The sell-off in gold is reminiscent of the 2008 deleveraging process... There were buyers of course, seller and buyer volumes must match. But the need to sell overwhelmed the need to buy.
When you have redemptions time is against you to liquidate, so it becomes a case of sell at any price as time becomes finite. Gold buyers picked up some bargains then and they will now.Davies concludes:
Before FOMC minutes two nights ago the seller was back at the close. And then the FOMC minutes changed the dynamic of market with the mention by some members that QE would be back if they saw renewed economic weakness. This is the association for us all of why the market stopped going down but in truth the seller was done.
I humbly believe the seller is done. For one week there has been several but mainly one entity selling Comex gold futures, as well as some physical to liquidate on the open and closes. This suggest to us it was a CTA commodity type fund. They use volume areas of the day to transact.Bottom line: We may have 3 factors pushing gold and silver to the upside in a "perfect storm" type event. First, we have a very oversold market. Second, we have may have a major seller out of the market and third, the Fed may be about to increase its money pumping.
I tend to buy gold for the long-term and not pay too much attention to short-term fluctuations, but given recent weakness in gold and what appears to be developing upside factors, it may make sense to step up gold buying at this time.