Analysts say the U.S. stock market is “very unhealthy” and vulnerable to sharp falls. Rosland Capital’s senior economic advisor explains in his latest column below what a dive might mean for the physical gold market.
We might well be about to see the gold price take its first weekly fall since Christmas, as bears get over-excited about Fed tapering and emerging market troubles ease off, prompting the yellow metal to lose some of its safe-haven appeal.
This past week’s dramatic gold-price action - with the metal falling some 5.8% from a Wednesday high of $1,790 an ounce to a low of $1,687 - does nothing to dissuade us from our super-bullish long-term view of gold-price prospects.
With the Greek drama taking an intermission and the euro strengthening at the US dollar's expense, it looks like gold wants to move higher – and has enough momentum to break through strong technical overhead resistance as we approach and possibly exceed $1,800 an ounce.
Despite the winding down of East Asia’s Lunar New Year gold buying binge, I expect the yellow metal’s price will continue to move up in the weeks ahead – but not without some struggle as gold works to reestablish upward momentum and renewed credibility.
Forecasters, whether of the economy, or the stock market, or the gold price are frequently wrong . . . but we are never in doubt. It is up to you - the investor - to listen, evaluate, doubt, and make your own decisions about gold's future price.
The explanation for gold's failure to move higher in recent weeks, following its spectacular rise earlier in the year, has much to do with which currency we choose as the numeraire or yardstick with which to measure gold's price.
While speculative pressures have pushed gold lower, physical demand has remained quite firm - not just from European's seeking a safe haven but, even more so, from Asian markets, particularly India and China.