Gold Falls Off A Cliff As Margin Calls Cream Speculators - We warned you that gold falls when the dollar rises-- and you might have noticed the dollar rising as the euro falls -- along with European sovereign bonds and European bank stocks. Gold you see trades in an inverse relationship to the dollar about 70% of the time.
My gold guru, who was bullish all the way from $950 an ounce in June, 2008 until $1570 last summer, believes a good buying floor might be in the $1525 area; that would amount to a $400 correction from the 2011 peak of $1920.
No doubt the oncoming austerity and slowdown in global economies is playing a forceful dampening role in gold-- as it is in oil, copper and many other commodities. We are again experiencing a sell-off in the leveraged risk trade in commodities held on leverage by hedge funds and other commodity speculators. They are clearly spooked by the paucity of credit in European financial markets and the apparent, but unsubstantiated use of gold borrowing in exchange for dollars that I don't understand one bit.
Another gold follower, Stephen Leeb, in a special sell recommendation just issued to his followers, is of the opinion gold could correct back to $1300 an ounce., That would be a $600 an ounce correction from $1920-- almost a 33% reversal. And very possible if the huge buying by the Chinese on every dip this yeasr is put on hold in order to find a bottom.
There won't be a bottom as long as the dollar is rising in value and the euro is falling. There won't be a rise in gold if there is no effective solution of Europe's debt quandry-- which I seriously doubt. So, that gold bubble we were all anticipating will have to be put on the back-burner.
And we are all left mulling over the 20% annual gain in US Treasuries so far in 2011. It ranks the best asset class you could have chosen. US Treasuries. Yr. Uncle Sam. ( forbes )
My gold guru, who was bullish all the way from $950 an ounce in June, 2008 until $1570 last summer, believes a good buying floor might be in the $1525 area; that would amount to a $400 correction from the 2011 peak of $1920.
No doubt the oncoming austerity and slowdown in global economies is playing a forceful dampening role in gold-- as it is in oil, copper and many other commodities. We are again experiencing a sell-off in the leveraged risk trade in commodities held on leverage by hedge funds and other commodity speculators. They are clearly spooked by the paucity of credit in European financial markets and the apparent, but unsubstantiated use of gold borrowing in exchange for dollars that I don't understand one bit.
Another gold follower, Stephen Leeb, in a special sell recommendation just issued to his followers, is of the opinion gold could correct back to $1300 an ounce., That would be a $600 an ounce correction from $1920-- almost a 33% reversal. And very possible if the huge buying by the Chinese on every dip this yeasr is put on hold in order to find a bottom.
There won't be a bottom as long as the dollar is rising in value and the euro is falling. There won't be a rise in gold if there is no effective solution of Europe's debt quandry-- which I seriously doubt. So, that gold bubble we were all anticipating will have to be put on the back-burner.
And we are all left mulling over the 20% annual gain in US Treasuries so far in 2011. It ranks the best asset class you could have chosen. US Treasuries. Yr. Uncle Sam. ( forbes )
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