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Gold And Silver:Under Technical Damage


Commodity brokers are now engaged in collecting margins from their clients. Most of the exchanges have enhanced margin requirement for holding commodity future positions by 20-30%.

In last 3-4 days,Gold and silver fell as shown in table below.

Name Price as on 22nd Sept Price as on 26th Sept. % Fall
Gold 28030 25800 8%
Silver 65000 48000 23%

This is a real colour of market.Gold,silver and other commodities crashed after federal reserves decision to buy long term bonds…Why commodities fall so much severely….may be due to some of the following reasons

1.Sharp rise is always followed by sharp fall:

This is a rule of nature.Thing which can go up so much easily can come down with similar speed.Correction was needed for healthy upmove in both commodities.

2.Strong dollar index:

Dollar index broken out after federal reserve meet and decision of buying long term bonds.Commodities fell severely after investors turn to greenback.

3.Margin:

All global exchanges enhanced margins by nearly 20%.Speculators need to cut out the positions as lead to major sell of across the market.In 1980 when speculators lead silver prices from 10$ to 50$.Same peoples declared bankruptcy when silver fell back to 6$.

4.Weekend:

No speculator / broker was eager to keep the risky positions at weekend.No one might like to spend sleepless nights at weekend.So brokers have no option but to cut high leveraged positions.It leads to breaking of all consecutive levels and silver fall by nearly 20% within 2 days.

In future market,money can be made in upward as well down market also.But risk management,risk planning is most important and same thing has outlined this time.

There are problems for speculators not for investors.Investors who have bought Gold $ Silver at National spot exchange can think of adding (value averaging) positions to get better returns in coming years.


Category: Commodities

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Information provided on this blog is for general purpose only & not investment advice.Please take advice of SEBI Registered Investment Advisors before taking any investment decision.
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