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Gold has now dropped over $200/Troy Oz. in the last 30 days.
They've all dropped. With the exception of Rhodium, the prices have all been exceptional for two years and have been expected to fall somewhat.
But last Friday The European Central Bank informed Cyprus and other countries that they will need to sell off their government stock of gold reserves or face a deep cut in financial assistance, think Welfare vs. assets on hand, and this event with the specter of governments dumping their gold reserves on the open market and making a huge supply surplus overnight triggered a tsunami of panic selling of metal futures contracts. BOOM!
This is very similar to what happened over a decade ago when Switzerland suddenly decided that they were going to dump their nation's gold standard
and just simply dump their reserves in whole on the open market.
This is exactly what they did and it created an overnight glut of the metal
which pulled the price down from over $300/Troy Oz. to below $250/Troy Oz.
The shame of it is, when governments interfere with the open market, it is the people in the trade, many who are self-employed, who lose their shirts. The governments meddling with their huge reserves is like dropping the atomic bomb on the private trader, and you can imagine how that works out.
The market has seen technical damage, for sure, but is now tentatively stabilizing. There is still much doubt among the bears, and fewer bulls today.
The price of Rhodium has been seriously low for several years due to the recession and its impact on the sales of cars and vehicles that use catalytic converters, and resultant stockpiles of rhodium due to the lack of trade with the automakers as a result, while the automakers themselves contracted for rhodium production in-house many years ago to prevent supply disruptions while keeping their prices low at the expense of the metals market. And doing so to offset the losses caused by the union pension factors which threw the companies into potential bankruptcy and
which then resulted in the bailouts to save them. Notice how in this instance, and in spite of the bailouts, how they did not function as "price support", and therefore how the price of a new car or truck is still higher than ever? Usually when the government supports a trade, the prices are "lower".
www.kitco.com
They've all dropped. With the exception of Rhodium, the prices have all been exceptional for two years and have been expected to fall somewhat.
But last Friday The European Central Bank informed Cyprus and other countries that they will need to sell off their government stock of gold reserves or face a deep cut in financial assistance, think Welfare vs. assets on hand, and this event with the specter of governments dumping their gold reserves on the open market and making a huge supply surplus overnight triggered a tsunami of panic selling of metal futures contracts. BOOM!
This is very similar to what happened over a decade ago when Switzerland suddenly decided that they were going to dump their nation's gold standard
and just simply dump their reserves in whole on the open market.
This is exactly what they did and it created an overnight glut of the metal
which pulled the price down from over $300/Troy Oz. to below $250/Troy Oz.
The shame of it is, when governments interfere with the open market, it is the people in the trade, many who are self-employed, who lose their shirts. The governments meddling with their huge reserves is like dropping the atomic bomb on the private trader, and you can imagine how that works out.
The market has seen technical damage, for sure, but is now tentatively stabilizing. There is still much doubt among the bears, and fewer bulls today.
The price of Rhodium has been seriously low for several years due to the recession and its impact on the sales of cars and vehicles that use catalytic converters, and resultant stockpiles of rhodium due to the lack of trade with the automakers as a result, while the automakers themselves contracted for rhodium production in-house many years ago to prevent supply disruptions while keeping their prices low at the expense of the metals market. And doing so to offset the losses caused by the union pension factors which threw the companies into potential bankruptcy and
which then resulted in the bailouts to save them. Notice how in this instance, and in spite of the bailouts, how they did not function as "price support", and therefore how the price of a new car or truck is still higher than ever? Usually when the government supports a trade, the prices are "lower".
www.kitco.com
