Yesterday’s plunge in gold and silver suggest that traders are focused on overall strength of US economy and not just the employment numbers. Fed Vice Chair Richard Clarida’s suggested the Federal Reserve could start cutting back on its asset purchase program later this year. Different Federal Reserve speakers are on different path on taper. Just trade in the technical (till tomorrow) in order to overcome the dilemma as to how price will move after the release of key US economic data releases.
Summer in USA and Europe will get over in the next four weeks. Bullion can trade in a wider range for a much longer time than most of us expect. “Taper talks” will continue to dictate the mindset of gold and silver traders. There are two ways to look at various taper talks by Federal Reserve speakers. (1) Federal Reserve will start money supply reducing measures any time before Christmas and first quarter of next year. They are preparing traders and investors alike for taper. They want a smooth transition if and when taper starts. (2) They are not sure when to taper without causing a shakeup global financial markets. New variants of coronavirus and its economic impact is uncertain. Federal Reserve has the taper bow and taper arrow. But they are living in space and away from the gravitational forces of earth with the taper bow and taper arrow. Every few weeks someone says something on taper which is inconsistent with Federal Reserve meetings. (3) Funds flow into emerging markets and Asian markets like India and Indonesia will be impacted much more by taper than precious metals and base metals. Forex reserves in various Asian nations need to be very high in order to prevent a Asian currency collapse if and when key central banks start to taper.
Coronavirus vaccine is a big Ponzi scheme by the world leaders. The number of vaccinated people getting infected and re-infected by covid makes me believe that our political master are making us guinea pigs for testing something else. (The number of vaccinated people getting covid infections IN UK is the best example why vaccines are a useless.). A third booster dose and many more doses in future will be forced on us. Gold will continue to rise as the vaccine sham scheme is leaked among masses. Short term corrections and crashes is not ruled out in gold. (I am vaccinated by India’s covaxin).
Offshore holdings of China government bonds hit a record $337 bln in July
Foreign investors’ holdings of Chinese government bonds (CGBs) touched a record high in July, official data showed, and rose at the fastest monthly pace since April. Offshore holdings of CGBs totalled 2.18 trillion yuan ($337.26 billion) at the end of July. That was an all-time high, and up 2.3% from a month earlier. (news source Reuters). Our View: The Chinese yuan accounts for 30.4% of Russia's National Wealth Fund's holdings, and 12.8% of Russia's reserve assets. National and hedge funds investment in China and with China will increase with passing of each month and every year. This will be done by reducing investments in USA. Gold will continue to rise as nations and hedge funds hedge against global dumping of greenback. The pace of long term rise of gold cannot be predicted as of now.
What next for gold and silver
- There will be more sell off if spot gold trades below hundred day moving average around $1803 to $1792 and $1778. Gold has to trade over $1803 till next week to be in a short term bullish zone
- There will be sellers on rise in gold after repeated failure to break past previous double top at $1733 for spot gold.
- Silver has to trade over $25.00 till Friday to be in a short term bullish zone.
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