Gold and silver got slammed on Friday and today’s Swiss rejection of the SNB acquiring more gold has put another nail in the coffin of those bullish gold. However, with polls leading up to the vote showing the measure wouldn’t pass, some of this result has already been priced into the metal. The Swiss vote was rejected by all 19 cantons.
The following is from my contact in Switzerland from a local news source;
The Swiss referendum was seen as a historic moment for some analysts
as it was the first time the general public had a direct say in how a
central bank should operate. Button explained that the vote is a clear
support for the SNB’s current initiative to peg its currency against
the euro. Since 2011, the SNB has pegged the franc to the euro and
maintains a floor of 1 euro to 1.20 francs.
“I think this is a rejection that gold is ultimate reserve,” he said.
Button added that if markets were open when the results were out, he
would have expected to see a sharp selloff on the overwhelming “no”
vote. Although markets will have time to digest the news before
trading starts at 6 p.m. EST, Button said that he is expecting to see
some weakness at the open.
“Now that the Swiss vote is out of the way the direction for gold is
lower,” he said.
George Gero, vice president and precious-metals strategist with RBC
Capital Markets Global Futures, agreed that prices will probably be
heading lower but added that markets had already priced in the no vote
so the downside will be limited.
JDST was the star of the day on Friday. On the 11-25 Gold and Silver Outlook I had noted; “Also technically JDST still is in a short term and long term green arrow up. and “Any bullishness is short term. I do expect another turn down in precious metal prices.” JDST will still be the one to watch to go long in the weeks ahead, especially with this Swiss vote result. There is a chance of this vote being priced in, so if there is a surprise bounce, keep stops if going long JDST. Also, expect a gap up in JDST and then a choppy day but look for higher highs to take advantage of.
USO hit lower lows and is still in watch mode waiting for an opportunity.
TZA bounced higher and is a play over Wednesday’s high of $13.42 and a safer play over last weeks high of $14.
UGAZ fell hard over 11% and DGAZ was up over 11% and would have been a play on a break of Wednesday’s high of $2.99, closing at $3.32. I think buying the dip on UGAZ is a decent risk vs. reward play. UGAZ closed at $13.32 Friday.
Gold and silver opened down sharply in Asia as expected. Bounces will always come but readers have known for awhile my expectations of lower prices. Nothing has changed with this thinking. We are getting it now.
Both gold and silver bounced from their bottoms. I don’t know if it will be a dead cat bounce but anytime you get this V shaped decline and bounce, then still expect some weakness. Gold holding up much better than silver.
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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