CelticGold Market Report 20th July 2014
Gold closed on Friday at about $1310 capping off one of the wildest weeks the yellow metal has had in a while. Over the last four weeks Gold has risen from the mid $1240’s all the way up to about $1348 before collapsing this week to under $1300 then recovering again to $1310.
The volatility is likely here for the foreseeable future due to escalating tensions in the Ukraine and the conflict in Gaza. In addition, concerns still exist with the ongoing banking situation with Espirito Santo International in Portugal.
The decline in Gold on Monday and Tuesday again brought in speculation that this was an orchestrated take down of Gold in the paper markets. Below is an excellent piece by Dr. Paul Craig Roberts and Dave Kranzler that provides some additional analysis of the decline Gold saw in the beginning of the week.
As you can see from the chart provided the large volume of paper contracts that were executed during a low volume period. The article explains the fact that the price of Gold is largely determined in the paper market where larger volume trades can take place. In a thinly traded market like Gold the paper market can cause big price swings.
Whether or not this was a manipulation caused by the bullion banks, the reality is that ultimately the fundamentals in the physical Gold market will eventually take over and lead the way to higher prices.
In the last couple of weeks we have posted articles about the possible trend shift taking place for Gold. Below is another piece that outlines the case for Gold being in the final stages of a bottoming process. One of the more interesting comments that the author makes is that many “Gold Bugs” have thrown in the towel which is sometimes a necessary development for a shake out phase for cyclical bull markets to again resume.
The other point made is what the Fed and ECB are going to do when the European or US economy starts to weaken again? Interest rates are already near zero. In the event there is some sort of meaningful stock market decline in Europe or the US the tools the Central Banks have left are limited.
Market Update for Silver
Silver finished the week at about $20.84 and also has had a volatile week of trading. As with Gold it is very possible that Silver is close to establishing an upward trend. Below is an article that discusses this.
One of the critical points that the interviewee makes is an idea from legendary investor Jesse Livermore that many investors exit bull markets along the way without going the distance. Mr. Livermore’s idea was that investors have to stick with it for the entire cycle to see the real benefits.
If you are a Silver investor consider reading the following interview below. It provides a good overview of the major price resistance areas as well as speaks to Silver’s uniqueness as a long term investment.
|Older CelticGold Weblink Series: Al Jazeera||Newer CelticGold Market Report 2nd August 2014|