Damage Done to Gold

By Brad Zigler

Real-time Monetary Inflation (per annum): 8.3%

Boy, gold took it on the chin Wednesday. The August COMEX contract closed at $909.30, a critical retracement of the March-November 2008 decline, and below key support for the intermediate-trend spring 2009 rally.

If August gold can't muster enough strength to close above $909.10 today, the bears will put the $871.30 target in play.

Overnight gold dealings reflected well-ordered short covering, but there was decidedly more volatile give-and-take ahead of the New York open. The London dealers' market slipped lower between fixings, but COMEX picked up some bargain hunters. Considering the depths of Wednesday's sell-off, an upside reaction ought to be expected. Volatility-wise, though, even an immediate bounce-back to the $934 level wouldn't appreciably change the prospects for the August delivery.

Technical indicators such as MACD and RSI are still switched to "bearish" and don't show signs yet of an imminent reversal. Volume spikes have been accompanying the contract's down days, lending credence to the notion that the bears are driving the market. (Need more background on gold market indicators? See "The Gold Market's Tech Clues").

COMEX/NYMEX Gold (Aug. '09)

HAI (HardAssetsInvestor.com) readers were cautioned about gold's summertime weakness in our June 4 Desktop column, "The Season For Gold? Not Yet" and in three subsequent updates.

The question now is how much more downside will open up for gold before its bullish seasonal tendencies re-emerge in the fall.

Stay tuned for updates.

Comments

[DONE_SONZ:]

Buy on the dips.If anything, the reasons to be in gold are getting stronger.

Jul 10 08:11 AM

[ScroogeMcduck:]

We can all agree clearly fear of inflation is driving the price of gold up. I have seen no protection from this secnario in the works has anybody else? I dont care were your key support for the intermediate-trend spring 2009 rally is.

p.s. the MACD looks bullish to me

Jul 10 09:04 AM

[I need more...:]

What are you smoking? It isn't going up it has cratering for weeks.
And, no , we cannot all agree fear of inflation is doing anything, because of the FACT of deflation.
Geez, Vanna, buy this man a clue.


On Jul 10 09:04 AM ScroogeMcduck wrote:

> We can all agree clearly fear of inflation is driving the price of
> gold up. I have seen no protection from this secnario in the works
> has anybody else? I dont care were your key support for the intermediate-trend
> spring 2009 rally is.
>
> p.s. the MACD looks bullish to me

Jul 10 09:14 AM

[ScroogeMcduck:]

The June Import Prices came in higher than expected at +3.2% MoM vs +2.0% consensus.

Aren't prices suppose to come down with less demand?
I can take a pretty good guess as to the reson for this, anyone else?

Prop. the same reason Chinese State Councilor Dai Bingguo is calling for the world to diversify the reserve currency system

www.cnbc.com/id/31838115

Jul 10 09:25 AM

[yellowhoard:]

Can't go wrong buying the dips.

Silver is the better play though.

Jul 10 09:26 AM

[DONE_SONZ:]

For the deflationists-No economic growth means California,here we come.The fear of this was the reason gold hit $1000.00 the 2nd time.IOUs on massive debt will not fare well for the dollar or any other fiat in the same boat.

Jul 10 09:35 AM

[ScroogeMcduck:]

hoard whats your play for silver?

Jul 10 09:43 AM

[Screwloose:]

Brad

This is all your fault....

You went and tipped-off the COMEX traders about gold's coming summer doldrums and they all piled into short positions to take advantage. [You've seen the COT?]

You know what happens 95% of the time when the usual suspects build-up a big short position? Mysteriously; soon afterwards on the quiet days, those "$20 instant drops" start to appear - and they keep on coming....

ALL of the rise from $868 was down to a falling dollar - check gold/GBP and gold/EUR if you don't believe me. Now that the "green shoots" have withered; fear's returning, the dollar is getting some support and $/gold is retracing.

I took heed of your excellent prediction and cashed out the remaining ETFs [Gone; finally!!] so I'm nicely set-up to take yellowhoard's excellent advice and nibble at the gold dips on Bullionvault and the silver on Goldmoney.

Roll on September.....

Jul 10 09:46 AM

[yellowhoard:]

Depends on your time horizon.

Silvertown bars have a relatively low markup.

AGQ is a good way to trade short term.

Jul 10 09:50 AM

[Vuke:]

Strong dollar + weak gold = G8 summit.

Jul 10 09:57 AM

[nmelendez:]

yep, i agree. it's normal with gold is 16:1 and it's presently about 70:1.


On Jul 10 09:26 AM yellowhoard wrote:

> Can't go wrong buying the dips.
>
> Silver is the better play though.

Jul 10 10:08 AM

[5142152-337:]

A very wise man said: "Buy gold and wait...don't wait to buy gold". Works for me.

Since he didn't mention silver, I will: "Buy it like there is no coming out of the ground. What is above ground will be VERY expensive VERY soon!

Jul 10 11:34 AM

[5142152-337:]

Sorry, for the typo. "no" should read: none

Jul 10 11:36 AM

[Screwloose:]

Yes; Goldmoney's silver commission rates and buying limits are a big disincentive to using them for trading - unlike Bullionvault's 0.1% base and 24/7 unlimited access. [Time it right and, on a rising price, you can buy below COMEX spot.]

However; if you buy in large enough blocks, GM's off-shore advantages just about compensate - for me.


On Jul 10 09:50 AM yellowhoard wrote:

> Depends on your time horizon.
>
> Silvertown bars have a relatively low markup.
>
> AGQ is a good way to trade short term.

Jul 10 11:48 AM

[montyman:]

No need to explain that, we can easily see that it was a typo. What I want to know is: what is your definition of VERY soon? (or VERY expensive for that matter) :)


On Jul 10 11:36 AM 5142152-337 wrote:

> Sorry, for the typo. "no" should read: none

Jul 11 12:50 AM

[DmytrenkoArtem:]

next week we will see a lot of data on inflation... it can increase volatility of gold much... in short term we expect defletion scenario.. but we are keeping gold stakes in portfolio.. it easy can go under 900

Jul 11 10:30 PM

[goldrealmny:]

"Damage done to gold" LMFAO!!! You mean like the damage done to equity investors in the last year, who are down 50-100% across the board.

Make me laugh. I am buying gold and silver and ACCUMULATING. The Federal Reserve has a perfect track record of destroying purchasing power of theiir stupid little pieces of paper. A century's worth of theft and corruption has silently transfered all of America's once great wealth abroad. All of America's gold and silver are GONE. I bet Fort Knox has lead bars with gold paint lol! The NWO globalist scum sold all the govt gold worldwide and they put it in their pocket!

Never forget this: the banksters and the govts they own and control are the root of all evil and the cause of all our problems. Plain and simple.

Jul 12 01:07 AM