The Price Of Gold Is Crashing. Here's Why

[george]

The Price of Gold Is Crashing. Here's Why

A chart of the crashing price of gold looks like a wedding ring rolling off a table. Gold futures for June delivery closed at $1,361 an ounce on the Comex in New York today, a drop of more than $200 in two sessions. Gold’s fall of 13 percent since April 11 was the biggest two-session decline since 1980.

Why is gold plunging? The most important factor is that global inflation is falling, reducing gold’s value as a hedge against rising prices. Gold bugs who were betting on an outburst of inflation are scrambling to reverse their bets and exit their gold positions at any price.

For consumers struggling to make ends meet, it may seem hard to believe that inflation is falling. But the evidence is clear from JPMorgan Chase’s (JPM) global consumer price index, which covers more than 30 countries that collectively represent more than 90 percent of world economic output.

According to the JPMorgan index, global inflation peaked at 4 percent in 2011 and has fallen steadily since. Global prices in February were up only about 2.5 percent from a year earlier, the bank’s index says.

JPMorgan has two scenarios for what happens next. Its main one is based on a “bottom-up” collection of analysts’ forecasted price trends sector by sector around the world. That shows inflation rising very slightly from its current level for the rest of 2013. In contrast, JPMorgan’s “top-down” analysis, which is prepared by the banks’ economists and takes into account prices of commodity futures contracts, among other factors, shows inflation moving down closer to 2 percent in the second half of 2013.

The headline on JPMorgan’s report: “The slide in global inflation may not be over.”

Joseph Lupton, a senior global economist at JPMorgan Chase, said in an interview that the inflation decline is partly a matter of supply bottlenecks easing, which is a good thing, and demand growth slowing, which is not so good. Lupton said he’s not in the business of forecasting gold prices, which tend to be whipsawed by speculation more than other commodity prices are. Says Lupton: “Gold is an animal in and of itself.”

Last week Goldman Sachs (GS) warned that the retreat in gold was accelerating after the longest rally in nine decades.

“Anybody who did some buying before this big drop is probably in some pain,” Donald Selkin, who helps manage about $3 billion of assets as chief market strategist at National Securities Corp. in New York, told Bloomberg News. “The perception is that gold is not really needed as a safe haven. People are looking at the stock market, and they’re stunned, and there’s no inflation. So people are saying, ‘What do we need gold for?’”

-- Businessweek 2013-04-15

[webfact]

Thai investors advised against panic as gold price hits lowest level in 30 years
By Digital Media



BANGKOK, April 17 – Local gold prices may dip below Bt20,000 per baht weight, or possibly even Bt18,000 when the Thai bullion market opens tomorrow after the four-day Songkran holiday, an analyst predicted.

Tipa Nawawattanasub, chief executive officer of YLG Bullion and Futures, said the global gold price has nosedived from US$1,580 per ounce last Friday to US$1,320 per ounce today – the deepest slump in three decades.

She urged investors to take a wait-and-see precaution as analysts predicted the next resistance level at US$1,300 per ounce.

If the price is maintained at the resistance level, it will possibly inch up, otherwise it may slip further to US$1,250 per ounce, she said.

Gold prices declined rapidly at US$50-70 per ounce daily during the last several days, she said but urged investors not to panic.

She said an initiative by the Cyprus central bank to sell 13 tonnes of gold bullion in its reserves to garner 400 million euros to salvage the country’s finances has triggered concerns among European countries.

Italy and Portugal which have gold reserves at 2,000 tonnes and 300 tonnes respectively may follow Cyprus while many investment funds have stoked the situation by selling gold in their stocks, she said. (MCOT online news)


-- TNA 2013-04-17

[IMA_FARANG]

Gold is oversold, it's price is too high.

It's time for a readjustment to reality for Gold prices.

The "Gold Freaks" who have been preaching the "Buy Gold now" religion never did answer my sarcastic question which always was this:

"If everything falls apart, and there is no one with any money to buy your Gold, can you eat it"?

"How many calories are there in a bar of Gold"?

But don't worry, it's a readjustment of overpricd Gold, not the end of the world.

[Locationthailand]

Gold is oversold, it's price is too high.

It's time for a readjustment to reality for Gold prices.

The "Gold Freaks" who have been preaching the "Buy Gold now" religion never did answer my sarcastic question which always was this:

"If everything falls apart, and there is no one with any money to buy your Gold, can you eat it"?

"How many calories are there in a bar of Gold"?

But don't worry, it's a readjustment of overpricd Gold, not the end of the world.

But - when fiat currencies and pieces of paper are worth only that - paper - can you eat that? Sorry to rain on your parade. In all fairness gold and other precious metals (perceived) will have a greater possibility of longevity than paper currencies which are basically IOU's and now that governments are printing to meet debt? Now wouldn't that be nice if I could meet my monthly bills by pushing a print button...

[hyperdimension]

The crash is due to decreasing inflation? Here's a different take: This Gold Slam is a Massive Wealth Transfer from Our Pockets to the Banks

I'll sell when the central banks of the world offload their own holdings. The fact that central banks hold any gold is an indication that they themselves know that the fiat money that they create (out of thin air) is intrinsically worthless.

[webfact]

RT @RichardBarrow: 17 April Thai Gold Prices at 9:30am (-฿2,350): Buy ฿18,900 - Sell ฿19,000 | Ornaments: ฿18,631.64 - Sell ฿19,400

[Naam]

gold price hits lowest level in 30 years

= rubbish!

[webfact]

RT @RichardBarrow: 9:40am Long queues outside gold shops in Bangkok's Chinatown as gold prices drop by ฿2,350 (Pic @Wootthinan) http://twitter.com/Wootthinan/status/324351973656764417/photo/1

[Thai at Heart]

Gold is oversold, it's price is too high.

It's time for a readjustment to reality for Gold prices.

The "Gold Freaks" who have been preaching the "Buy Gold now" religion never did answer my sarcastic question which always was this:

"If everything falls apart, and there is no one with any money to buy your Gold, can you eat it"?

"How many calories are there in a bar of Gold"?

But don't worry, it's a readjustment of overpricd Gold, not the end of the world.

But - when fiat currencies and pieces of paper are worth only that - paper - can you eat that? Sorry to rain on your parade. In all fairness gold and other precious metals (perceived) will have a greater possibility of longevity than paper currencies which are basically IOU's and now that governments are printing to meet debt? Now wouldn't that be nice if I could meet my monthly bills by pushing a print button...

Ah but people would very very quickly create their own local currencies using IOU's, which in themselves would be the foundation of a currency.

[Locationthailand]

The crash is due to decreasing inflation? Here's a different take: This Gold Slam is a Massive Wealth Transfer from Our Pockets to the Banks

I'll sell when the central banks of the world offload their own holdings. The fact that central banks hold any gold is an indication that they themselves know that the fiat money that they create (out of thin air) is intrinsically worthless.

Agree, especially when Wall Street bwankers like JPMorgan make the media statements. The media is on the payroll too...

[yoshiwara]

Full explanation here:

Gold Bubble Pop.

[midas]

The Indians don't seem too worried.......

Gold Bears Scarce in India as Selloff Lures Shoppers to Bazaars

" Gold buyers in India, the world’s biggest consumer, are flocking to stores to buy jewelry and coins, betting a selloff that plunged bullion to a two-year low may be overdone. "

http://www.bloomberg.com/news/2013-04-16/gold-bears-scarce-in-india-as-selloff-lures-shoppers-to-bazaars.html

[davejones]

Gold is oversold, it's price is too high.

It's time for a readjustment to reality for Gold prices.

The "Gold Freaks" who have been preaching the "Buy Gold now" religion never did answer my sarcastic question which always was this:

"If everything falls apart, and there is no one with any money to buy your Gold, can you eat it"?

"How many calories are there in a bar of Gold"?

But don't worry, it's a readjustment of overpricd Gold, not the end of the world.

I don't own gold, and would never buy it. But the answer to your question is that it would still have value. People might not have money in your scenario, but you could still trade your gold for food, and other things. If everything falls apart, gold will be one of the few things that people will really value.

[KhunBENQ]

gold price hits lowest level in 30 years

= rubbish!

So true, complete BS

Most of my gold purchases were in the 300 to 400 USD range.

I was stupid enough to sell some of it for about 700 USD

Today after the "big crash" 1379.

What a laugh.

Some short time market manipulation by the big players to cash in.

Let the first North Korean rocket fly an wait what happens with the gold price.

Let the next Euro domino topple and wait what happens with the gold price.

Edited April 17, 2013 by KhunBENQ

[KhunBENQ]

Buyers I would guess? Gold shops were crowded here too.

RT @RichardBarrow: 9:40am Long queues outside gold shops in Bangkok's Chinatown as gold prices drop by ฿2,350 (Pic @Wootthinan) http://twitter.com/Wootthinan/status/324351973656764417/photo/1

[midas]

Buyers I would guess? Gold shops were crowded here too.

RT @RichardBarrow: 9:40am Long queues outside gold shops in Bangkok's Chinatown as gold prices drop by ฿2,350 (Pic @Wootthinan) http://twitter.com/Wootthinan/status/324351973656764417/photo/1

Indian,Chinese consumer joins Gold rush

" Analysts said the rush will eventually help gold as India and China, the two Asian and global tiger economies, make up more than half of total annual gold demand.

They added that chances are that these bargain-basement gold prices are only going to spur their appetite even further, not dampen it."

http://www.bullionstreet.com/news/indianchinese-consumer-joins-gold-rush/4513

Edited April 17, 2013 by midas

[mania]

Gold is always the canary in the coal mine

Folks should forget their preconceived notions about worth & gold vs paper

overbought, oversold etc.

When you see something like this happen for no apparent reason you better take

a deep breath & grab onto to something. The canary is trying to tell you something

This is not about gold or bubbles that did not even yet exist

[yoshiwara]

gold price hits lowest level in 30 years

= rubbish!

It was a misreading by whoever. It was the sharpest tumble in 30 years.

[yoshiwara]

Gold is always the canary in the coal mine

Folks should forget their preconceived notions about worth & gold vs paper

overbought, oversold etc.

When you see something like this happen for no apparent reason you better take

a deep breath & grab onto to something. The canary is trying to tell you something

This is not about gold or bubbles that did not even yet exist

You would need to point to research indicating that. Or is it a pet theory?

[midas]

Gold is always the canary in the coal mine

Folks should forget their preconceived notions about worth & gold vs paper

overbought, oversold etc.

When you see something like this happen for no apparent reason you better take

a deep breath & grab onto to something. The canary is trying to tell you something

This is not about gold or bubbles that did not even yet exist

You would need to point to research indicating that. Or is it a pet theory?

That's so rich coming from YOU !

When have you EVER pointed to any link about ANYTHING to support your views ?

You only ever insult others and make totally meaningless remarks. A complete waste of space.

[webfact]

GOLD
Sharp fall in gold prices draws huge number of buyers
The Nation


A large number of buyers at a Yaowarat gold shop, as seen through Channel 3.

BANGKOK: -- A large number of gold buyers flocked to Yaowarat on Wednesday, following the historical intraday fall in the metal price on rumours of central banks' unloading.

Gold Traders Association of Thailand today until 11am has cut retail prices of gold bar and ornaments by three times by Bt2,350, the highest change in the gold price history.

Gold bar is now sold at Bt18,900, while gold ornament at Bt19,300. Gold Traders Association, which is the portal site of gold prices, is now too busy to respond to overwhelming demand for information.

"Gold prices have fallen below the psychological support line mainly on the rumours that Cyprus’ central bank will unload its gold holding, and the central bank in Italy may follow," Thanarat Possawong, managing director of Hua Seng Heng Gold Futures, told Channel 3 today. He said that investors reacted more negatively to the rumours than tensions in the Korean peninsula.

"All must protect themselves. The chance for speculation is limited," he added.


-- The Nation 2013-04-17

[theblether]

Okay I'm sorry I need to gloat........I posted on the Gold thread over a year ago that the price of Gold would be $1250 by January 1 2015. It was a lemmings market, and now it's adjusting to reality.

Personally I still think $1250 is too high, but we'll see.

http://www.thaivisa.com/forum/topic/218064-where-is-gold-going-in-this-market/?view=findpost&p=5045576

Edited April 17, 2013 by theblether

[KunMatt]

Which could mean we are in the "Bull trap" and will see a slight surge before a huge plummet;

Let watch what happens...

Edited April 17, 2013 by KunMatt

[theblether]

Excellent chart Kunmatt.

[Fgis]

So I now wonder where to invest. Even my gold has suddenly lost a lot of value. My USD and Euros are also worth nothing. Seems like the end of luxury life !

[KunMatt]

Okay I'm sorry I need to gloat........I posted on the Gold thread over a year ago that the price of Gold would be $1250 by January 1 2015. It was a lemmings market, and now it's adjusting to reality.

Personally I still think $1250 is too high, but we'll see.

http://www.thaivisa.com/forum/topic/218064-where-is-gold-going-in-this-market/?view=findpost&p=5045576

Well done. The law of large numbers would state that eventually one of your inane posts would turn out to be correct, I guess it was that one!!

[farang000999]

Well that number 1250, appears to be right where most gold producers claim their costs to mine an ounce of gold averages.

[soi41]

Gold is oversold, it's price is too high.

It's time for a readjustment to reality for Gold prices.

The "Gold Freaks" who have been preaching the "Buy Gold now" religion never did answer my sarcastic question which always was this:

"If everything falls apart, and there is no one with any money to buy your Gold, can you eat it"?

"How many calories are there in a bar of Gold"?

But don't worry, it's a readjustment of overpricd Gold, not the end of the world.

I don't own gold, and would never buy it. But the answer to your question is that it would still have value. People might not have money in your scenario, but you could still trade your gold for food, and other things. If everything falls apart, gold will be one of the few things that people will really value.

Yes, back to the cave and start all over again !

[Naam]

So I now wonder where to invest. Even my gold has suddenly lost a lot of value. My USD and Euros are also worth nothing. Seems like the end of luxury life !

relax!

-let your wife take up a job,

-sell all the slave girls you have,

-tell your mia noi austerity measures apply,

-switch from lobster, caviar and champagne to fried rice (no eggs!), som tam and tap water,

-sell all iPhones (including the old models) your family members have acquired,

-convert your Bentley and Ferrari from gasoline to liquified natural gas,

-train your dogs to hunt for their food and steal from them.

if you need more advice, let me know.

[theblether]

Okay I'm sorry I need to gloat........I posted on the Gold thread over a year ago that the price of Gold would be $1250 by January 1 2015. It was a lemmings market, and now it's adjusting to reality.

Personally I still think $1250 is too high, but we'll see.

http://www.thaivisa.com/forum/topic/218064-where-is-gold-going-in-this-market/?view=findpost&p=5045576

Well done. The law of large numbers would state that eventually one of your inane posts would turn out to be correct, I guess it was that one!!

Yup it was a fluke.......it's that old thing about monkeys / shakespeare.........I was going to get something right eventually