Factors makes Are Gold and Silver Prices Falling
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Factors makes Are Gold and Silver Prices Falling
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Gold and silver fell hard again on May 5: Gold touched an intraday low of $1463 per ounce (from $1,577 on May 2), and silver fell as low as $35 an ounce (from $49 on April 25.) Investors want explanations, and here are some of the more popular ones:
* ... [the] stronger dollar amplified negative sentiment toward precious metals forged by a 23% dive in silver prices. (The WSJ, May 5)
* Comex...late Wednesday announced margin-requirement increases [for silver futures trading]… (MarketWatch, May 5)
* Major players, including George Soros, are reportedly pulling back from gold and silver (CNBC, May 5)
These may seem perfectly plausible -- until you consider the chronology of the stories vs. the precious metals' selloff. See the problem for yourself.
Silver peaked on April 25, gold on May 2. But the U.S. dollar only got stronger on May 5. New silver futures margin requirements came on May 4. The Soros hedge fund news came late on May 3 -- again, after gold and silver had started to decline.
The most one can say about these news stories is that they pushed the selloffs in the direction prices were going already. The actual timeline shows that the strong dollar, higher margins, George Soros, etc. were not the cause. So what was?
From an Elliott wave perspective, the answer is always: investor psychology. In the days leading up to the reversals, EWI's Mn.-Wd.-Fri. Short Term Update repeatedly warned subscribers that silver's rally was running on fumes READ MORE
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