February 11, 2013 | By Tekoa Da Silva
This morning gold collapsed from $1670 oz. to $1642.80. In response, I called a contact of mine who runs a “market-making” precious metals desk in London.
Commenting on today’s collapse he said, “I’m not that worried about the sell-off today, it’s just the logical thing. I was surprised they waited so long [to take it down], because many opportunities to push it to that level existed before…and it finally happened, and that’s good for the market. This is actually a blessing. We are still not at the lows of January at $1625…but at the moment this is probably as far as it’s going to go [$1642]. There’s good support here.”
He further added that, “This is actually the typical reaction of the Chinese New Year, because the shorts, they know there will be no physical demand for a couple of days, there won’t be support there, and so they are smart. This is smart money just pushing it to the extremes. For me this is an opportunity to get something cheap in for the mid-term. But you can’t fight the trend at the moment in terms of what’s in the air for the Fed-speak etc., but the long-term money stays and sits.”
Briefly concluding he said, “I have to stop here because I have to help my guys make money…The market is insanely busy right now, we just collapsed down to $1642, and I really have to help my people.”