Kitco Metals Roundup:Comex Gold Hammered Lower, Hits 3-Month Low, On Panic Selling

Kitco News ^ | 12/14/2011 | Jim Wyckoff

[Mariner]

(Kitco News) - Comex February gold futures prices careened lower and hit a fresh nearly three-month low on follow-through selling pressure from the strong losses posted in afternoon trading Tuesday. It was a “risk-off” trading day in the market place Wednesday, and that was very bearish for the precious metals. A stronger U.S. dollar and sharply lower crude oil prices were also major bearish factors for gold Wednesday. Fresh, serious near-term technical damage has been inflicted in gold this week. February gold last traded down $76.80 at $1,586.60 an ounce. Spot gold last traded down $47.00 an ounce at $1,584.50. March Comex silver last traded down $2.365 at $28.89 an ounce.

Fresh developments on the European Union debt crisis scene include higher Italian bond yields Wednesday and some fresh, weak economic data coming from the EU. That pushed the Euro currency to a fresh 11-month low Wednesday, which in turn boosted the U.S. dollar index.

The U.S. dollar index traded higher Wednesday and hit a fresh 11-month high. The dollar index bulls have the solid overall near-term technical advantage, which is a major bearish underlying factor for the precious metals markets. Crude oil and many other commodity market prices were lower Wednesday morning, with crude sharply lower, which was also negative for the precious metals.

[grumpygresh]

“Helicoptor Ben will make a move to print.....but can it kickstart some inflation.......or just sit in banks” investment portfolios again?”

The government and the Feds figure that if they can tamp down the economy through regulation and taxes, overall inflation will be relatively tame as it was during the Great depression (actually deflation). The idea is to depress wealth creation which reduces prices for dicretionary, and high end purchases (homes, gold as jewelry, luxury items). However, staples (food, energy) will continue to inflate because of constant demand. So making people poorer will avert inflation to some extent.

However, the reality is that gold is also a store of value and has functioned that way throughout history even through the most dire times including the Dark Ages (Atilla the Hun liked gold). The one trump card for fiat currency is its legal aspect. That legal aspect could trump gold if there is a worldwide currency snd totalitarian world government.

[BenKenobi]

I find your lack of faith disturbing.

[dennisw]

Good move. Deflation is the theme right now. Everyone has antennae up for a replay of fall2008-winter2009 severe downdraft when SLW went to $3. It can happen again but (just repeating others here) this time much worse because this is not about staving off bankster/Wall St. defaults. This is about staving off sovereign nation debt defaults.

Who knows, maybe the Euros with Fed help will find a way to make everything look good and the deflation theme will be replaced by rallying stock and PM prices for a few weeks or months. Euro is up today

[RC one]

problwm with that is that our government and fed. reserve won’t allow deflation to get that out of control. this sell off is a result of election uncertainty and a correction resulting from previously anticipated inflation that was previously figured into the price. the problem is, investors are now anticipating deflation which can quickly spiral out of control as people hunt for deeper bottoms. you’ll notice, btw, stocks aren’t fareing much better. that is significant imho.

[politicket]

problem with that is that our government and fed. reserve won’t allow deflation to get that out of control

The government and Fed are two separate entities.

I would agree that the government is fighting as hard as possible to stave off the inevitable deflationary spiral. That is the purpose of the vast amounts of deficit spending.

The Fed is just a conduit to the United States that is controlled by international banks. They have collapsed lending (thus the money supply) on purpose in order to perform an economic reset. This has happened many times in our history due to money being debt-based.

The banks have no intention of taking their feet off the throats of world governments until the reset has occurred. Look for world war to follow as gradual inflation is reintroduced into the world economies.

[politicket]

problem with that is that our government and fed. reserve won’t allow deflation to get that out of control

The government and Fed are two separate entities.

I would agree that the government is fighting as hard as possible to stave off the inevitable deflationary spiral. That is the purpose of the vast amounts of deficit spending.

The Fed is just a conduit to the United States that is controlled by international banks. They have collapsed lending (thus the money supply) on purpose in order to perform an economic reset. This has happened many times in our history due to money being debt-based.

The banks have no intention of taking their feet off the throats of world governments until the reset has occurred. Look for world war to follow as gradual inflation is reintroduced into the world economies.