The value of Gold dropped today slightly upon the news that the Swiss do not wish to restrict the outflow of Gold. The swiss hold 1041.1 tonnes of Gold, 7th the world after USA (8133 tonnes), Germany (3401 tonnes), IMF (2814 tonnes), Italy (2451.8 tonnes), France (2435.4 tonnes) and China (1054 tonnes).
Derestricting the sale of Gold should actually not affect Gold itself, however when they start selling Gold off it will mean that the market flow for Gold will go up, reducing Gold vs Dollar value. However if they had restricted the gold flow, then we could have seen Gold rally (reduce the amount of something and it goes up in value if there are buyers).
Gold is heading off to the east, China and India are keen to get more gold, India for jewellery and China because they are thinking of making it the new Reserve Currency. India said that if they had to pay off their debts the would use Gold to do it.
The FED think Gold is not money. But if you can pay for something with Gold, guess what, it is money.
For me, this move is just a small dent in a Gold rally that should slowly move upwards as I have said in previous posts.
HSBC said that the Feds tapering will have a negative effect on Gold, but they think it will be limited.
If I was a country I would bring Gold in at these prices and hold it. Exactly what the emerging markets are doing. If the dollar does eventually crash because of the continuing Debt Ceiling raises not being reconciled (you can’t go on increasing your debt forever). Then investors will move away to safe haven currencies like sterling (which has been doing very well recently) and metals such as silver and Gold.
Practically Gold is a long term buy for me. You need big stops to trade gold as it can move very fast either way. I reckon around 3k pips. At these lower areas we are in a good place for a buy.
GBP is still making me nervous because it seems alone rallying hugely against the dollar, there is one word for this Bubble. I am concerned that it is rallying too fast and that it could have to correct even faster.
Happy Trading (remember sometimes the best trade is the wait trade).