Vikram Saxena

Countdown of Manipulated Gold Price Running Out

You do not need a conspiracy theories. Simple supply/demand can explain a lot.

1. India is the largest consumer and importer of Gold.
-Indians have been selling Gold as it made its bull run. With the INR falling against the USD the spot Gold Price in India is still quite high, and encouraging more sales.
-Indian economy is slowing down and the stock market has been cut in half; less discretionary demand for gold.

2. The world is in a deflationary asset mode. The hedge against inflation is not needed.

3. The fragile banking system has been effectively nationalized with national governments providing a back-stop. The safe-haven play is over.

4. Some talk of central banks selling Gold, partly to finance the backstop they have provided to the major banks. Many hedge funds de-leveraging and selling their gold holdings.

5. Dollar Strength; other commodities are also down.

6. Supply too is elastic with relation to price. With Gold prices near its highs, Gold producers have an incentive to mine more. Longer work-days, deeper mines.

What's Behind the Slide in Oil and Commodities?

Missed the Key: That Tricky/ECB hinted that they were done with the rate hikes due to the rapid decline in the Euro zone economy. This is likely to end Euro's run against the USD, which will also gain from the end of the Bush era. Plus the $150 spike target was almost met, and July it traditionally a slow month for oil.

The key is where it bottoms. Does it stay firmly above $120 or does it test $100.