Stuttgart-based gold market expert Philip Klinkmüller has explained what the recent development means for the precious metal. In his interview, the expert spoke about "structural weaknesses" in the market and prepared tips for gold investors.
In mid-November, the price of gold unexpectedly plummeted. While it seems to have recovered again slightly, other economic news reports warn about the gloomy prospects for the price of gold "going south". On Wednesday, the price was quoted at $1,458 per ounce. At the end of August, it was still above $1,550.
Gold market analyst and trading expert Philip Klinkmüller, an economist at the investment company Hopf & Klinkmüller Capital Management, has expressed a clear view on the current situation:
"Whether the gold price has really recovered again is relatively visible in the current environment. In recent weeks we have had a low of $1,446 per ounce. We haven't even reached $30 above that now", the expert says, emphasising that a real recovery in gold would look different.
The gold market analyst from Stuttgart says that they are now preparing for two scenarios: either the price of gold will continue to decline to $1,470 or it will develop in the form of an interim recovery. Such a development might push the price up to $1,500-1,512 per ounce.
"Our preferred scenario would be for the sell-off to continue from there. But in general, we expect that over the next few weeks the price of gold will continue to fall before there is a chance for a sustained upturn", Klinkmüller stresses.
Is the Upward Trend in Gold Prices Already Over?
His company in Stuttgart has already sold a large part of its gold positions but still holds reserves. Philip Klinkmüller noted that they still have long positions in gold. Should the market, as they expect, show intermediate growth, they'll sell them off and take the short positions for the time being. Then they'd find out whether the gold market will get another long chance or if the upward movement has already come to an end.
Other negative factors could significantly lower the gold market in the coming weeks and months: "Judging by the market movement charts and buyer signals, we estimate that the market is going to face a massive sell-off", Klinkmüller warns in his column on the precious metal.
"Gold Market is Facing Violent Turbulence"
On the other hand, gold market expert Dimitri Speck told Sputnik a few days ago that the gold market still has “brilliant prospects”. In the short-, medium- and long-term, the gold price will rise, the expert believes:
"We are far from a bear market in gold", he made clear at the time.
Moreover, US stocks that are currently well listed are "never a solution for investors" compared to gold or silver. However, several questions remain: how the gold situation will continue to develop and whether there is really going to be another sustained upward trend here, Klinkmüller says.
"We don't exclude that the price will again climb above $1,566 per ounce. However, we are currently ruling out the possibility of the price of gold breaking above $1,920. Only such an upward trend in gold would actually be sustainable", the expert notes.
According to the expert, the market is soon going to face a violent correction that could push gold even lower.
"We see this in the charts from a structural point of view. The underpinning structure that the market has built up currently gives us no hope that we are dealing with an impulsive, sustainable upward movement".
The expert has long been aware of structural weaknesses in the gold market. Besides this, the market is also suffering from a "massively overbought condition". The surprising fall in gold in mid-November was a logical consequence of this.
Expert Tips for Gold Investors Under the Current Circumstances
Klinkmüller advises prospective gold buyers and investors that it would not make sense to invest in new gold at present. However, for those who have already invested in gold, he suggests keeping "physical gold". But that also depends heavily on how large the investment in gold is.
"Anyone who owns a lot of gold could seriously consider selling some of their gold at the moment and thus get cash flow liquidity", he said.
The analyst also warned of upcoming market movements that could “knock the price of gold down in quite different spheres”. His advice is that it is better to make money now with your gold investments than to experience the next price crash with the precious metal in a vault.
Silver at the moment, if to be realistic, is experiencing a negative trend. The prices of both precious metals are closely intertwined.
"Silver also has structural problems, and there have been signals to sell here as well. Both markets are not particularly in a favourable position", Klinkmüller says.
For this reason, the Stuttgart expert currently sees rising share prices as short-term alternatives with corresponding profit opportunities.
"Although, I am not a big fan of such an approach, you just need to see where the money is going now".
With some stocks now expecting big gains, it is clear that not enough money is flowing into the gold market to create new all-time highs.