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« Gold, Silver And The Mining Sector: Prepare For A Severe Fall | Main | Goldman Stands by $1,050 Gold Target on Outlook for Recovery »

Gold's Gory Crash, One Year On

A YEAR AGO this Friday, writes Adrian Ash at BullionVault, a leaked IMF-EU paper told Cyprus to sell a chunk of its tiny gold reserves.
It never did. No Eurozone central bank has sold gold since France quit in 2009. But already advised that week to sell short by Goldman Sachs, the market took fright. 
No one owning gold or silver in April 2013 needs reminding of the gory details. (Horror fans will find gold's $1 trillion crash explained here.) But with hindsight, and without the need for valium, three points deserve comment today.
#1. Gold met very strong demand last April. Just not in the form of financial securities or derivatives traded on Western exchanges. So while the spot price "gapped down" on the morning of Monday 15 April, 2013...with few buyers daring to catch it...the surge in China and India's retail bargain-buying clearly put a floor under the market.
#2. Such wrenching shifts in price, and also in who owns what gold where, changed the gold market's dynamics, of course. Price aside, the 2013 sell-off by Western investment funds was just as much a huge investment purchase by Asian savers. So to serve those respective customers better, the bullion market has re-deployed its available stockpiles.
Some odd things result.

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The miners have started 2014 very well indeed on the back of rising gold prices, so the question is; is this the real deal or another head fake? Is the bottom really in? Could there be a final capitulation just ahead of us? Will the summer doldrums take the PMs lower?

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