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Soft Holiday Landing

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​Much of the U.S. has been pummeled by a winter storm, cold weather, snarled travel. Northern Europe is getting it, too, but even worse. Many, many minds are on the mid-week Christmas holiday and much of the rest of the world will have to wait while the Christian (and not-so-Christian) societies celebrate.

This squelches trading for a few days. Having Christmas on a Wednesday is about as disruptive to markets as any day can be. Volume began to slide last week, really dropped today and will be as gossamer as the ghosts that appeared to Ebenezer Scrooge in A Christmas Carol.
On a further holiday note, Reuters had this to say about the physical market today:

"Tumbling gold prices, growing consumer confidence and aggressive discounting by retailers have Americans flocking to jewelers' counters this holiday shopping season.


"The U.S. gold jewelry industry is on track for its highest sales for the fourth quarter since 2010 and its first annual increase in gold sales in more than a decade, precious metal consultant Thomson Reuters GFMS has estimated.


"Renewed consumer appetite for gold is unlikely to counteract the lack of investment dollars and reverse the downward trend for prices. But U.S. demand is a bright spot in a global gold market where import restrictions in India have slowed buying in that country, one of the world's biggest consumers."


Market analysts, when asked by Bloomberg, have been consistently bearish on gold in the past few months. 2014 forecasts are bleak. Even Paulson sold half his gold earlier this year and resisted the temptation to buy more during the last quarter. UBS predicts an average price of $1,200 for the year, which is a tad below where it opened today. Goldman Sachs still says to sell it. For many, there's just no way to read great news for gold in that kind of news.


"The pressure is clearly staying on the yellow metal," said Matt Zeman, senior market strategist with Chicago-based futures brokerage Kingsview Financial. "A lot of people feel that the Fed is in fact tapering is bearish for gold." Mr. Zeman added that if gold breaks below its June low, the losses could add up rapidly, dropping as much as $200 an ounce in days. "Gold could be headed for another large leg lower in the near future," he said. "You could be looking at sub-$1,000-an-ounce gold fairly quickly."


Many investors are indeed taking a break this week ahead of Christmas. So, some of the downward movement may only be position squaring and peace-of-mind selling.


The Comex trading floor will close one hour earlier on Tuesday, and gold trading on both sides of the Atlantic will be closed Wednesday in observance of Christmas.


As always, wishing you good trading,


Gary S. Wagner - Executive Producer