GOLD AND SILVER IN THE WEEK AHEAD / MACLEODFINANCE

Gold and silver in the week ahead

Has Friday's pump-and-dump operation put a cap on gold and silver prices, given geopolitical developments over the weekend?

MACLEODFINANCE

 

Once meddling Asian buyers were out of the game for the weekend, it was time for the western bullion bank establishment to mark prices down heavily, triggering the speculators’ stops. 

If we look at the Open Interest on Comex, we see that on preliminary figures gold’s fell by about 6,000 contracts and volume was moderate. 

Hardly what one expects from a serious sell off.

In the absence of other factors, we would toss a coin over whether this manufactured takedown is sufficient to take the steam out of precious metal prices. 

Personally, I expect that in the absence of other factors it would be. 

And I would also expect a bit of negative push from the Bank for International Settlements, because on the back of $2400 gold and $30 silver no doubt some banks are facing life-threatening losses. 

Furthermore, for both metals to turn south at these psychological levels should prove to be an irresistible argument for sentiment traders.

None of this has anything to do with ending the rise in gold and silver prices, which is more about declining values for the currencies in which we measure them. 

But China, Russia, and all those in their sphere of influence are not fools, nor do they trade off the charts and they have dollars to dump. 

Any reaction in gold and silver is likely to lead to renewed demand from these and associated sources.

Now there’s a new factor which will test whether capital markets think safety is to be found in the dollar or gold. 

For the last forty years the establishment believes it has been the dollar. 

And the dollar is indeed rising against other currencies, potentially causing chaos for them. 

But in recent weeks while the dollar’s TWI has been rising, so has the gold price. 

Or more accurately the dollar has been declining against gold, so the best hedge of the lot has definitely been gold.

But now there is a new factor: Iran has responded to Israel’s attack on its consulate in Damascus with a massed drone attack overnight on Saturday/Sunday. 

This is developing into an escalating tit-for-tat, clearly designed by Israel to bring America into attacking Iran. 

Expect oil prices to rise next week. 

We could even see WTI testing $90—$100. 

There could be fears that all this is leading to Hormuz being closed, at least to tankers bound for Europe and other enemies of Iran.

Furthermore, statements from Russia over Ukraine suggests that they will move to resolve the Ukraine crisis rapidly. 

The ground is drying up, allowing military mobilisation. 

Russia seems to be convinced that Zelensky is terminally weakened and western support is being held up so now is the time to finishPutin’s special military operation.

With these developments now on the table, is the risk-off trade into dollars or gold? 

This week could be a revelation.