Jul 6 2013, 06:33
http://seekingalpha.com/author/moneyline
Silver prices have slumped to deeper lows in June 2013 after having been smashed big time earlier in April. Technical indicators suggest an extremely oversold condition and that a rise seems imminent. On a weekly basis, RSI (relative strength indicator) is at the lowest in 40 years of data and nearly that low on a daily basis. This timing indicator suggests that silver is extremely oversold on both a daily and weekly basis. Gold is similarly oversold. Technically, a rally in gold and silver prices is absolutely unavoidable. Then why have bullion seen a steep and steady decline in prices? Having said about Gold and Silver being in technically oversold conditions, market manipulation yet, will of course play its own part in defining price direction, even though for a small volatile period now.
Take a look at a recent statement by GATA: Market-rigging central banks laugh at technical analysis and 'fundamentals'
GATA said: "Technical analysis of a manipulated market like gold has been tedious nonsense for years, but these days, with virtually infinite paper dropped on the gold futures market at illiquid times to drive the price down even as the physical market remains strong, technical analysis has become insulting. The only analysis worth anything anymore is the identification of the source of all the paper. The suspects are obvious - Western central banks."
As of Friday, June 28, 2013, the Commitment of Traders (COT) data by the CFTC indicates that net long difference was the lowest since the beginning of January 2001 and probably also for several decades. This indicates that the large bullion banks (JPM, etc.) are in net longs and also in a position to profit from a sharp rally in the Gold and Silver prices - especially Silver. Also that, JPMorgan has announced an overweight buy call in commodities proves my point and should help see money flows from institutional investors. India's gold demand has always had a huge influence on gold prices. Due to the recent extreme steps undertaken by the Indian govt. to curb demand, gold imports by India have dipped since the mid of May 2013. But Indians seem to have simply shifted their focus from Gold to Silver and Silver imports by India have seen sudden spurts since April 2013. Just imagine what can happen when the world's largest gold buyer is compelled to quit gold investments and thereby completely focusing now on Silver!
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