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Cascade-like Fall Scenario
for Precious Metal Prices




Mid-April 2013 brought gold and silver prices down. Massive sell-offs and dampened investor sentiment were both characteristic to this period. Gold plummeted even below 1,400 $, a level that many wouldn't have expected last year, when the vast majority of investors were expecting gold prices to reach levels above 2,000 $!

The gold crash happened, but it's still a small fall of price.

Prime Values believes that this is the beginning of a process that will lead to much cheaper gold and silver prices. The resistance around 1,450 $ has been relatively strong. Bargain-hunting kept gold rising towards 1,500 $ again, but new bearish factors might drag it down substantially.

If these new factors take over, then the bears will get stronger than the bulls: gold will fall below 1,400 $ in the May-June period and will head towards the 1,200 $ (next psychological level).


Let's see which these next negative factors could be...

 FOMC is considering QE trimming: monetary easing might get slowed down - analysts suggest up to over 40 % QE cut might occur this year (as early as this summer, but most voices are sure about it happening before 2014 kicks in) - the first serious hints about the QE cut might be given as soon as today: May 1st, 2013 - watch the statements and press declarations following the FOMC's Washington D.C. meeting early this afternoon (2:00 PM USA's Eastern Time)

 Euro crisis amplification: watch the news after the German elections in September; as soon as the euro gets badly hit again, the dollar will gain from it

 The Japanese yen's continuing devaluation: the Japanese government has just engaged in massive monetary easing, which has propelled precious metal prices skyward in the island country - this is good for the dollar, which will seem stronger (precious metals in dollars will become cheaper as many will sell their Japanese yen to acquire US dollars)

 Profit takers will sell above 1,400 $: many will end their positions and will turn short on gold in order to gather profits, as an anticipation of various bearish factors (for instance, the Fed's decision to trim QE) - this literally means that many will sell their gold, which might bring it down below 1,400 $ again


The cascade-like fall will be similar to a "stepped increase". Gold will gradually fall step-by-step. Short periods of light uproars will occur, partly due to bargain-hunting.

We might see multiple gold crashes, which will reflect in other metals' price as well - especially in the more volatile silver's price. Quite unusual to the grayish shiny metal - it has held on quite strongly, despite the negative news.





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