Certainly a number of bullish forces are operating this morning to justify strength in gold prices but in our opinion the magnitude of the gains in the face of only marginal declines in equities and in the face of modest strength in the dollar highlights the gold and silver markets expanding potentials.
Gold is feeding higher off the situation at the Hong Kong airport as departures have been suspended for a second straight day and that in turn has many expecting some kind of show of force from the national Chinese government.
While treasury prices are not showing significant gains, expectations for an inverted US yield curve and or the return of yields to historical lows, certainly adds to the safe haven environment for gold and silver.
Gold ETF holdings increased by 269,212 ounces yesterday (10th straight session) and that brings year to date purchases to 2.8 million ounces.
Silver ETF holdings increased by 951,213 ounces yesterday and that brings year to date total purchases 271.4 million ounces.
Since the gold market has not paid that much attention to classic supply news recently it is understandable that the market has almost completely ignored or discounted reports from Barrick Gold that their production will reach the upper end of their projections.
Perhaps the bull camp discounts the higher production news because of offsetting demand news that hedge funds continue to protect their equity market exposure with long gold instruments.
The latest COT positioning report in gold showed the market at a new record spec long of 378,681 contracts and those figures are probably understated given the $59 rally from that report mark off.
On the other hand, seeing the potential for an all-out currency war, signs of a fight to the finish between the US and China and any indication the US Fed is poised to react again could easily result in even more aggressive buying.
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Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete and/or up to date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Financial Services LLC, unless otherwise expressly noted.
