Is 5000 Years of History Wrong?

Ross Norman is CEO of Sharps Pixley and has been the LBMA’s (London Bullion Market Association) top forecaster for 15 years – he knows gold.  He has also generally steered clear of buying into the gold price suppression arguments.  But this week he has come out and stated he believes somebody big is sitting on the gold price and that we could well see a rally when the Fed raises interest rates.

In an interview this week he had this to say:

“Either 5,000 years of safe haven buying has just become bunk, or there is a desire to portray what it is evidently a financial and economic crisis as nothing to be concerned about.”

“I think a rate hike must rate as the most telegraphed move in the history of financial markets and as such it must be fully factored into the price. When it does eventually come, say in Q1 2016, I could see a relief rally in gold as a distinct possibility.”

Just as we’ve seen in Australia, with gold and silver comfortably up in Aussie dollar terms and more joy to come with predictions of low 70’s and even 60’s by years end, he points out the same is for European gold holders whose currency has depreciated about 15% against the USD:

“European gold investors saw a 10 per cent gain last year and are up eight per cent year-to-date.  So again gold is doing what it should do, and that is to provide a means of hedging ones exposure to a currency crisis.”

As we explained in todays Weekly Wrap too, there is a thesis that the gold price is under pressure due to highly leveraged Chinese investors selling gold to pay their margin calls.  We’ve also seen the largest ever short contracts set up on COMEX by the speculative, and totally “naked” managed money sector whilst the big commercials shorts way down.  As discussed this week, those naked shorts need to cover some time soon...