Volatility, bigger market moves and structural changes ahead for gold

Thursday saw sales from the SPDR gold ETF of 1. 19 tonnes and sales of 0.60 of a tonne from the Gold Trust. The holdings of the SPDR gold ETF are now at 644.749 tonnes and at 153.72 tonnes in the Gold Trust. With sales of this size we are inclined to attribute them to retail sales of speculative positions ahead of the holidays.

We do expect there to be dealer adjustments to prices as gold will follow the strengthening euro. But at this time of the year market activity will be thin. It is a good opportunity for larger speculators to jump the market to push it one way or the other as their impact will be proportionately bigger in thin trade.

But the market mood has changed from the slow downward path to a sideways movement as we see a more positive Technical shape. This shape could go either way still, but a glance across at the strengthening euro indicates direction for gold and silver. Until the market is out of holiday mode we doubt whether too much should be read into price movements.

The feeling that we are about to ride into a New Year is heavy in the air. Extrapolating what is happening at the end of 2015, what is becoming palpable is that the ‘lackluster’ 2015 will change to a 2016 with far more hormones [both ways?] bringing volatility, bigger market moves and structural changes. We note that the persistent media optimism about developed world economic prospects has more of a tone of hope than reality. In 2016 we expect events to break through this optimism as structural changes create divisions in the monetary world in 2016. This will apply to gold and silver worlds as they continue to act as monetary metals, ignoring their fundamentals.  Just how long the market participants accept prices that ignore fundamentals remains to be seen, but we expect the earlier part of 2016 to see major changes on this front. We do see structural changes in gold markets and in the monetary world which will directly affect gold and silver prices.

Julian D.W. Phillips for the Gold & Silver Forecasters –www.goldforecaster.com and www.silverforecaster.com

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