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Politics : Gold and Silver Stocks and Related Commentary
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To: kacy_in_LA who wrote (9365)3/23/2005 3:52:21 PM
From: seventh_son  Read Replies (1) of 18308
 
Here are some of my thoughts on gold -- first of all, I have to wonder whether this dip in gold really started with what was the given media excuse -- expectation of Greenspan getting ready to increase rates faster than anticipated and thereby drive up the US dollar. It seems that a drop was anticipated early last week, with some of the gold majors showing unusual weakness and commercial short interest increasing significantly by last Friday's COT report (and note that majors such as Newmont and Placer Dome are not showing great weakness today). What is just as likely as the interest rate/inflation excuse is the possibility that big money knew about the impending GoldCorp announcement about stopping hoarding gold, and at the same time saw short term vulnerability in the gold market due to recent bullish sentiment as shown in the Hulbert Digest contrarian indicators.

Looking at gold a little differently, it has been holding firmly around the 327 Euro point for quite a while, and this is more indicative of the real price of gold, which is more in a holding pattern than a bull or bear market. The physical market seems strong and supports it at around this level, and as Julian Philips has noted recently, the paper market seems to be having less and less effect on prices as time goes on given the robustness of the physical market.

The real question about gold, if you simply look at the $US gold price, is what the dollar is going to do. Short term it is hard to say, but foreigners seem to be holding more dollars than they are comfortable with and there is little sign that the current account deficit in the US is going anywhere but up.
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