What a difference a week or two makes in gold sentiment – and in silver which has fared even worse with the gold:silver ratio running close to 80 again at one point – a level which usually is at the top end of the comparison and would seem to signify a great buying opportunity for silver bulls – but is it? Gold sank to $1204 before making a small recovery, and silver to $15.07 before making a slightly larger one (in percentage terms at least.) Prices do seem to be clawing their way back upwards at the time of writing, but is this just a blip in a continuing downtrend? As I write, gold is at $1214 and silver at $15.60.
No doubt the dastardly bullion banks with their huge short positions in both precious metals are being seen as the principal culprits. Certainly trading volumes have been far higher than one would expect, particularly at the tail end of last week, but as usual these are paper gold (and silver) transactions driving the markets, but this time aided by sales of physical metal out of the big ETFs. Gold and silver bulls feel that the end-game is nigh and the big bullion banks (of which JP Morgan comes in for particular stick) will switch tack and drive prices back up again making mega profits on metal they have bought on the cheap. But is this just wishful thinking – no-one really knows. Second guessing the big banks is a mug’s game. JP Morgan, for example, always seems to come out on top in its trades – far more so than normal balanced financial markets would suggest. No wonder there is ever-continuing talk of blatant market manipulation by the big guys.
This post was published at Sharps Pixley