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The Push-Pull Dynamic In Gold & Silver

From the CME:
  • Gold and silver prices could be pressured if the strong growth in silver production continues.
  • Gold, silver have a positive correlation as their usage overlaps in jewelry, dentistry and as investments.
  • Changes in gold/silver output correlate to 52% of price changes in gold YoY, 47% in silver.
  • Silver prices react more negatively to an increase in gold output than its own.

Full report:
Platinum: More downside ahead Sinden looks at the technical charts and sees Platinum trapped in a downtrend. Looking at the monthly charts, the precious metal has broken below the psychological support at $1000/ounce for the first time since 2008. Platinum and Gold share a very close correlation, explains Sinden. Platinum looks set to test the late 2008 lows at $800/ounce. The price action also favours further downside in Gold prices, with the yellow metal having dipped lower to new 5-year lows.
The perfect storm
Gold prices have seen a bearish fall from 1800 to 1200. The price action hasn’t matched the expectation story. When Gold was in an uptrend, markets hated it, but when QE started, sentiment shifted to a bullish view, and were disappointed when the yellow metal ignored their heeds and shifted sideways, says Zak Mir. Rodriquez explains that while Gold was seen as a crisis hedge, the story has not led to an increase in prices, this is due to markets favouritism towards cash. When a crisis strikes, they run for cash. The fall in asset classes, which Rodriguez refers to as the ‘synchronised downturn’, remains a concern. The equity markets have remained a pillar for now, but with Gold prices falling, any fall in the equity space, combined with a possible USD rally would form a the perfect financial market storm.
Bearish on Gold prices
Gold has more downside to go, 1200 remains key, according to Rodriguez. He further prefers remaining a bear for the precious metal till any bullish momentum and upside break is seen in the technical charts.
Silver – Supply/Demand speculation
Zak Mir, comments how markets are speculating about the cost of production factor for Silver as a potential price booster. Mir comments how markets view the current $19 level might lead to a shutdown in mining activity, which in turn will curtail supply and help the prices push higher. Rodriguez says that the trend for silver prices remains down for now.
Still holding onto Gold as an insurance Price says that they continue to hold Gold from an insurance perspective, in spite of the prices being hammered lower on falling commodities. Price’s basis of holding Gold – Industrial Commodity, and as an alternative currency.