One look at the chart says it all:
A fresh 6 + month low was made in the commodity sector earlier this AM.
Some might recall a while back I mentioned that the forward curve in the commodity markets was suggesting LOWER prices ahead, not higher prices, as the backwardation that existed in some of the major futures markets was dissolving with the structure moving more towards the typical contango structure. That was especially true between the old crop ( 2013) / new crop grains spreads.
With the US Dollar attempting to gain some further upside traction and with the commodity indices plunging, as well as the idea that interest rate hikes are coming to the US sooner rather than later, the headwinds against gold are gathering.
Gold bulls had best be thanking their lucky stars for all the geopolitical risk in place right now. Were it not for that, it is unlikely gold would be maintaining itself above key support near $1280.
I noticed that we finally got an updated number for the gold holdings in GLD yesterday. The number had not changed for nearly a week. The new number is a DECREASE of some 1.8 tons. Interestingly enough, the newly reported 800.05 tons is about the same amount that gold holdings have increased since the last business day of 2013 when the ETF reported holdings of 798.22 tons. Another way of saying this is that over the last 7 months, there has been a increase in gold holdings of a paltry 1.8 tons. Clearly Western-oriented investor demand for gold is comatose at the current time. Perhaps that will change as we move forward into Q3 of this year but that remains yet to be seen. With Chinese demand falling off and with Western investment demand on the wane, gold bulls need something to spark this market. It is very sad but that essentially means that they are either going to have to wish for, and even pray for, bad news for someone.
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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