Tags: BCA | Research | Gold | South

BCA Research: Gold Is Going South

Saturday, 16 Mar 2013 04:58 PM

By John Morgan

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A perfect storm of adverse factors means gold prices are headed lower, according to BCA
Research, the Canadian financial forecasting firm that is closely followed by large banks and institutional investors.

BCA said gold prices face a triple whammy of sagging technical indicators, benign economic growth, and downward trading momentum.

BCA’s proprietary technical indicator – its global gold advance/decline line – has dropped below key support.

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

“This indicator has a good track record of timing major shifts in gold, and the decline is particularly worrisome since it reflects universal negative sentiment towards the yellow metal,” BCA’s blog said.

The prospect of more favorable economic data is also bad for gold demand. The yellow metal often flourishes in uncertain times.

“Tame inflation expectations, rising real rates and a flattening yield curve diminish gold’s safe haven appeal. Consistent with this, our gold cyclical indicator is low and falling,” BCA reported.

The firm noted gold ETF outflows in February set a record, and that option-based trading momentum suggested the trend would continue.

A deflation scare could send gold higher, but BCA assigned low odds to that occurring for now.

The bottom line, according to BCA: “The path of least resistance for gold prices remains down.”

The price of gold rose convincingly above $1,000 per ounce five years ago. While off its subsequent highs in recent months, gold for April delivery settled at $1,592.60 an ounce  Friday at the New York Comex.

Indeed, gold bulls remain. According to The Guardian, “There have never been more private gold traders and individual investors keen to keep their cash in the precious metal.”

BullionVault, which operates vaults in London, New York and Zurich, reported there has been a nine-fold increase in the number of gold bullion traders since 2008.

Veteran gold mutual fund manager Tom Winmill told Kitco News he expects gold to recover this year on worries about U.S. government spending and continued negative real interest rates.

Winmill, president and chief executive officer of Midas Funds, said gold could return to $1,900 an ounce by year-end.

Editor's Note:
 
'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.


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