Speculators smash gold as dollar squeeze tightens

Powerful speculators have launched an unprecedented attack on the world gold market, driving prices to a five-year low as commodities wilt and the US Federal Reserve prepares to tighten monetary policy.

Spot prices slumped by more than 4pc to $1,086 an ounce in overnight trading after anonymous funds sold 57 tonnes of gold in Shanghai and New York, choosing the moment of minimum market liquidity in what appears to have been a synchronized strike intended to smash confidence.

The move came after China’s central bank dismayed “gold bugs” by revealing that the country’s bullion reserves stand at just 1,658 tonnes, far lower than widely assumed. While holdings have risen 60pc since the last update in 2009, they are still a fraction of China’s total $3.7 trillion foreign exchange reserves.

  • truthdareisay

    Coincidently?? it also came right after the Iran nuke deal

  • David Murrell

    Conservatives should not tie their ideology to gold. The value of the $US has been soaring, hence commodity prices — and the $Can — have been falling. It is best to tilt one’s investment portfolio into US financials and technology, and Canadian manufacturing exports to the US. When strong signs of inflation start to appear, then one should start to invest into gold and silver.

    • Reader

      Going with the momentum is not a good policy in the long run.

      Canada’s exports to the US have been falling.

      With “adjustments” to CPI and similar figures, they appear to be understated.

      Diversification is a key to preserving your wealth, which I see as a higher priority than growth from the conservative prospective.

      That being said, the Shiller CAPE index for the S&P 500 shows a 27.32 ratio, well above the median of 16 and the average of 16.61, so equities look very overpriced.

      In times of deflation, gold and silver have a tendency to lose their value far less than real estate or equities do.

      In times of inflation, the higher the rate, the better gold and silver look. On one hand the gold to silver price ratio is at a historic high making silver look better than gold, on the other hand since silver has many industrial uses in comparison to gold and in a downturn the industrial uses can cause depress it somewhat.

      Yes, the powers that be may be trying to drive down gold and silver, but with the median cost of production for gold miners being about $1000 a Troy ounce, and for all but a tiny minority of mines $950 or more, there is a lot less downside to precious metals in comparison to equities. But the more they drive it down, the more I would be buying to hold for the long-run; And I would not hold paper certificates, but the physical metal.

      As for the U.S. dollar or most currencies, with how much money printing done and continuing to go on, I would be concerned with them all, and I see currencies as a crap-shoot.

      That said, I still would stick with diversity, with the mix being a question of your goals and tolerance for risk.

  • tom_billesley

    Silver and the Hunt brothers, Copper and Sumitomo, Commodity markets are as prone to manipulation as stock markets