goldcore.com / By Mark O’Byrne / 10 September 2013
Gold tracked oil lower today after Russia offered to work with Syria’s Assad to put their chemical weapons under international control. Firmer equities and equities at record highs showed risk appetite remains very high and “irrational exuberance” is back despite significant risks, including geopolitical risk.
Other risks worth keeping in mind are the likelihood of the Eurozone debt crisis flaring up once the German elections on September 22 are over. It is worth bearing in mind too, the coming political and possible financial fracas over the U.S. debt ceiling – U.S. Federal debt recently surged over $16.9 trillion.
The immediate risk of a unilateral bombing of Syria has abated but there remains a real risk of confrontation in the region and the possibility of a wider war in the Middle East involving Iran and Israel and their respective allies. This will support gold and could contribute to materially higher prices.
However, of far more importance to gold is the very tight physical market place which is manifest in the negative gold forward interest rates, gold futures still in backwardation and perhaps most importantly plummeting inventories on the COMEX.
Comex gold inventories have plunged more than 36% year to date, creating a market more leveraged than it has been for the last nine years. Inventories are down from 11.059 million ounces to 7.034 million ounces today.
Thanks to BrotherJohnF