What's behind the recent falls in gold & silver, and will it continue?

Putting this question out to SS member knowledge base. Does any have an idea about what is driving the recent price falls, and for how long will it continue? What are the fundamentals that are pushing prices down?

Thanks!

 

IMHO, people are sick to death of losing on PM's. Capitulation... it may be? But they have had a gut full of theories, are cutting their losses, and are now licking their wounds.
I also think the fundamental arguments the bulls push are somewhat flawed (but that's another storey).

To give it some perspective, consider the chart below:



This shows that if you had chosen to invest in gold (safe haven) rather than the US stock market since 2011 (just 4 years ago), you would be behind by 140%.
ie, had you invested $10,000 in gold, the value would now be $6000, rather than $20,000..... A $14,000 opportunity cost.
A loss such as this can take a lifetime to recover from... as demonstrated below:

How long would it take to earn back this opportunity cost?.... and recover back to SQUARE 1?
Using the average returns over the last 20 years:
S&P 500 - avg 6.7%pa - 20 years
S&P 500 (infl adjusted) - avg 4.4%pa - 28 years
10 year treasuries - avg 4.7% - 27 years
10 year treasuries (infl adjusted) - avg 2.4% - 51 years
Gold - avg 5.4% - 23 years
Gold (infl adjusted) - avg 3.0% - 41 years

Remember this is just to recover opportunity cost, and doesn't take into regard the lost opportunity during the years taken to recover.

Lucky I hedge with paper......

 

Best time to buy PMs is when no one wants them?

 

Slow down in China.

Eurozone not seen as a good place to invest.

USD seen as better than other currencies.

Yellen...sprooking...will raise interest rates.

Strong USD = Precious metal taking a hit.

Will precious metal continue to fall?

Why shouldn't it? I see the USD gaining more strength.

For Aussie folk the USD / AUD exchange rate doesn't make buying now the best opportunity and unless we see prices lower than mid November 2014 I'd say if you already have a swag of precious metal, you can wait to see if the price drops further.

Having said that, I think Yellen's sprook about raising interest rates is like a silent fart in a cyclone!

Personally, I think it's a no brainer to own gold, silver and platinum (Especially silver)

Imo, the world is in turmoil and I really think things are going to turn turtle sooner or later...but...what do I know??? :|

History is your friend.

"History is the answer".

 

Nope.

nfi

Possibly the winding down of the Chinese building boom of the past 10 years ?

Short term prices are determined by the futures markets, which don't have all that much connect with reality these days.
Most, if not all, futures traders are working on technical analysis so chart expectations lead to chart reactions in a self fulfilling loop.

 

I always thought that because gold offers an alternative to currency that it would be attacked
by currency manipulators.ie.politians, bankers, etc.I expect more of it.

 

I think it's always good to remember that the price being discussed is a paper promise leveraged possibly 100:1, and the real value of physical for sale is mostly independent of the paper price.

 

I have never observed that. In fact, I still don't see it.

 

Go look in the for sale section and you'll see most going for above spot

Edit: it's not independent, but it's not the same as the paper price.

 

I noticed you referenced 'spot' in relation to the physical price.... that would confirm my suggestion that it is in fact mostly dependent.
Everyone knows there is a production premium on phys.

 

Sigh..........They reported 1,600 tons.........
........The USA has over 8,000..........

 

In one of three facilities.
Fort Knox audited lately?

 

You sound like you don't trust the government...pshh. :lol:

 

But that is the reported holdings within there reserve bank I believe. This amount does not include the reserves held in other State controlled Chinese Banks.

The Chinese always under report. Never let your foes know what true position is. The art of war. Stephen Leeb is the source of this information from the KWN puma bull camp.

 

So the Chinese surprise the market and announce that they have 10,000 tonnes of gold.......and then????
after a 3 day relief rally followed by a lull......down it goes. Why?
Because the rate at which they have been buying has done absolutely nothing to move the price of gold in the upwards direction. In fact it is going down. It is an investment out of favour and until that changes, it won't go up.
If they buy a 1000 tonnes it simply means that someone that had a 1000 tonnes did not want it anymore.
This is straw grasping. No single event will change the direction of gold. The negative must run its course. Then, quietly the turn will occur while we all have our eyes closed waiting for the inevitable fall which doesn't happen.

 

:|

 

If Chile has a 1000 tonne and they sell it to China, it makes no difference. Just because China holds the gold it does not mean that gold takes on a new dimension. It is still gold. All that happens is an increase in the amount of blogs proclaiming to know the intentions of the Chinese in dethroning the U.S. dollar blah blah blah.

 

I remember hearing at the puma bull site KWN (John Embry I think) indicating the sudden dropout of gold relates as a deliberate statement to China of "we are still in control" of the gold price in retaliation to Chinas gold hoard report. A currency war retaliation, a shot over the bow to let it be known as it were that we have the controls.