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Gold Winds Down a Volatile Weekby Peter A. Grant
Nov 30, AM 
Gold has been rather volatile this week, primarily rising and falling with the hopes that Congress and the White House will reach some deal to avert a drop over the fiscal cliff after the end of the year. The yellow metal is back on the defensive today as the latest proposal from the Obama Administration (pretty much the same proposal he campaigned on) was rejected by Congressional Republicans.The proliferation of paper gold derivatives can make the yellow metal react like a risk asset in the short-term, even though physical gold is very widely perceived as one of the safest assets available. Frequently, when selling of paper gold drives the price lower, physical buyers will step in to snap-up the actual metal at the discounted price. It's a time tested strategy... The market however is still a bit on its heels in the wake of Wednesday's, heavy selling in COMEX futures. The CME Group reported record volume of 486,315 contracts in gold futures that day, a big chunk of which came right on the open in the form of a 24 tonne sell order. This caused a cascading affect as sell stops were triggered on the way down. While the market subsequently recovered the majority of Wednesday's losses, and more than half of the losses from the high set a week ago at 1754.30, it's not surprising that longs are somewhat cautious here as the week winds down. There are still many lingering questions as to the 'who and why' on that aggressive selling. Nonetheless, the underlying fundamentals of the gold market remain constructive. It is in fact the proliferation of paper, in the form of debt and fiat currencies, that should provide all the incentive you need to stay the course on gold. That is a trend that isn't going to change any time soon. Investor Kyle Bass noted last week that since 1981, "the US increased its sovereign debt by 1,560% while its population increased by only 35%." In this context, it becomes glaringly obvious that whatever compromise the President and Congress might hash out, it won't amount to a hill of beans in the grand scheme of things... NEWSLETTER SIGN-UP Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.
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