-- Posted Thursday, 2 October 2008 | Digg This Article | Source: GoldSeek.com

More extremely counter intuitive moves in the gold market today. Despite, unprecedented demand internationally for gold bullion as evidenced by vault staff throughout the world working overtime, queues outside bullion dealers in the UK (see  http://www.goldassets.co.uk/images/the_guardian_02-10-08.jpg ) and in Asia and in shortages and rationing of small gold coins and bars (Eagles, Philharmonics, Buffalos, Krugerrands and Sovereigns) in Europe and the U.S. - gold has sold off aggressively in the COMEX market.

Short sellers pushed their advantage today on much weaker oil and the still rallying dollar and they have aggressively sold gold again today pushing gold back below $850/oz.

There has been a very determined seller above $900 in recent days and it would certainly seem like some large institution did not want the gold price surging above $900/oz as contagion spreads throughout global money markets. Some contend that this may be US government and US Treasury motivated others that it is to protect a very large short position and some such as the Gold Anti Trust Action Committee (GATA) contend both.

However, this is likely to be another short term (paper) futures market sell off and we would not be surprised if gold prices rallied sharply on the Congress' decision regarding the Paulson bailout plan.

Congressional approval of the plan may be bearish for gold in the very short term but it is very bullish for gold in the medium to long term as the US' fiscal position deteriorates significantly.

Should Congress vote against the plan again we are likely to again see stock markets plummet and gold surge.

With physical demand on a par if not higher than 1979-80, gold will not languish at these levels for long and $1,000/oz should be reached very soon after election day.

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-- Posted Thursday, 2 October 2008 | Digg This Article

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