Marc Faber On Bloomberg : Why hasn't the GOLD PRICE Held Up?
Local gold stocks are taking a big hit this morning after the price for
the precious metal fell into bear market territory in offshore trade on
Friday, sinking to its lowest level since August last year. This
outlook is even direr for gold.
The plunge in the gold price has pushed the ASX's gold stocks sub-index down 7.7 per cent in early trade.
The precious metal was trading at $US1493.45 this morning, down 4.2 per cent from local trade on Friday.
US investment bank Goldman Sachs put a ''sell'' on the metal last week, which sparked an early sell-off.
IG strategist Evan Lucas said it had come under even more pressure from
technical selling, as it broke through the $US1522 support level to
fall to $US1483.
''The bears roared even harder towards the end
of last week as soft data led to analysts making the call that a period
of deflation is on the cards, as the US stimulus package floods the
market, but is not followed by any discernible changes to the economy,''
''This outlook is even direr for gold.''
Averill at Rochford Capital said gold had also fallen on the back of
concerns that America and other G20 countries would criticize Japan at
the upcoming G20 meeting over monetary policies that have weakened the
yen and as a result, gold.
''I think you'll see the Japanese
reassure world leaders that their new monetary policy is not designed to
deliberately weaken the yen,'' he said.
Mr Averill said it was only a short-term problem for gold, which would pick up later in the week.
would say that gold shouldn't lose much more,'' he said. ''The G20
meeting is a bit of a distraction, but after this week, we are
predicting a resumption of the yen trade, which supports the gold
Burrell Stockbroking adviser Jamie Elgar said the recent
rally on stock markets - Wall Street posted record highs last week -
had also dampened demand for gold.
''I think gold started to come
off over the last couple of months as people started becoming more
confident in equities,'' Mr Elgar said. ''Particularly as the economic
data out of China and the US was looking pretty good.''
Shares in Australia's biggest listed gold company, Newcrest, fell 7.5 per cent this morning to $18.26.
how some of the other local gold miners are performing: Kingsgate
Consolidated: Down more than 12 per cent Alacer Gold: Down more than
15 per cent
Precious metals investors can't look back at this
week's declines in gold and silver and not be a little upset. But it's
important to keep in mind that nothing happened this week that reversed
the decade long bullish trends for gold and silver. So, keep in mind
that for over a decade gold and silver have gone up for a reason; the
mismanagement of the world's monetary system by the global central
banks. That plus all financial assets today have huge counter-party
risk thanks to the fraud plagued OTC derivatives market, whose notional
value is in the hundreds of trillions. Physical gold and silver have no
counter-party risks for their owners, and this makes them especially
attractive to forward thinking investors. This lack of counter-party
risk also makes the old monetary metals objects of ridicule by the
global financial industry, who market fraudulent "financial assets" by
the trillions of dollars, euros and other currencies.
Are there any indications that central
bankers have seen the error of their ways at the end of this week?
Good grief no! The Bank of Japan has reaffirmed its commitment to
destroy the yen as an economic asset, and the ECB is scheming to
confiscate Cypress's "excess gold reserves". Our Doctor Bernanke is no
monetary slouch either. Look at the post credit crisis Federal
Reserve's balance sheet in the chart below. Since 2008 the supply of
newly created digital dollars has exploded. If US Currency in
Circulation (CinC / Green Plot) lags behind the growth in digital
dollars (Blue and Red Plots), it is most likely because the Earth
doesn't grow enough cotton to supply both the world's textile mills and
the US Treasury's need for high-grade cotton based paper for its paper
money production. That's a scary thought that just might be true!