September’s final numbers not as bad as some would have us believe

LATE REPORT

Gold finished the day down $8.94 at $1270.70.  Silver was down 8¢ at $16.55. The final numbers on the week and the month ending 9/29 are not as bad as some would have us believe:

Gold
Week:  Down $30.83 at $1279.70 [- 2.4%]
Month:  Down $ $41.51 at $1279.70 [- 3.1%]

Silver
Week:  Down 52¢ at $16.63 [- 3.0%]
Month:  Down 92¢ at $16.63 [- 5.2%]

Blame for the downside has been cast wide and far, but in the end, the corrections in both metals had more to do with profit-taking and a little piling-on here and there from the short side of the market than much else.  In keeping with that analysis, the CFTC reports in its Commitment of Traders report that large speculators cut their positions by a little over 10% last week. Over the past two weeks, large specs have cut their positions by about 20% following eight successive weeks of gains.

We should keep in mind that gold and silver registered their highs for the year at the beginning of the month before turning south.  The metals are trading sideways in Asia as this is posted.

Quote of the day
“Central banks must feel like they have stepped through a mirror, and who can blame them? They used to struggle to bring inflation down or keep it under control; now they toil to push it up. They used to fear wage increases; now they urge them on . They used to dread fiscal expansion; now they sometimes invoke it. Fighting inflation defined a generation of postwar central bankers; encouraging it could define the current one.

What is going on in this topsy-turvy world? Could it be that inflation is like a compass with a broken needle? That would be a dreadful prospect – central bankers’ worst nightmare. And what would be the broader implications for central banking?” – Claudio Borio, chief economist,  the Bank for International Settlements


In the October issue of News & Views, we explore how professional investors radically altered the gold market, why gold is up in every major currency and  what has brought the Old Guard back into the precious metals market.

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