Ha ha ha… people bought last year because of China’s insatiable demand and the price of gold dropped. Now people get hysterical about a demand drop in China (as if gold is subject to the same macro economic issues as copper) and boink, it pops.
It still says here that you should immediately tune out anyone going on about Indian Wedding season, Central Bank buying and selling, mine supply and most of all… China’s gold demand.
Gold will be driven by investment demand and specifically investment demand that comes in the face of a loss of confidence in the way that money and interest are manipulated in the effort to promote certain economic signals and agendas.
The gold ratios are looking pretty good by daily charts. Gold vs. the stock market is okay, same vs. commodities. Gold vs. base metals? Well, you just know that one is launching. Hardly the stuff of a healthy economic growth cycle. Not a good sign for stocks and possibly a sign of an overdue commodity correction. Here is gold-oil looking a little peppy. This one is of particular interest to miners.
I am not going to name names or direct links to the source because I think what goes on in another manager’s shop between himself and his subscribers is their business, not ours. But I did note that an astute precious metals oriented trading service just had a public talking to with its subscribers, many of whom apparently are really feeling the grind of this consolidation in the precious metals.
That is a good thing because as NFTRH has been noting for a couple weeks now the mounting bearish CoT data and the over bullish sentiment have been bad things… for the short term (with not hardly a peep about them from the ‘community’ I might add). So seeing a capable trader’s subscriber base getting antsy (or worse) is very positive in that it implies that maybe gold bugs are getting jumpy and feeling the heat, which is what any good correction should do.
The manager does by the way advise that people back off of leverage and/or large position size if the ability to sleep is being compromised. I for one do not have the psychological makeup to endure significant draw downs on my portfolios, so as advised in NFTRH a few weeks ago, I began the process of trimming positions to be in line with my makeup.
That is good advice for everybody folks. We are each of us only human and subject to different levels of emotion and discipline. First rule of trading and investing… know yourself. Don’t think you know yourself. Know yourself!
Now we will get to test the theory that little of what most people consider fundamentals for gold actually matters. That would be things like Indian wedding season, jewelry demand, central bank buying/selling and the one hyped in the gold “community” more than any other, China gold demand.
From Hard Assets Investor: Gold Flat Amid China Demand Drop
According to the China Gold Association, demand in the world’s largest No. 1 consumer may fall 17 percent this quarter from a year ago. An official for the trade group said the decline wasn’t unusual given the huge spike in demand last year.
“Last year was a peculiar year when we saw a big fall in prices,” Zhang Yongtao, vice chairman of the CGA, said. “People bought a lot of gold, and I think demand will start climbing again once the festive and marriage season begin later this year.”
‘But but… China gold demand is strong!!’ kept people bullish last year as gold got blown up. Marriage season? Please. For me it is investment demand that matters.
Two reasons for this post…
- I probably don’t post enough publicly on precious metals because I do so much of it in the premium service and…
- I don’t want that disgusting FTEK post to be the first thing I wake up to in the morning.
Silver has been systematically working its way down in a short term consolidation channel (bullish until proven otherwise) after hitting NFTRH’s initial target in the 22′s. As noted a couple weeks ago in the letter (or an update), the support level at 20 (+/-) is going to be tested at some point, so it may as well be sooner rather than later.
This has been good work by silver thus far. Now if only we can bleed out some of the over bullish sentiment that 2 months of positive sector activity has instigated.