Paul Rodriguez, Director of ThinkTrading.com, comments on the market sentiment and his position on Gold prices from a historic perspective, continuing to explain how the current fall might be adding to the perfect global financial market storm, and how precious metals remain trapped in the downtrend.
Key points from the video:
The mismatch of expectation and price action in Gold prices from a historical perspective.
The brewing of the perfect financial market storm
Gold has further downside
The chatter around Silver
Copper as the driving factor of a economy
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.