Tuesday, April 16, 2013

Massive Paper Gold Selling Eclipses Annual Mine Production!

"With incredible turbulence in the gold and silver markets, today John Hathaway informed King World News that the massive two-day paper selling in the gold market unbelievably eclipsed the entire annual production of every gold mining company in the world.  KWN was given exclusive distribution rights to this outstanding piece by superstar John Hathaway of Tocqueville Asset Management L.P..  John is without question one of the most respected institutional minds in the world today regarding gold, and his fund was awarded a coveted 5-star rating.
 
 
April 16 (King World News)
 
Gold bullion prices have been subjected to a cleverly orchestrated bear raid in our opinion.  Selling of paper Comex contracts on Friday, April 12th, and Monday, April 15th, totaled 1 million contracts, exceeding global annual gold production by 12%.  The attack succeeded when the technical support in the low $1500’s/oz. easily gave way and led to waves of forced selling.  The volume is without precedent and has all the characteristics of a panic liquidation driven by naked short selling....
There is no way to know where or when the liquidation will end, but it will inevitably do so, probably sooner rather than later.
According to our source at the World Gold Council, physical buying from India and China, which represents half of global gold consumption, remains robust.  Central bank buying activity shows no signs of abating.  The notion that weak peripheral European states will be forced to sell their gold holdings is fanciful.  A more likely scenario is that these holdings would be used as collateral to support additional credit to the sovereign.
All in all, it appears to us that this gold sell off was made in America, based on an assessment of technical weakness by a large number of opportunistic players, and supported by dubious macroeconomic speculations.  At the very least, a sharp rebound based on short covering and physical buying should be expected once the panic has run its course.  The bigger consideration is whether the validity of the rationale for gold has changed..."
 
 

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