Posted on 11/12/2010 5:29:28 PM PST by EagleUSA
SAN FRANCISCO (MarketWatch) — Gold futures sold off Friday on concerns China will soon take steps to rein in its inflation and move to increase interest rates.
Gold for December delivery /quotes/comstock/21e!f:gc\z10 (GCZ10 1,368, -35.00, -2.49%) dropped $37.80, or 2.7%, to $1,365.50 an ounce on the Comex division of the New York Mercantile Exchange. That was gold’s largest one-day drop since early July.
The contract earlier traded as low as $1,359.30 an ounce, according to FactSet Research.
Gold had lost more than $30 overnight, but seemed to have recovered somewhat at the start of floor trading. Nervous investors, however, pulled the plug on gold after they saw other commodities and stocks selling off.
On the week, gold has lost 2.3%, its worst weekly decline in four weeks and a first drop after two consecutive weekly gains.
If China tightens, it raises the likelihood more countries would follow suit, said Matt Zeman, a trader at LaSalle Futures in Chicago. Gold would lose one of its main engines so far: fear of inflation, he added.
Moreover, gold, which earlier this week posted a fourth consecutive record high, and silver, which has traded at 30-year highs almost daily, “are markets that are going to be very vulnerable to profit-taking,” he said.
(Excerpt) Read more at marketwatch.com ...
I hope it falls some, because I am buying heavy. I have since gold was 700, and silver was 13.
I bought my first $5 gold coin when gold was at about $300. I should have been buying silver, I think.
I am mad at myself for not going with my gut after 9/11. Gold was 360. I was going to buy eagles. I didn’t. I bought silver eagles a year ago, though. I think I will stick with my gut on the future.
I really wish I could figure this very question out. I am SO afraid of a gold bubble that I have been avoiding doing the right thing since it was at 1000/oz. I do understand what is making gold rise, but I don’t understand what conditions might cause it to drop precipitously like the housing market just did in 2008. I can’t afford to get caught in another bubble, but it seems I am now going to be forced into either a dollar or a metals bubble and must pick the least worst outcome. Food / Ammo / Gold / Silver seem to be the consensus. I continue to do the first two. I just must overcome my fear and get out of the dollar. I just wish my gut would stop yelling at me that gold can’t not have a major correction at some point on this hockey stick curve it’s been on. I just want to keep my family secure through what’s undoubtedly coming. There is no clarity on this topic of gold.
I dont trust gold. Something smells like “bubble” to me. Although maybe that’s just because most everything else seems to have been a bubble. But just seems to be too much hype around it.
This is a correction the shorts will use to bail from gold. Nothing changes on the triple deficit of the US, and the QE2 set sail, so the $ will sink over the longer term continuing to push up the price on gold, nevermind the slight increase in China’s interest rates. Until the US stops printing hundreds of billions of cash and spending with trillion+ dollar deficits every year, gold and international stocks or oil investments will continue to do well in the longer term, silver too. There will be some volatility and that is what we are seeing.
Obama got spanked by China and everyone else in Korea this week, and nothing has changed to improve the US economy. This pull back is a good time to buy, certainly to hold, unless you need to lock in some profits or exit a short position.
If China raises rates, and other major nations follow, but the US continues with nearly 0%, we can watch the dollar become toilet paper even faster.
We live in a banana republic ruled by common street thugs.
Obama got spanked by China and everyone else in Korea this week, and nothing has changed to improve the US economy. This pull back is a good time to buy, certainly to hold, unless you need to lock in some profits or exit a short position.
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I agree, but I am watching the short term on gold. Silver is a slam dunk. But the big point you stated, was that NOTHING IS GETTING FIXED in our economy, quite the opposite. Obama continues his planned destruction of our economy, and the international metals market will continue to show it. How that fraud got elected still eludes me.
bfl
I’m with you, I have no gold, a few hundred ounces of silver. I have some cash on hand, plenty of food (I even canned butter the other night!), clothing, personal needs, need some more ammo but I’m just afraid to spend that much on gold when I can purchase many of the things I will need in the future cheaply now.
Watch the Federal Funds rate. Gold will correct hard against the dollar when Bernanke (or his successor) has to throw in the towel and start raising rates. It took Volcker some serious rate increases to break the back of gold in the early 80's. Hopefully the Fed acts before things get that bad, but they're what you have to watch when it comes to the dollar price of gold.
“....I still see masses of unemployed and endless home foreclosures....”
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It does not take any kind of Harvard MBA to figure out the state of the economy and what is and is not being DONE TO IT (and why). Your comment says it all. The economy is a disaster, and getting worse (and we know why) and the rest of the world is watching it happen just like you and I. Know the what and who of the situation says that it will continue to decline until January of 2013....and then we can only hope that we end up with an administration that fires the plethora of Congress-bypassing czars and returns the government back to Congressional oversight and control, hopefully led by a strong conservative President. Until then, expect anything.
Buy silver eagles. They are relatively inexpensive, easy to sell. Go to a local dealer. A good deal is 3 dollars over spot. Who wants to barter with a gold eagle at 1600 per coin?
I got to work on my food and ammo supply now!
Silver, and later Gold, were the last preps.
Food, water, shelter, clothes, energy.
Guns and Ammo of coarse.
Preserve any wealth you have left.
George Green said to keep five ounces of gold handy per person. He said it could get you out of the country in a pinch. Easy to carry when you travel.
Think of what pilots carried in WWII. Wasn’t it two gold twenty dollar double eagles?
“Gold futures sold off Friday on concerns China will soon take steps to rein in its inflation and move to increase interest rates.”
Does anyone but me see that this bullshit statement has nothing to do with the price of gold? For cripsake, there is no logic or rationality between the words “gold” and “rates.” This story was written by a fifth-grader high on twinkies.
If you’re going to shovel out bullshit at least stand a bull nearby.
“...Does anyone but me see that this bullshit statement has nothing to do with the price of gold?...”
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And how would you know for sure?? I am not the author, but I would not be against it.
Higher interest rates have been used as a tool against inflation in this country during the Reagan era. Successfully, too, but we had a short, severe recession because of it. Historic prices for gold followed suit with inflation and dropped precipitously.
China getting serious in combatting inflation would depress demand for "safe havens" in an inflationary environment as well.
Higher rates have another effect upon behavior, and that would be saving money in banks that are offering a better rate of return, which competes with other investment vehicles such as gold.
The base assumption that could be BS, however, is that gold demand is all that high from China, that domestic economic policy from that one country could drive a sell-off.
I contend that gold is peaky, so any rumor such as this could set investors running for the exits, and they did just that.
Well, then bet your fortune on China’s economic policy and short gold.
A lot of people have bet on the Asian dragon and got burned.
“I contend that gold is peaky..”
Famous last words. Col. Custer was certain he could tame the Indians at Little Bighorn.
Let us know how betting on the ChiComms turns out for you.
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