Andrew Maguire explains Tuesday’s dive in the gold price - and why the precious metal will rebound stronger.
‘Talking Gold’ - a fortnightly update from Kinesis Director and precious metals expert, Andrew Maguire, providing a detailed round-up of the recent action in the gold and silver markets - a regular feature from the Kinesis Youtube show ‘Live from the Vault’.
In this week’s breakdown of the gold and silver markets, Andrew Maguire explores Tuesday’s monumental losses in gold and silver - and reaffirms why, despite the hit, gold and silver’s rise isn’t done yet.
In gold’s biggest daily loss since the historic sell-off in April 2013, the commodity shed nearly 6% on Tuesday, a fall of around $200 from Friday’s highs. Meanwhile silver dropped by almost 15%, a single day slump on a scale not seen since October 2008.
What’s happened to the gold price and the silver price?
The timing and voracity of the sell-off across the gold and silver futures markets suggest rigged market interference, according to precious metals expert, Andrew Maguire.
In Andrew Maguire’s analysis of the markets, officials orchestrated Tuesday’s sell-off to coincide with thin holiday market conditions. The telegraphing of the selling event is evidenced in sell orders that clearly exceed the CFT position limit parameters, which should apply to all trades.
Andrew Maguire believes Tuesday’s losses represent a coordinated effort from market making insiders to halt the ascent of gold and silver in its tracks.
Watch Andrew Maguire look into gold’s meteoric rise in last week’s episode of Talking Gold from fortnightly Kinesis show ‘Live from the Vault’.
Why the push down of the gold price will fail?
Andrew Maguire sees Tuesday’s drop as a dip to be bought, rather than a sign of things to come. By way of explanation, the precious metals expert points to evidence of fresh institutional funds moving into gold.
More and more hedge fund managers are turning to gold investment, as the stock market balloons near the risky territory of all-time highs. With very few employable hedges to compliment or, even, replace treasuries - gold has become the preferred hedging option.
As these positions are secured to hedge high-risk stock market conditions, they were not taken out by Tuesday’s sell-off. Institutional investments are essentially hedging into these positions and, as a result, have no stops.
When considering the outlook for gold, it’s important to distinguish these institutional hedge positions from the flows of speculators. While the visible stops of the speculative momentum-driven positions are susceptible to being flushed, institutional hedge positions aren’t going anywhere, as Tuesday clearly demonstrated.
With stocks testing all-time highs in very risky conditions and fresh risk on related hedging continuing to flow into the gold and silver futures, it grows increasingly difficult for officials to create downside traction.
What can we expect from gold?
In the days following Tuesday’s sink in gold and silver prices, Andrew Maguires offers a timely reminder that “backfilling is part of the course in a bull market.” As Andrew Maguire sees it, the pullback of Tuesday “is just a step along the way,” to $2500 per ounce gold.
According to Andrew Maguire the wholesale market footprints evidence that at the $2500 per ounce price mark, insiders and first-tier banks will be positioned and ready for the upcoming upside reevaluation.
Andrew Maguire’s parting thought.
Everything suggests the line is crossed with this reset at $2500 spot. I can upgrade the silver price at $35 spot, and that will be achieved. Before the reset.
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Next Episode: Andrew Maguire conducts another thorough inspection of the recent action in the gold and silver markets.
The opinions expressed in this publication are those of the Andrew Maguire and do not purport to reflect the official policy or position of Kinesis.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.