Friday, November 16, 2012

Gold Being Used to Cover Losses/Raise Cash

I had discussed  my outlook for gold and precious metal stocks in the latest All That Glitter Post, discussing how a lower price of gold (among other details of the precious metal timing models) would make the sector look more attractive. Knowing this, I read the following two articles attesting the latest sell off to funds and other institutional investors using gold and the precious metal complex as a source of funds.

First was this post at Zero Hedge.....

Whether it is leveraged AAPL traders forced to sell winning collateral to meet margin calls, correlation-driven algos running stops down and up, or simply the whims of worried custodians managing risk for their clients' holdings; one thing is sure - someone (or more than one) has been a size seller of precious metals in the US-day-session-open to Europe-close period for four days in a row now...



Second this article at Mineweb coming at the sell off from a similar, but slightly different angle. An excerpt...
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WHOLESALE gold bullion prices fell below $1710 an ounce Friday morning in London, dropping below that level for the second day in a row, as stocks, commodities and the Euro all fell and US Treasuries gained ahead of negotiations among US lawmakers about the so-called fiscal cliff.

"Gold is being seen increasingly as a source of cash," says Simon Weeks, head of precious metals at bullion bank Scotia Mocatta.

"Liquidation of gold can cover losses elsewhere."
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I would welcome lower gold prices and think this would make the precious metal complex more attractive, all else remaining equal.
 

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