Articles
-
Has the Great Gold Crash Divorced Bullion from Futures Prices?
By moneymorning
n mid-April, a black swan crash-landed on the gold market.
Over just two trading days, gold futures prices shed 13%, falling from $1,575 to $1,375.
That $200 cliff dive was the largest two-day drop in 33 years.
Gold prices already had been in steady consolidation mode for 18 months. But the magnitude and swiftness of this dramatic move were rare…to the point of suspicion.
How did markets react? Unlike almost anyone expected.
What caused such a landslide, and who may be behind it? More importantly, what are the implications for the precious metals markets moving forward?
The conclusions will surprise you—and help you invest more wisely.
Past as Prologue
To understand what happened, we need to first dissect the circumstances surrounding the event.
The gold futures selloff were so extreme, it’s difficult not to conclude that whoever may have initiated this effort achieved exactly what was intended: a gold panic.
However, the law of unintended consequences tells us that some actions have unanticipated effects. And given the reaction in the physical gold markets, it appears the perpetrators of a gold panic (if they indeed exist) will find it difficult to achieve their goals in the future.
The Timeline
A number of bearish news stories were released in the days and weeks leading into the selloff.
First came word that infamous hedge fund manager George Soros had dramatically cut his fund’s gold ETF holdings by 55% in 4Q 2012. But having already dumped (as a group) a total of 140 tons just in 1Q this year, gold ETFs were already suffering a bloodletting.
Three days before the initial selloff, the Fed’s Open Market Committee minutes were leaked a day early. They revealed that some members were in favor of slowing the Fed’s monthly purchases of $85 billion worth of mortgage-backed securities and Treasuries.
The next day, with gold trading at $1,575, Goldman Sachs lowered its 2013 and 2014 gold price estimates, and recommended shorting gold with a $1,450 target, suggesting gold prices had peaked.
Was Goldman prescient, lucky, or did they know what was coming?
Read full article
-
Authorized Person for MEX NEPAL
Mob: +977 9856030634 -
Biratnagar Branch Manager
Mob: +977 9852033934 -
Our Clearing Member
-
Our Banking Partners
-
-
-
