- Jan 14, 2016
- By the Gulag wall.
An interesting article here that suggests that gold prices may be about to enter a period of steep decline. As I write, gold is trading at 1506 USD per ounce. A couple of weeks ago it traded at 1556. These are financial crisis prices. And yet, we're certainly not in a financial crisis. What does appear to be happening is that Europe has joined Japan and South Korea in a demographic winter, where lack of new babies means low interest rates and low profits for companies. The USA is likely to join us within a couple of years. But, this is not a financial crisis. It's just a slow - very slow - death of Capitalism. I think the fall in cryptos may be down to the same factors.
In my experience of trading financial markets, I'd say the biggest single influence is boredom - simple boredom. People get used to any situation very quickly and they just get bored with it. Nothing more sophisticated than that. I think traders are now bored with the China Vs USA trade war and they're bored with Brexit. Bad news about these things doesn't make them as fearful as it used to. The article below makes the interesting point that gold and silver miners are not doing well. That would be a sign that the market does not believe gold and silver are staying high in the long term.
Another point that I noticed last week is that during September, Western banks and institutions make record loans to emerging market economies. This shows that Western institutions do not expect any sort of financial crisis in the foreseeable future. Of course, they can be wrong, and they have been in the past, but we have to go on what we see before us.
I'm short gold myself. Targeting 1400 in the medium term. But, gold could be going a lot lower than that.