Beware of the Doldrums
Demand for gold and silver both, both domestic and international, continues to show modest volume. The US Mint has published sales figures illustrating that the sales of both Gold and Silver Eagles in comparison to last year are lower – the first time since 2008. Even India, the world’s largest consumer of gold, is showing lower numbers.
Individuals who were selling scrap gold and silver into the market are holding out for higher prices. Dealers who are buying scrap are, in many cases, holding their purchases and waiting for prices to move up before sending the items they have purchased to the smelter.
Gold prices have been trading in a range in the mid $1,600’s. A break below $1,600 would be a huge psychological penetration of support. Conversely, prices moving through resistance $1,675 / $1,700 would be very bullish and buyers would move in on momentum.
Major news of some sort will get the markets going again. Until then, prices will consolidate in their respective ranges as weak “hands” give up the ghost and sell to strong “hands” who are continuing to accumulate.
Here is exactly what is going on: Buyers have been lulled to sleep due to the lack of big price action. Buyers should be slowly accumulating if they still have the capacity – or still believe in the long term fundamentals of the markets – instead they are waiting. I am witnessing apathy, boredom, trying to out-guess and second-guess, and in the end buyers find themselves frozen.
All Things Considered – John’s Commentary
What is the smart money doing? What most successful investors do, buy when others aren’t, then hold, and finally sell to those who did not buy in the first place. Have your position! If you don’t have it, begin to acquire it.
Finally, when the world is awash in paper, and everyone has had their fill, people will flock to essential services and tangibles – real estate, food, and of course the metals. Best to have some of each!
Quote of the day: “When paper money systems begin to crack at the seams, the run to gold could be explosive.” – Harry Browne
