A new gold suppressant? I am now seeing more amateurish gold analysis by the untrained all hoping and praying (not a good investing strategy) for the recovery of gold prices. I really wish the fundamentals were there but they are not and now we have a new gold price suppressant. Gold has been going sideways for a year over all which I pointed out numerous times and have prognosticated at least 7 more months of sideways gold prices.
Markets will continue to be sold down as the summer doldrums approach and that means gold and gold stocks as well to cover margin calls and other market losses. Now I am taking notice of a new wrinkle. The strengthening of the U.S. markets. This perceived (not proven fundamentally yet) recovery is going to have an upbeat effect on the U.S dollar thus a slight rush back into the buck=selling of gold into PERCEIVED security.
The budget deficit is still the big elephant in the room, but even sequestering (automatic budget cuts) is looking to have a positive effect on perception. U.S. spending cuts are the only road to go there. Let me put it this way. Comparing U.S taxpayers to shareholders of companies if you will enjoy cost cutting measures as a sign of cutting fat. Like the rest of us when we cut spending to reduce our debt is seen as a positive sign.
I don’t know how long (U.S market surge) this will last yet as I would like to see more budget cuts and the effect it will have on the U.S. markets, so the jury is still out there. Even without any strengthening of the U.S. dollar the European (Europe is the largest world consumer group and China’s largest consumer customer) debt crisis will remain the main market influence for the rest of 2013 = depressed markets including gold and gold stocks= suppressed gold and gold stocks. In case you didn’t know Canada increased exports Europe over the past few years and rely a bit less on U.S. exports although they are still Canada’s largest trading partner.
Bottom line Europe is still the key problem to world markets. In a nutshell it is that simple.