I have been trying to see what all triggered the recent precipitous fall in metals. It looks like on April 10th Goldman Sachs announced (around the time of the beginning of the4 fall, which also coincided with when China's GDP report fell short of expectations by .3%, and oil fell below $88, and our strengthening dollar is a significant facotor). They hinted that gold was in a kind of bubble, and made dire predictions about gold falling into the 1300s and recommended that multi-month longs close out their positions. But the weird thing is that they based it on a strong recovery outlook, that the Gov't would pare back its stimulus, and that this strong recovery would lead to higher interest rates, and that gold would subsequently lose its luster as a refuge from the economic doldrums. It seems people decided to run for the hills before we even have the high rates, the strong recovery, LOL. But if we had a strong recovery wouldn't that be good for Platinum and Palladium? Here are snippits from that 4/10 article:
"Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, declined to about 1,200 metric tons yesterday, the least since June 2011. Deutsche Bank AG cut its 2013 gold outlook yesterday by 12 percent, citing a strengthening dollar and a lack of haven buying.
“Despite resurgence in euro-area risk aversion and disappointing U.S. economic data, gold prices are unchanged over the past month, highlighting how conviction in holding gold is quickly waning,” the Goldman analysts wrote in the report. “While higher inflation may be the catalyst for the next gold cycle, this is likely several years away.”
Gold for June delivery on the Comex in New York fell 0.5 percent to $1,579.30 an ounce as of 8:52 a.m. local time. The metal advanced 1.1 percent in March, the first monthly gain since September, as policy makers wrangled over Cyprus’s 10 billion-euro ($13 billion) bailout.
to be cont..........
continued post: Targets Cut
Goldman cut its 2013 gold estimate to $1,545 an ounce from $1,610, trimmed its 2014 forecast to $1,350 from $1,490, and set year-end targets of $1,450 in 2013 and $1,270 in 2014. Goldman recommended starting a short Comex gold position, targeting $1,450 with a stop at $1,650, the analysts wrote.
A couple of things (my comments): 1. In the last 7 months we've gone from 1400 to 1700 back to 1550 up to 1650 back to 1550 back up to 1700 and then back down to 1400, so I don't think it is easy to look that far out to the future with any certainty. The other thing is that Platinum followed Gold most of the way down even though it is subject to different rules. It is funny that gold immediately dropped to GS 2013 prediction and through that - not quite to the 1270 they have for 2014 year end. That could be, but if all that happens for the reason GS gave, I think we will see Platinum going in the opposite direction, up.
Ref: Bloomberg article from 4/10 entitled, "Goldman Cuts Gold Price Forecast Through 2014 as Cycle Turns"
It might help if I included the introductory paragraph of the article: "The turn in the gold price cycle is accelerating after a 12-year rally as the recovery in the U.S. economy gains momentum, according to Goldman Sachs Group Inc., which reduced forecasts for the metal through 2014. "