Monday , 2 October 2023

Gold Prices Could Still Fall Another 25%! Here Are 3 Reasons Why

Surely, the swift and severe plunge in gold represents a buying opportunity, right? Igold-correction mean, it’s not like the Fed finally stopped printing  money, right? Wrong! As the old saying goes, “never try to catch a falling knife” and that’s especially true in the case of gold. Below are 3 fundamental forces working against gold prices and, combined, they could ultimately push the precious metal down another 25% from here.

So writes Louis Basenese ( in edited excerpts from his original article* entitled Three Reasons to Expect Gold Prices to Keep Falling.

[The following article is presented by Lorimer Wilson, editor of and and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]

Basenese goes on to say in further edited excerpts:

After more than doubling – from $881 an ounce at the end of  2008 to a record of over $1,921 in September 2011 – gold dropped to a 34-month  low last week. So much for being a store of value. What gives? The Fed, of course. The selloff is a continuation of the response to concerns over the Fed tapering stimulus.

~Bearish Sign #1:  Capitulation, Not Conviction
So far in 2013, exchanged-traded funds have sold more than 500 tons of gold. That’s equivalent to about 20% of their total holdings. Clearly, a stampede for the exits is underway and it’s not just skittish retail investors hightailing it out of gold. Hedge funds want out, too. According to research firm, Eurekahedge Pte Ltd., the number  of hedge funds investing in gold recently dropped to the lowest level since  2010.

As Tom Kendall, Precious Metals Analyst at Credit Suisse,  puts it, “The word at the moment is capitulation.” I’ll say! Kendall notes that long-term investors, “who you would have  expected to hold on through thick and thin,” are selling. I’m sorry, but sudden rebounds don’t materialize under such  conditions.

~Bearish Sign #2:  Where Have All the Institutional Cheerleaders Gone?
As you know, many investors abhor independent thinking.  Instead, they rely on the “rah rahs” (aka cheerleading) emanating from major Wall Street banks. However, the banks aren’t wielding their influence to stem the gold selloff.

  • Firms like Morgan Stanley (MS) and Goldman Sachs (GS) are lowering their price targets for gold.
  • UBS (UBS), historically one of the most bullish banks on gold, is souring on the  precious metal. Over the last year, the Swiss bank lowered its price target  from $1,750 to $1,050 an ounce. It’s now advising high-net-worth clients to avoid gold, according to reports in the Financial  Times.
  • The analysts over at ABN Amro Group are even more pessimistic.  They predict that gold will drop to $900 by the end of next year. That’s equal  to a 25% dip from current prices.

~Bearish Sign #3: No  Chinese or Indian Saviors
The last time that gold sold off (back in April), Chinese and Indian buyers swooped in to purchase coins and jewelry, which prompted a rebound in prices. Apparently, they’re not interested in saving the day again, though…so we’re talking about a global absence of buyers.

Bottom line:

“We’ll need to see evidence of more physical  buying and demand from central banks before gold really turns around” says Bart Melek of TD Securities. Translation: Gold prices haven’t hit bottom yet so look out below!

 [Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]
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One comment

  1. Said another way, seems the biggest investors are Anti-PM and very pro flat money, I wonder why that is since they trade mostly in flat money…

    It may be that the Bigs are actually slowly buying PM for themselves but doing at a agreed upon rate so as not to send any signals to small to medium investors that the joke is on them!

    I feel that the BIGS are pushing PM prices downward and now most small investors are being hustled into putting in sell orders, which just makes it easier for the Bigs to do what they are doing!

    Time will tell, certainly not the Bigs…