Gold Price Dips Below $1,500, Silver Plunge Continues

GOLD PRICE NEWS – The gold price moved lower Thursday morning, declining $10.00 to $1,509 per ounce.  The gold price moved lower overnight, falling below $1,500 to a low of $1,496.25 amid broad-based liquidation in stock and commodity markets.  Silver remains immersed in a violent correction, dropping another 3.1% to $38.10 per ounce after touching a low of $37.36 earlier this morning.  Silver prices have crashed 21% this week while the gold price has lost 3.5%.

The share prices of gold and silver mining companies moved lower, led by declines in Barrick Gold (ABX) and Goldcorp (GG), which sank 2% and 1%, respectively.  Barrick, the worlds’ largest gold producer has dropped 7.5% over the past eight trading days on the back of soft gold prices and a takeover bid for copper company, Equinox Minerals that has been ill-received by the market.

Gold prices showed a muted reaction to news early Thursday that applications for jobless benefits rose 43,000 to 474,000 last week, considerably worse than the 400,000 to 420,000 consensus among economists.  The bleak outlook on the employment front should keep Bernanke and the Fed in the dovish camp on monetary policy, lending support for the gold price.

Wednesday saw the gold price continue to retreat, as the yellow metal fell to as low as $1,505 before paring its losses and closing near $1,515 per ounce.  Silver tumbled alongside the gold price, briefly dropping below $39 before finishing down by $2.44, or 5.9%, at $39.19 per ounce.

The sell-off in the gold price on Wednesday was fueled by a Wall Street Journal report that several large investors – including George Soros and John Burbank – liquidated a considerable portion of their gold and silver holdings.  The story noted that Soros Fund Management purchased gold and silver over the past two years to protect against the Federal Reserve’s response to the risks of deflation.  However, Soros now believes that deflationary risks have dissipated significantly, making the rationale for holding positions tied to the gold price less attractive.

Burbank, founder of hedge fund Passport Capital, reduced the size of his gold positions in order to lock in profits, according to an individual close to the firm.  However, the source noted that Burbank remains bullish on the gold price over the longer-term, but feels that the price of gold is due for a meaningful correction at this time.

Late Wednesday afternoon, a report surfaced that legendary investor and billionaire Carlos Slim, the world’s wealthiest individual, has been actively selling silver futures contracts 2-3 years out.  Silver prices moved lower yet again this morning on the heels of the news and on liquidation of speculative net long positions on the COMEX.

Returning to gold, in contrast to the views of George Soros, another prominent investor reiterated his bullish forecast on the yellow metal.  John Paulson – who with $36 billion under management at Paulson & Co. runs the world’s third-largest hedge fund – told investors this week that the price of gold could reach $4,000 per ounce.

Paulson’s bullish prediction on the gold price echoed positive comments he recently made to France’s Les Echos.  There, the hedge fund magnate stated that “In these times of uncertainty for paper based currency, I feel more secure in holding gold; [it] offers good protection against the paper currencies devaluation and even the possibility of generating a return on fixed investment.”

Paulson went on to discuss the Federal Reserve’s quantitative easing programs, contending that “It is undeniable that this monetary expansion is equivalent to running the printing press.”  He later stated that “gold has always been a safe haven against inflation and a safe haven in times of political instability.”

As a result, Paulson forecasted that inflation will reach double digits in the next three to five years, and investors will continue to seek out investments tied to the gold price in order to protect against these inflationary risks.

(Source: http://www.goldalert.com/gold-price-dips-below-1500-silver-plunge-continues/)