Gold Pessimism Overdone, Turnaround May Be Ahead

Wayne Lin

8/3/2018 10:35:08 AM

Daily Gold & Silver Market Report – 08/03/2018

Gold investors have had a challenging year, with a series of sharp downturns in the price of the bullion this year. Gold spot prices have gone down 8 percent in the most recent three month period and nearly 11 percent overall since the beginning of 2018. The U.S. dollar has gained 7 percent during the same window, compared to other globally monitored currencies. However, in an article published by Nasdaq, a leading commodities trader believes the tide will soon change. 

Blue Line Futures President, Bill Baruch, states that there are significant clues found in a report by the Commodity Futures Trading Commission that a more favorable period is ahead for the Gold market. Primarily, he points to an unusual trend showing that managed money short positions have outgrown long positions over four consecutive weeks, with short positions now approaching record highs. As observed by Baruch, this pattern has only been seen on two previous occasions, and in both cases, Gold rallied soon after. 

Gold to Silver Ratio Looks Optimistic for Silver 

Many economists observe that market sentiment is at historic lows for Silver, but some believe the current Gold to Silver ratio is in a favorable position for Silver, with growing demand expected. Several industries have shown glimpses of increasing demand for Silver, and there are no signs of slipping in the coming months. As mentioned in a report on Seeking Alpha, the Photovoltaic industry grew 19 percent in 2017, which uses Silver as a significant component in solar panels. In China, specifically, the sector rose 46 percent and executed more than half of the total solar panel installations in the world. Automobiles that incorporate internal combustion engines, along with autonomous vehicles, consistently integrate new technologies that require Silver as a component, with new applications in constant development. Finally, the jewelry and Silverware industry in India is experiencing a 10-year winning streak, quadrupling over the last decade. 

Bitcoin Price Falls Below $7,400 

The price of Bitcoin dropped late this week, falling below the $7,500 mark for the first time in several days. This follows on the tail of gains for the cryptocurrency toward the end of July. As reported by CoinTelegraph, this downward shift may have been influenced by volatility at OKEx, a cryptocurrency exchange, which confirmed they had, “injected 2500 BTC in order to stabilize impending futures settlements. The crypto exchange added that it will add a new ‘anti-manipulation policy’ on August 4 to avoid such incidents reoccurring at an even larger scale.” Bitcoin has long suffered from pressure immediately following publicized futures contract liquidation from large exchanges.

At 11:33 a.m. (ET), the APMEX Gold and Silver spot prices were:

• Gold, $1,221.80 Up $7.50
• Silver, $15.64 Up $0.18
• Platinum, $843.90 Up $13.70
• Palladium, $919.30 Down $4.20

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