Gold and Silver Snips

After some gold ETF redemptions, ETF holdings have started to climb again, which ScotiaMocatta considers a "potentially bullish development."

Author: Dorothy Kosich
Posted: Monday , 21 Sep 2009

"The big picture remains bullish for gold," ScotiaMocatta advises, "and if equities start to correct more safe haven buying might return."

ScotiaMocatta also suggests, "Silver's rebound is looking robust and with prices continuing to outperform gold, there is likely to be good upside potential."

Meanwhile, gold ETF holdings are starting to rise again, suggesting redemptions have run their course, which ScotiaMocatta calls "a potentially bullish development."

In their September 2009 Metal Matters, ScotiaMocatta noted gold consolidated in August after June's sell-off and July's rebound. In the meantime, there were some redemptions in the gold ETFs, "not enough to damage sentiment too much," the gold bullion experts said.

"Although there seems to have been strong waves of bullish sentiment flowing through the markets as optimism for an economic recovery is running high," ScotiaMocatta advised, "there are numerous areas of uncertainty that could scupper this optimism. "

Nevertheless, ScotiaMocatta suggests, "the big picture remains bullish and although a downside correction in the wider markets might still drag gold prices lower as investors move into cash, the secondary reaction might be for investors to store their cash in bullion as the dollar and other currencies could well suffer if the markets enter another period of turbulence."

Meanwhile, ScotiaMocatta says, "Silver's rally looks robust." However, they noted, silver ETFs suffered a pull back with one of the ETFs enduring an 82-tonne drop in its holdings on August 27^th.

"Silver has potential to rise on either an economic recovery, or if safe-haven demand rises in the face of further turmoil in the financial markets," they forecast.

"The big picture outlook for bullion remains bullish," ScotiaMocatta advises. The silver price "may suffer some selling if equities correct, but any price weakness in silver is likely to attract even more buying as investors rotate from equities back into safe-haven products, such as silver and gold."

In the meantime, palladium has outshone platinum setting fresh 12-month highs, ScotiaMocatta noted.

"Strike action in South Africa and the low levels of Palladium exports from Russia, are likely to dominate sentiment," they advise