With gold and silver consolidating recent gains, today King World News interviewed Ben Davies, CEO of Hinde Capital, to get his take on where the markets are headed from here. When asked about the price action in gold Davies stated, “Friday we had a superlative response to the payroll numbers and the market was already breaking out prior to that news. The market did what it had to do, which was to facilitate trade to the upside. I just think there is too much pent up demand and shorts were in at the wrong level. I think in September we are going to see the $2,100 level, we’ve been looking for that slingshot.”
Ben Davies continues:
“Recent price action, speaking subjectively, just felt like a retest of the highs. We’ll probably continue to see some (short-term) selling coming into the market at this point. There are two dynamics here, one is we did actually hear of some physical selling. It was mainly some fabricators out of Asia who had taken in a bit of overstock and were taking advantage of the higher price levels.
The amazing price action was the near $40 to $50 vaporization in the market, when the gold market went from $1,910 down to $1,861. This was five minutes before the incredible announcement by the Swiss National Bank that they have come in and effectively they are going to peg the Swiss franc to the euro 1.20. They have completely divested themselves of any monetary policy responsibility. It’s not a peg as such, but it is a managed float.
“As you will recall, Eric, I wrote a blog last week for KWN about the whole Swiss franc situation and the fact that their reserves are not backed by gold. In terms of being a bastion of safety (the Swiss franc) in the world of safe haven, really this is a fallacy. This has just been confirmed by the recent price action in the Swiss franc because of the announcement by the SNB who have said that they will effectively sell unlimited amounts of Swiss francs by buying other currencies, in order to hold this 1.20 level.
But this price action once again, why was it (gold) selling off just ahead of a really bullish announcement? You have to believe that there was some coordinated action. When I say that, the central banks will all have been in on knowing ahead of time that the Swiss were going to announce this. So there was central bank selling because they really didn’t want the price of gold to skyrocket on what is incredibly bullish news for gold.”
When asked about silver specifically Davies responded, “Silver, we actually have a sensitivity to silver at the moment, we’re quite partial to it. We think the price action has been very solid. Since the $50 level it has been acquiescing sideways, but considering the other industrial elements have done very poorly vs gold, silver has really held in well.
I really believe that we are nearing the beginning of a third wave higher. We are creating that type of pattern where we are really going to start accelerating higher over the next quarter. Silver will take out the $50 highs and will go pushing into the mid 60’s.”
The KWN audio interview with Ben Davies will be released shortly and you can listen to it by CLICKING HERE.
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Eric King
