Gold is on the cusp of a 'major breakdown'

So long as banks, the fed and govt want to prevent flight of capital from equities to commodities, gold price will be artificially pushed down. Nasdaq's high yesterday will also have fund managers' preference to park money in equities rather than in commodities to balance risks. It is not only drop in gold; silver and other precious metals are also shorted.

However, short-selling now means have to cover back the position later or deliver the physical gold (virtually no one does that), so eventually these short-sellers will have to cover their position and buy back. Right now, the amount of short contracts is staggering and at record high since 1999 and those sellers are so highly-leveraged that a mere 3%+ rise in gold price will wipe out their entire capital. There is no need to rush in to buy as the next support level is at USD$1,100 just wait to see whether it will be breached. The short-selling is even worse in silver and a massive buyback will be needed very soon; i would buy silver now rather than gold.

Just for the record, silver is at USD$14.84 /ounce gold is at USD$1,133.30 / ounce this week.

garlic said:

The short-selling is even worse in silver and a massive buyback will be needed very soon; i would buy silver now rather than gold.

Just for the record, silver is at USD$14.84 /ounce gold is at USD$1,133.30 / ounce this week.

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Yes, silver is another good choice.

yes.. potential for silver is indeed very high cos unlike gold it has commercial use in the electronic sector

i still think there is no reason to long, china stock market recovering from its mess, greek crisis is almost over, FED going to raise rate along with UK. tell me what could happen next, a war??? i shan't believe that there is another crisis hanging around the corner. wait for next year or maybe after, then we talk about gold price rising.



The bottom line is American futures speculators’ gold and silver shorts just surged to record levels. It was almost exclusively this marginal supply that recently forced the precious metals down near major secular lows. But borrowed futures are temporary artificial supply that must soon reverse into guaranteed proportional buying as they are covered. Thus excessive shorting is an exceedingly-bullish omen.

http://news.goldseek.com/Zealllc/1437149245.php

have you all seen the morning dip? i was spot on on my chart reading, if you have doubts, you can refer to me.

$2.7bn gold dump in China causes price ‘flash crash’

The manipulation of the gold price continues. Why did somebody in China dump a notional $2.7 billion in gold last night when China opened for trade causing precious metal prices to crash?

Gold prices dived 4.2 per cent or over $50 in a ‘flash crash’ to $1,086 before quickly rebounding back above the $1,100 marker, reported zero hedge.com (click here).

Market bottom?

This action looks to be somebody in China trying to force the gold price to its bottom. It’s not a normal trade, that’s for sure.

Maybe this is to ensure gold now coming onto the market after the Chinese stock market crash is sold for a low price. Or it could be a derivatives trade that has gone wrong.

But as zero hedge.com noted: ‘Whatever the reason, gold just had its biggest flash crash in nearly two years, as a targeted stop hunt launched by the dumping of $2.7 billion notional in product, accelerates the capitulation of the momentum buyers (and in this case sellers) pushing gold to a level not seen almost since 2009.’

Bottoming out?

How close is the gold price to its bottom now? Surely this just has to be it. This sort of flash crash tests market lows to their limit. They are a moment of the most extremely pressure possible.

Will retail buyers in China see this as a sell signal or an opportunity to pick up a bargain?

What other surprises are to come as China tries to bury the aftershocks from its massive stock market crash? This will not be the last.

http://www.arabianmoney.net/gold-silver/2015/07/20/2-7bn-gold-dump-in-china-smashes-price/