Monday. Earlier it slipped to a low of $891.60 an ounce.
While the masses were piling into low- to no-yield bonds during the market collapse in the fall of 2008, the International Speculator went bargain shopping in a sector that gives investors leverage to a rising gold price: the junior mining sector.
The previous low point for the ratio of the XAU gold stock index to the price of gold was .16, when gold was trading around $270 an ounce in October of 2000. Today, the XAU is trading a mere 57% higher than it was in October of 2000, compared to a gold price that has increased by 184%.
There was virtually nothing in the price action of gold in the Far East on Friday that suggested that there would be an explosion in the gold price on Friday morning at the Comex open. I’d gone to bed at 5:00 a.m. New York time after filing my Thursday rant that you read yesterday morning. True, at the usual 3:00 a.m. time, gold had peaked at the lofty price of $759. But two hours later the price was still at $759.
In early Friday morning trading in the Far East, both gold and silver were taken down sharply. Volume was thin in both metals, so it wasn’t hard for someone to influence the price. Gold gained most of it back, but once the Sydney close was in…the price pressure showed up again until shortly after London opened…then rose again until the London p.m. fix was in…and it was straight down hill from there.
On Wednesday, gold vacillated between $740 and $750 all through the Far East and early European trading. Gold struggled to tack on about $20 within two hours of the Comex open in New York, but then it was lights out for the rest of the regular trading session.
The gold bottom for the day was in shortly after London opened yesterday morning. Any attempt by the gold price to go parabolic was snuffed out by the not-for-profit seller(s). Gold only gained $10 by the time the Comex closed for the day. However, in after hours trading, it was a whole new ball game. Gold tacked on $35 in two hours…and at that point the bullion bank(s) pulled the pin and the gold price dropped $20 in just a few minutes. The rally attempt during the Sydney open this morning also ran into ‘resistance’…and gold is down about $11 as I fire this off to my editor (4:20 a.m. NY time).
Silver was a whole different story. There wasn’t a…
Wall Street is on its knees, and the taxpayer is on the hook for well over a trillion dollars to prop up the financial system.
Meanwhile, the wider US economy is sliding into a recession.
William Patalon III says there are four solid ways to protect your portfolio from these forces: 1) Buy dividend-paying stocks; 2) Buy gold; 3) Buy companies focused on overseas market; and 4) Don’t panic…
The Daily Reckoning’s Mogambo Guru is astonished that the dollar is rallying. He says the S&P500 and Dow Jones Industrial Average Indexes are grossly overvalued, the banking system is leveraged to preposterous levels, and the FDIC insurance fund is negligible compared to total bank deposits it is supposed to cover. Mogambo says all of these things strengthen his case for buying gold, silver and oil now…
“Who cares about gold? It is the epitome of human stupidity. A metal that is dug out of the ground at great cost to be reinterred in bank vaults as a protection against the same stupidity as caused it to be dug up in the first place.”