Gold Demand Having Less Impact As Prices Tread Water: Analysts

By Neils Christensen of Kitco News
Friday July 26, 2013 5:25 PM (Kitco News) - With uncertainty growing in the gold market, analysts expect that retail investors will be hesitant to buy more physical gold in the near-term.
Although demand has been exceptionally strong since prices started to drop in April, Jeffrey Christian, managing director at New York-based research firm, CPM Group said that he is starting to see signs of weakening demand for physical gold.
He added that even after gold’s second sharp drop in June - when Comex August gold contracts briefly dropped below $1,200 an ounce and hit a three-year low – investors were hesitant to jump in and buy bullion again.
On June 21, after gold’s second meltdown, CPM Group released an update that warned demand is starting to drop off.
“At present, there are few signs of strong demand at these lower prices on Thursday and Friday. Indian market sources reported increased demand, but said the buying levels were less than half the volumes seen in the first week of May,” the report said. “The decline in prices in the middle of April had been very timely, occurring just prior to the wedding seasons in India and China. This resulted in a substantial amount of buying from consumers in those countries, especially India. This demand helped push gold prices higher through the end of April.”
Although demand in Asia, and more specifically China, is at a record level, Christian added that he expects it to have less impact moving forward, especially as prices consolidate between support at $1,280 and resistance at $1,350.
“Demand in Asia is extremely price sensitive,” he said. “Right now we are in no man’s land. Prices are treading water and investors are hesitant to buy.”
On Thursday the World Gold Council released a report saying that because of strong demand China, the country is expected to import 1,000 metric tons of gold this year. Because of tight import restrictions in India, China is now expected to become the top gold consumer in the world.
Analysts from Barclays have also highlighted the fact that demand from China remains firm but below the record levels seen earlier in the year.
“…physical demand seems likely to remain responsive to prices. Indeed, as prices have firmed, volume traded on the Shanghai Gold Exchange has softened yet remains firm overall,” Barclays’ analysts said in a report published Friday.
Demand is even weaker in North American as the U.S. continues to show signs of a slowly improving economy. Christian said that many of the investors who bought gold were expecting either the economy to completely collapse or see higher inflation. He added that neither of those scenarios has materialized and a lot of those investors have walked away from the market.
“It would take a lot of major economic problems to get these guys to come back to the gold market,” he said. “We just don’t think that is going to happen.”
After hitting a session low of $1,179.40 an ounce on June 28, August gold prices have found some momentum and closed Friday at $1,321.50 an ounce – a 12% gain.
However, Howard Wen, analyst at HSBC, said that the rally appears mostly to be short-covering. Prices have been unable to break through resistance at $1,350, which Wen said is a sign that prices might head lower in the near-term.
“For demand to pick up we would need to see lower prices,” he said. “Most of the buyers looking for a price drop bought earlier in the year.”
Wen added they are looking at some seasonal factors that could be bullish for gold in the near-term. In India, he said they have heard that the monsoon season has been fairly positive, which means farmers will be able to buy more gold in the fall.
However if prices rise too much, Wen would expect demand to wain because people would only be able to buy so much.
“People only have so much money so it’s not a question of when they will buy but of how much they will buy,” he said.
For the next few months, especially during the slower summer period, Wen said he expects prices to trade in a range of $1,125 and $1,375.
CPM group is also not that far off from HSBC’s outlook. Christian said that looking at the long-term price trend there are indications that prices are nearing a bottom; however investors should expect more volatility in the near-term.
“We have said that we wouldn’t be surprised to see prices spike lower in July and August. We are almost finished with July so we will have to wait and see,” he said. “If prices hover around these levels until September we could see investors start to come back and buy.”

Gold Surges 3% - COMEX Default May Lead To Over $3,500/oz

Mark O'Byrne

July 23, 2013

Gold surged over 3% yesterday due to what appears to be have been significant short covering due to concerns about gold backwardation and the continual haemorrhaging of gold inventories from the COMEX. Gold climbed $39.30 or 3.04% yesterday and closed at $1,333.70/oz. And Silver surged $0.97 or 4.98% and closed at $20.46 on Monday.
Concerns about a default on the COMEX, once the preserve of a few observant market watchers, are becoming more widespread as we appear to be witnessing a run on the highly leveraged bullion banking system.

Support & Resistance Chart - (GoldCore)
Very robust physical demand from the Middle East, Asia and particularly China and a decline in the dollar also helped prices log their biggest one-day gain in over a year and their first close above $1,300 an ounce in nearly five weeks.
Gains in silver futures, meanwhile, outpaced gold’s rise, with silver surging 5%.

Gold may have been higher also due to the weak U.S. dollar which is under pressure from poor U.S. home sales and comments from Bill Gross, PIMCO co-chief investment officer, who said he expected the Fed won't tighten policy before 2016.

Gold has recovered nearly $150 or more than 12% in less than a month since hitting a three-year low of $1,180/oz on June 28th. Gold has made the strong gains due to robust physical demand as seen in the still high premiums in Asia.

Respected investor and precious metals guru, Jim Sinclair has again warned of a risk of a default on the COMEX and said that gold prices will rise to $3,500/oz and that gold at $50,000/oz is “not out of the question.”
Sinclair, the successful gold and silver investor and a former adviser to the Hunt Brothers in their liquidation of silver from 1981 to 1984, said in a posting on his blog that was emailed out to subscribers that:

“The cause of today’s spectacular rise in the gold price is the reality that with Friday continues large drops in the COMEX warehouse gold inventory. No cogent argument can be formed against the reality that because of the continued fall in gold inventory that within in 90 days or sooner the Comex must change its delivery mechanism.”

Sinclair, said that the COMEX would have to move to cash settlement as they do not have nearly enough gold bullion to make deliveries and warned that owners of futures may be forced to accept payment in the form of the SPDR GLD ETF. This which would make them unsecured creditors of the bullion banks who are the custodians and sub custodians of the SPDR GLD.

He said that this could lead to the GLD ETF being “destroyed” and said that “it is a truism in gold that
which is convertible into gold will in fact be converted over time.”

Sinclair was likely alluding to a form of Gresham’s Law where bad money drives out good and where ‘bad’ or more risky gold investments are driven out by ‘good’ or safer gold ‘investments’ such as physical bullion in your possession or allocated in a vault outside the banking system.

Gold rose yesterday and Sinclair said, “because those knowledgeable know the inevitability of the changing of the COMEX contract.”

Dennis Gartman: Gold is going 'several hundred dollars higher'

NEW YORK (jJuly 23) The selloff in gold has run its course, and the precious metal is set on an upward trajectory, Dennis Gartman the closely followed commodities trader and founder of The Gartman Letter, told CNBC.

"I had been agnostic and modestly bearish of gold until about three and a half weeks ago," Gartman told "Squawk on the Street" on Tuesday. "Then I wrote what I call 'a watershed commentary' that gold was going to go several hundred dollars higher.
"I continue to be bullish on gold, and I think [it] is going higher," he said. "I'm not a gold bug. … Gold is nothing more than another currency. It's to be crossed against other currencies. I think in the circumstances that prevail right now, gold wants to go higher."
Gartman said that he's 'especially bullish' on gold in yen and euro terms because of moves made by the world's major central banks, which are looking to expand reserves. "It's not a new story, but it's having an effect."
In addition, he said, since the public has been liquidating gold positions, that process has likely run its course, as demonstrated by gold's recent move up.
Gold has also broken above several technical levels in the past few days and "given none of that back—I find that impressive," Gartman said. It also is experiencing backwardation (in which the expected spot price is below the price of a futures contract), a situation that he said supports his bullish thesis.
"That's a market that tells you the demand for that commodity is strong," Gartman said. "It's actually asking for that commodity to come out of storage," he added, pointing out that crude oil is also experiencing backwardation.
"I don't believe that there is a conspiracy out there to tighten the supplies of gold. Supplies of gold are simply tight. ... There's [also] not a conspiracy to tighten the supplies of crude oil. Demand for crude is strong, even relative to the supply that we have. The economies of the world are strong, and that's where you get a backwardation," he said.
"The market is what the market is," Gartman said. "Let's respond to that. Let's understand that and let's move on."

New South Korea Gold Exchange More Proof Of Strong Asian Demand For The Yellow Metal

By Neils Christensen of Kitco News
Tuesday July 23, 2013 12:35 PM (Kitco News) -With so much demand for  

physical gold in Asia, analysts are not surprised that South Korea is 

trying to get in on the action.

 On Monday, South Korea’s Financial Services Commission said 

that in the first quarter of 2014, spot gold will be traded on the 

country’s markets like listed stocks.

 According to media reports, the commission said the gold 

exchange is being created to combat “underground gold 

transactions.” The commission added that, people have been 

buying and selling black-market gold as a way to avoid the 

country’s value added taxes.

 Howard Wen, analyst at HBSC said, he doesn’t know how big the 

exchange will be, but it does continue to add to the argument that 

Asian consumers want physical gold.

 Wen added that although the South Korean market is relatively 

small, easier access to gold is definitely positive for the market.

George Gero, vice president and precious-metals strategist with 

RBC Capital Markets Global Futures, said with so much trading 

activity in Hong Kong and Tokyo and new gold vaults in Singapore, 

it is not surprising that South Korea wants to create their own 

market.

“There is tremendous interest in Asia for trading and buying gold,” 

he said.

 Gero added, as another example of strong dedmand in Asia, a new 

overnight contract introduced on the Shanghai Futures Exchange 

has seen surprisingly strong volume since it started trading on July 

5.  The creation of new exchanges means there will be new 

arbitrage opportunities and more liquidity, which is something the 

Asian market could use, he added.

 Colin Cieszynsk, senior market analyst at CMC Markets Canada, 

agreed that increased liquidity will help the market. He added it 

could also help to lower some of the volatility sometimes seen 

during the Asian trading session.

 “Gold is such a huge market that it could support more exchanges 

even if it is only localized trading,” he said. “There is no question 

that liquidity is a good thing.”

Although Asia appears to be setting its self up as physical gold hub, 

analysts are not sure that these countries will be able to dominate 

the market. Wen said he would expect investor demand to 

continue to dominate price trends for the yellow metal.

“It’s true that whoever holds the gold has control, but the bulk of 

the paper trading still happens on Comex,” said Wen.

Gero added that the gold market is too big to be controlled by one 

country or even one region.

“I don’t think any one area can control prices for very long,” he said.

Pick Gold Bottom for Investing - How Low Will it Go?

In any investment it's essential to buy the asset as cheap as possible. Precious metals have been oscillating

wildly during the past 2 years. While everyone was hoping for gold to hit the 2,000 $ mark, it dropped even

below 1,400 $. If you want to invest in gold, then pick the bottom and buy then. Immediately after gold hits

 "rock bottom", it will spike skywards. Smart investors will seize the opportunity to buy more. It seems like

gold will continue to fall for a while, because there are plenty of bearish factors out there that need to be

taken into account. But how low can gold's price go? When to get into a long position? When should we

start stacking physical gold? It will eventually stop when it's "too low" and from that point on it will start

rising. Finding out when it's "too low" is the key to buying gold at the right time! You should also check why

gold has crashed, because it's essential to understand the causes of the price drop. There are factors pulling

it upwards and factors dragging it down. Understand the forces and it will be easier to identify the bottom

price for gold. Most experts agree that gold's current production price is around 1,200 $ per ounce. This

means that if it drops below, it will be "less worthy" to produce more gold, as it will not be profitable

enough.The closer gold gets to 1,200 $, the higher the possibility will be for it to rise again. The 1,200 $ limit

seems to be a psychological level as well. Many financial institutions have predicted that this level will be

gold's bottom. Others predict sub-1,000 $ gold. If you want to pick the bottom, you will have to keep this

production cost limit in mind (1,200 $). It is very likely that gold will indeed reach the 1,200 - 1,300 $ range

this year. There is also a possibility for it to drop below 1,200 $. (In case the Fed slashes QE later this year,

if the euro starts weakening drastically etc. - then we could see even lower prices) Currently there is less

appetite for gold, dampened investor sentiment and it seems central banks aren't buying as much as they did

last year. As soon as gold reaches around 1,200 $, it's possible that we'll see a spike in prices. Part of the

spike's cause will be due to the fact that gold producers (mines) will slow down, because of risky profit

margins. They won't produce as much gold because of the low price, which will reduce the amount of gold

output. If supply shrinks, this will give more power to the bulls and gold will rise. The 1,000 - 1,200 $ range

should be a great buying opportunity. It might not be the lowest level, but it's the next most likely bottom for

gold. If you want to invest in gold, you should eye this interval and purchase at least some. Of course, it

depends on your portfolio. If you are new to gold buying, then you should check our precious metals

investment advice section for further documentation. Each purchase needs careful analysis in order to be

able to take the right decision.

Shocking New Gold Chart:

Look at it now, before everyone else gets ahold of it.

By Keith Fitz-Gerald, Chief Investment Strategist, Money Morning

What I'm about to say will challenge even the most steadfast gold bears - or anyone for that matter right now who thinks that gold has seen its better days.

The chart below tells a story - a big story. In fact, I encourage you to forward this to anyone you know who is serious about their money.

What I found here, with the help of Frank Holmes from U.S. Global and one of the smartest people on earth on the potent combination of Asian markets and commodities, is a chart that shows a truly astounding fact about gold.

Let me walk you through it, and what it could mean to your money, your gold, and your financial future. 


Courtesy U.S. Global Advisors - click to enlarge

The grey backdrop is total world mining production. The blue vertical lines represent COMEX gold deliveries. And the big long vertical red lines? That's physical gold delivery on the Shanghai gold exchange.

The takeaway? - Chinese demand for physical delivery all by itself is nearly equal to total worldwide gold production.

That's not a misprint.

In fact, so far this year Chinese deliveries through the Shanghai exchange account for nearly 50% of total global production all by themselves. The COMEX that's part of the New York Mercantile Exchange is almost an afterthought.

This is about as bullish as it gets because the basic laws of supply and demand stipulate that whenever supply is reduced but demand remains constant or accelerates, higher prices result.

No Stopping It

This is as immutable as the sun coming up tomorrow or the grass turning green in the spring.

This is good for the markets in general, especially with Bernanke hell bent on keeping the "bad is good theme alive" when it comes to further stimulus.

And this is positively great for gutsy gold investors at a time when others want to relegate it to the scrap pile.

Imagine what happens when people actually figure out that China is buying so much gold that physical deliveries there could account for 100% of worldwide production by year's end?

For investors wanting to play gold, there are quite a few options.

But one's the best...

Get Ready For a 21st Century Gold Rush

Purists feel owning physical gold is the only true hedge against global turmoil and declining values in the dollar and other fiat currencies.

For smaller investors, this typically means buying gold bullion bars, rounds (unadorned coin-shaped pieces) or minted gold bullion coins.

Bullion bars - produced primarily by private mints like Engelhard, Johnson Matthey PLC (LON: JMAT) and Credit Suisse Group AC (NYSE ADR: CS) - come in an assortment of sizes to suit the needs and means of every investor.

The smallest bars weigh just one gram, while the largest weigh 400 ounces.

Gold rounds are produced by the same private refiners, as well as some government mints, and are also available in a variety of sizes, typically ranging from one-tenth of an ounce to five ounces. Prices range from as little as $15 per round over the spot price of gold at the time of the order for smaller pieces to $40 over the spot for larger specialty pieces.

Jewelry-type pieces, such as pendants, are also available, but generally carry slightly higher premiums.

Minted bullion coins come in a far greater variety, being produced by most of the private refiners as well as a number of the world's leading government mints.

Examples of the latter include the American Gold Eagle, American Gold Buffalo, the Canadian Gold Maple Leaf, the South African Krugerrand, the Chinese Gold Panda and the Mexican Gold Libertad.

Specialty bullion "commemorative" coins are also available from both private and government mints, honoring everything from African wildlife to the spouses of American presidents.

Sizes range from one-tenth of an ounce to two ounces, with the one-ounce size being most popular and readily available. Bullion coin prices typically track the spot price of gold, plus a premium of 5% to 6% for the one-ounce issues, which covers the cost of refining, minting and marketing. Premiums on smaller coins can run as high as 15%.

Beware, however, that the premiums for all sizes will be considerably higher if you buy in small quantities or want to pay by credit card rather than with a bank draft or funds transfer.

The most important rule, whether you're buying gold bars, rounds or minted bullion coins - or any other physical metal, for that matter - is to deal only with reputable dealers with proven experience and clearly stated policies and warranties. This is especially crucial if you're purchasing by phone or online.

Don't Get Scammed

Several well-regarded, long-standing dealers in the U.S. include:

American Precious Metals Exchange (apmex.com) - This Oklahoma City-based firm offers both bullion and collectible metals products, as well as storage facilities. Quotes are updated every 15 minutes during trading hours. Purchase online or call 1-800-375-9006.

Asset Strategies International (ASI) (assetstrategies.com) - This Rockville, MD, firm has a large inventory of gold coins, bars and other bullion products, and also offers regular metals markets commentary and analysis on its website. Sales representatives are available at 1-800-831-0007.

Goldline International Inc. (goldline.com) - Based in Santa Monica, CA, this company has been in business more than 50 years and offers a full range of gold coins and bars from mints around the globe. You can purchase online or through a sales rep by calling 1-800-963-9798.

The Tulving Co. (tulving.com) - Based in Newport Beach, CA, Tulving provides 24-hour sales and service, tracking trading and price quotes in markets around the globe. U.S. and Canadian investors can call 1-800-995-1708.

Physical gold provides a long-term store of value, but it does carry one added risk - the potential for confiscation, much like what happened in 1933.

That possibility is quite real. As such, if you're seriously considering gold as a hedge against future U.S. political or economic uncertainty, you might consider a storage site for your coins or bars in Canada or elsewhere offshore.

One added note for coin buyers: If what you want is a true hedge against turmoil, inflation and a weakening dollar, stay away from "collectible" gold pieces.

While such coins are beautiful and their value will no doubt increase along with gold bullion, those values are subjective, they carry far higher premiums than bullion coins and they're much harder to sell on short notice.

By contrast, bullion coins and bars are cumbersome for investors to trade given the price premiums, storage, shipping and insurance costs.

In this case, the ultimate trading vehicles are gold futures - the most popular being the 100-ounce contract listed on the COMEX Division of the Chicago's CME Group.

However, that's a fairly high-dollar/high-risk instrument for most investors since a single contract is worth $125,000 or more at current prices.

As such, a better vehicle for smaller investors wanting to play gold's next rally is one of the exchange-traded funds (ETFs) or notes (ETNs) with shares backed by actual bullion.

Shanghai Gold Volume Shock

Stewart Thomson

July 9, 2013

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For decades, the American “paper gold” market (the COMEX) has been the primary market for determining the POYG (price of your gold).
Most analysts in the gold community believe that demand for physical gold will somehow overwhelm the COMEX, and “liberate” the POYG.  They predict vastly higher prices are coming, when that happens.
I disagree.  I believe paper gold markets will continue to be the primary price setting mechanism for gold, but Asian paper gold markets will be where most of the action is.
Like the COMEX, the Shanghai futures exchange (SHFE) is a paper gold market.  Yesterday marked the beginning of extended trading hours (night trading) for the SHFE, and volume was superb.
The average trading volume during the day is about 90,000 contracts.  The first night session saw more than 220,000 contracts change hands.
Slowly, Shanghai’s paper gold market should begin to rival the COMEX.  That’s excellent news for bullish gold investors in the West!
Public investors in Asia are generally “pro-gold”, while Westerners are generally “pro-fiat”.  Institutional paper gold investors in Asia are more reluctant to sell into price declines than their Western counterparts, and they can be eager buyers of size!
Also, when analysing the gold price, the market actions of Japanese investors should not be overlooked.  “Assets held by Mitsubishi UFJ’s gold ETF reached 24.58 billion yen ($243 million) on July 5, compared with 25.86 billion yen at the end of last year, Hoshi said.  About half of the assets are held by individual investors, with the rest owned by financial institutions, pension funds and corporations and foreigners, Hoshi said.  Trading value in Mitsubishi UFJ Trust’s gold ETF on the Tokyo Stock Exchange amounted to 7.23 billion yen in May, becoming the most-traded commodity fund listed in Japan, according to data compiled by the bank.” –Bloomberg News, July 9, 2013.
The rise of Eastern paper gold markets will be a process, rather than a one-time event, so patience is required.  Japan’s paper gold markets are still very small, but they are gaining popularity.  The trend is definitely your friend.
“SPDR Gold Trust, the world's largest gold ETF, said its holdings fell 1.56 percent to 946.96 tonnes on Monday - the lowest since February 2009.” –Reuters News, July 9, 2013.
SPDR is a Western gold ETF.  In the big picture, the West continues to bail out of gold, and the East is an eager buyer of all that is offered.



The banks are also substantial buyers, as shown by recent COT reports.
You can see that the commercial traders’ long position is growing nicely.  The gold community is not alone; powerful banks and many types of Asian entities are buyers now.

That’s the hourly bars chart for gold.  It shows the trading on the COMEX.
It will be interesting to see if the SHFE night session traders can put a bit of a scare into COMEX pit traders this week.
Regardless, my suggestion to both Eastern and Western gold traders is to be a light seller in the $1255 - $1275 range, and a buyer at $1175 - $1225.

That’s the daily gold chart.  No significant rally has occurred yet, but a number of bank analysts have suggested the decline is nearly finished.  That should provide some comfort to investors.
Note the position of my stokeillator. A buy signal is in play, and I don’t like to bet against it.  Longer term investors should book some profits in the $1280 - $1320 zone, if the price gets there.  Hold the rest as a core position.
Chinese inflation is apparently on the rise again, as are Chinese gold imports from Hong Kong.

You are looking at the GDX daily chart.  It’s an appalling picture, but I’m a buyer anyways.  From a tactical standpoint, I recommend adding short positions or put options with every purchase of gold stock, to maintain some semblance of emotional sanity.
One reason that I’m now focused on gold stocks more than bullion, is because I believe that gold stocks outperform in an inflationary environment.  Since 2008, deflation has been the main investment theme, but I think there is a transition to inflation, in play now.
Also, there’s a lot of talk about owning gold bullion as a “growth with safety” play.  I believe in “safety first”, not “safety after I’ve blown up in gold stocks”.  Gold bullion is arguably the safest asset in the world, so it should be the first item on every investor’s buy list, not one that is bought in hindsight, after a portfolio wipeout occurs.  It’s too late to transition to bullion from gold stocks now, and it’s the wrong play, in my professional opinion.

That’s the daily chart for silver.  I prefer to own silver stocks, rather than bullion.  Buyers of silver stocks should already own silver bullion, as your “safety first” play. The red supply line on this chart is a pesky one.  The stokeillator is flashing a buy signal, but the silver price still can’t break above that annoying trend line.  Patience is the virtue that is required here.

That’s the daily chart of SIL-NYSE, which is a silver stocks ETF.   I own it, and I want to own a lot more of it.  Will you join me today, in a small way, and show the East… how the West was really won?  Hi, ho, silver!

http://www.gold-eagle.com/article/shanghai-gold-volume-shock

What Could Bring Gold Further Down What Could Bring Gold Further Down

Gold is correcting and it's likelier to fall lower instead of recovering.

Here are several factors that will most likely bring gold even lower in 2013:

 1. Investor sentiment has weakened: although it's temporary and purchases tend to pick up once a lower price level has been reached

 2. Physical demand for gold has declined: less gold was bought in 2012 and we're seeing a delayed reaction in the price - this was due to various factors, partly because of the fact that small investors overbought gold, so the current cheaper gold comes in as an opportunity to them

 3. QE Trimming by the US Fed: the Federal Reserve might reduce QE3 and it's most likely for the trimming to occur in 2013 - obviously the slowed-down pace of quantitative easing will propel the dollar higher and will push gold's price lower!

 4. Weakening euro: the euro is on the brink of collapse, but even if the long-predicted crash doesn't occur, any negative euro-affecting factors will only strengthen the dollar - cheaper euro means more expensive dollar and this will drag gold down


Positive factors for gold would be, for instance: central bank purchases of gold, even small investors acquiring physical gold, but also appetite for ETFs - any of these, if occurring in substantial volume will propel the shiny metal's price higher.

The weakening dollar, negative US economy-related news also gives a boost to gold. Right now, the dollar is gaining strength - which is mainly due to the fact that other competing currencies, like the euro and the Japanese yen are devaluing. This makes the American fiat currency seem a lot stronger.

But: much of the gold traded is COMEX gold, exchange traded funds, not physical gold. Speculators play the metal's price up or down, they're only interested in the profit, but this as well, influences gold to drop or rise. The price is the same for physical gold as well.

For the 2013 - 2014 period there's a plethora of negative forces: the likeliness of gold dropping is extremely high.

Market Watch / Gold Price Crash in 2013-2014?

Gold Price Crash in 2013-2014?

Gold's price has been rising for over a decade now. It's a reliable hard asset, one that has intrinsic value and has been regarded as wealth for millennia.

Everyone who's up-to-date with gold's prices during the early 2000's knows that gold has been in a bull market for about 12 years. It's been rising with slight interruptions, modest corrections for over a decade and bullion dealers have only had to gain from this phenomenon.

Gold has become "trendier". But how long will this continue?

Can you trust gold as a long-term investment?

Could gold's price crash?

Yes - gold can crash. In fact, it's highly likely that it will. There are multiple signs that this could occur, only that the vast majority of investors and gold experts won't tell you that - because they have the interest to sell their services and promote their partners.

On the very long term gold will indeed rise, but there could be a strong correction during 2013-2014. The signs are obvious and PrimeValues.org will unveil them to you - right on this page!

There are forces propelling gold up and there are others pulling it back! Precious metal sellers usually tell you about the ones propelling the prices higher, on the opposite side are governments and various institutions interested in currencies bonds, etc. - they will talk negative about gold.

Prime Values has a neutral position. Listen to both sides and act independently!

Understand where gold goes and buy when it's cheap!

Cheaper gold prices can mean another great opportunity for buying! Because on the long term, fiat currencies will eventually lose tremendous amounts of their value and you will only be safe enough if you own hard assets.
Let's see the forces first and how gold will crash.  

The Forces Propelling Gold Higher

Details will be omitted, you will find a plethora of articles on this site and many others on the web. You will always find more articles about why you should buy gold and how it will rise on the long term.

Just to enumerate the forces and factors that are giving a boost to gold prices: fiat currency devaluation/hyperinflation/money printing, the worsening global economic crisis, high demand for gold (both from individuals, companies and governments - the more they buy, the more it will cost), the loss of trust in paper-based values (currencies, bonds, certificates etc.).

A severe, 1930's depression is unraveling in front of your eyes. Hyperinflation, civil unrest, severe poverty are just part of the problems that could occur.

Peter Schiff, Paul Krugman, Nouriel Roubini, Marc Faber and lots of other economists have been warning about such scenarios. It's rather a question of time than a question of "if". Owning hard assets is unquestionably a good thing.

The Forces Dragging Gold Down

Of course, there are factors that cheapen gold.

Money-printing makes it more expensive, so does any major negative US economic data (and not only US economy-related data). But: when the US dollar strengthens, gold loses value. This usually occurs for brief periods, while the overall price trend is on an upward slope.

This is what we'd like to analyze under this article.

Let's see why gold could crash as early as this year - 2013 or, later in 2014.


 1. Gold Has Lost Momentum

You don't have to be able to interpret the charts. Simply observe the price of gold on Kitco.com and observe the "humps" during the 2011-2012 period. It vividly reflects that gold doesn't have the same energy to rise.

The "humps" are abrupt bull runs followed by sharp corrections. Almost every time gold gained strength, it took a dip very soon.

In early 2013 it has been trading horizontally. This reflects uncertainty.

The energetic rise of price was characteristic to the 2001-2010 period especially. After that, sideways tradings and abrupt drops...

In 2011 and since then, gold has been falling back after strong bull runs quite sharply. It's an undeniable fact. Observe the charts.

All these despite "Operation Twist" (also known as "QE 2.5"), despite "QE Infinity" (the 3rd round of quantitative easing), despite the severe weakening US economy, despite the nearing fiscal cliff-related issues, etc.


 2. Gold Has Crashed Before, it Could Happen Again

Check the historical charts and observe the evolution of gold's price. You will see waves: ups and downs.

After President Nixon took the US off the gold standard, the "king of all metals" gained tremendous value, only to crash roughly to half of the peak value in 1980!

Look at platinum's crash in 2002. Observe how that metal went up to above 2,200 $ and crashed to slightly above 800 $!

Indeed: gold can crash, as it did before. As platinum dropped. They are not immune to value-loss either.


 3. Failure to Reach Predicted Price Levels

Gold failed to reach the 2,000 $ per ounce limit. The long-predicted psychological level could not have been reached. Multiple predictions by prestigious investors and renowned financial institutions failed multiple times.

Gold could barely hold the 1,700 $ level in 2012, despite CitiBank's prediction of 2,400 $.

In December 2012, gold prices dropped 1,680 $ and the "big bull run" in early 2013 didn't happen until mid January (yet, at least).

Evidently, gold is failing to meet expectations.

Recently, Goldman Sachs predicts lower gold prices for the coming period (see the related Reuters article).

According to these and numerous other predictions, gold will only get past 1,800 $ (will stay below 1,900 $) during 2013-2014. We shouldn't be too enthusiastic about that 2,000 $ level. It seems like some forces pulling gold down are getting stronger.


 4. Deflationary Scenario to Weaken Gold Prices

During deflation, precious metal prices, as prices in general are lower. Gold could "take a dip", if this happens. It's not 100 % certain, but it's way higher than 50 % - it's more likely it will happen during deflation that not.

Marc Faber is one of many economists warning of a possible deflation in the United States.

You might want to check the Reuters article about a US deflationary spiral.

The long-predicted hyperinflation might only occur after the "deflationary spiral".

It is possible that gold will "take a vacation" for a while and will pick up later on.


 5. Weaker or Crashing Euro Will Propel the Dollar, Which Will Drag Gold Down

The US dollar's biggest rival's demise will only strengthen the American currency. Its position as a reserve currency might briefly be strengthened. This will rather be an artificial financially-motivated gain of strength.

Despite the US economy not delivering good results, the fall of its biggest rival will have a positive effect on it.

Ordinary people, but especially forex speculators will rush into the US dollar from the euro.

The obvious conclusion will be cheaper gold. Other precious metals (especially silver, perhaps platinum might follow).


 6. Experts Predicting Lower Gold Prices For 2013

Marc Faber (also known as "Dr. Doom") has stated in a CNBC interview in December 2012 that gold's price could even go below 1,500 $ per ounce this year. He also talked about the fact that gold is in a correction.

Similarly, Jim Rogers didn't seem too optimistic either - underlining that it's rather unusual for a commodity to rise for over a decade. Rogers expressed that he wouldn't be surprised to see a correction.

According to this MarketWatch article, gold will fall roughly 500 $ an ounce to reach as low as 1,200 $ per ounce in 2013.


 7. Gold Price Manipulation

Jim Sinclair (also known as "Mr.Gold") believes that major financial institutions like Goldman Sachs are manipulating gold's price down only to buy it up at a cheaper price for later re-sale at a higher price.

Goldman Sachs is indeed often suspected of manipulating precious metal prices. Check the article by ArabianMoney.com for details on what Sinclair believes.


 8. Paper on the Gold Market

ETFs and various other "paper certificates" that don't have real precious metals behind them are behaving almost like fiat currency. They have no gold backing, but they act as if they had. So, their massive sales or lack of demand to buy them automatically induces lower prices for physical gold!

Let's keep in mind: "what they trade out there" isn't real physical gold, but rather "certificates of gold". Physical gold becomes a victim of these speculations.


 9. Automatic Stop-losses Ending Positions on Strong Dips

If gold turns bearish, there is a risk of "stop-loss detonation": the lower gold's price goes, the higher the likeliness of touching the stop-loss points set by investors.

Massive sale of gold futures - for example (one occurred in autumn 2012), can bring gold prices down only to trigger stop-losses. This is an automated domino-effect.

This danger is always there. But the gold market has been more often bearish during 2011-2012 than any time during the previous 10 years (2000-2010).


 10. Psychological Factors, Weaker Investor Sentiment

Gold (as any other asset) is only good as long as people believe in it. Belief gives value.

Just like we believe in people, we believe in hard assets, similarly to fiat currency.

Perhaps the "belief" is one of the most powerful and very hard to measure factors that can move the prices of assets up and down.

Gold has lost from its prestige during 2012 and some bullion sellers actually reported lower sales. In mid 2012, gold prices dropped to 1,518 $/ounce and gold traded sideways until the 3rd round of quantitative easing was announced in September 2012.

If the investors lose confidence in gold, it drops. Loss of confidence will drag prices down, which will cause panic, fueling an even sharper decline.

Psychological factors play strong roles at certain times, but almost always act together with other (more rational) factors.