Posted on 04/12/2013 2:18:03 PM PDT by Sawdring
(Kitco News) - Investors looking for a reason behind Friday’s dramatic selloff in gold should look no further than the European Central Bank and its president Mario Draghi, says Vince Lanci, managing partner at Cameron Hanover.
During a press conference Friday, Draghi said that while Cyprus doesn’t have to sell its gold, any money that is raised from the sale must go towards covering the losses from the emergency loans to country’s banks.
In Friday’s edition of Reset Lanci said, Draghi’s message was fairly clear “sell your gold or you are not going to get the money.”
“That spurred a very disorderly selloff in the market,” Lanci told Kitco News Reporter Daniela Cambone.”I think the market is going to be suffering for a while on that.”
During Friday’s North American session Comex June gold futures hit its lowest level Since April 2011. At 3:25 p.m. gold spot prices were trading at $1,485.70, down $75.30 or almost 5% on the day.
Lanci pointed that Friday’s selloff shows just how influential the government has and it was “incredibility irresponsible” for the head of the ECB to make comments inferring that a country will have to sell its gold reserves.
“This guy is not a loose cannon. He shouldn’t be doing this,” he said. “I doubt Mario Draghi would be saying that he was selling gold the day before he sold it. I doubt China would be saying they’re going to buy gold the day before they buy it.”
Because of this extreme move, traders will now start pricing in other countries that will have to sell their gold reserves to show up their economy. Lanci said the fear of a potential domino effect might cause some investors to rethink buying gold in the near-term.
Friday afternoon the euro zone finance ministers officially backed the 10 billion euro loan for Cyprus. However, Cyprus itself will have to come up with 13 billion euros of its own; the bulk of those funds are expected to come from the closure of its Laiki bank and the restructuring of the Bank of Cyprus.
While Lanci is still a buyer of gold, he said that he is a little bit more careful to make sure he finds the right price and is only buying a little at a time. Because of the current fragility in gold prices he recommends that investors do not over extend themselves in precious metals.
As for whether Friday’s selloff is the official end of gold’s bull market, Lanci said that although it could be, there will still be interested buyers who see gold as an investment.
Looks like the Beast System will do ANYTHING to maintain their fiat paper as real currency and destroy all competition ( gold, silver, bitcoin).
Goldbug ping.
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