Ross Norman: Gold looks like a 'beat fighter'
Ross Norman, ex-trader for NM Rothschild and Credit Suisse and owner of bullion brokers Sharps Pixley, tells Bloomberg on Wednesday, gold "looks like a beat fighter" and it won't get off the ropes "in a hurry."
He said he was surprised gold hasn't seen a solid bounce back given the number of short sellers in the market that will now have to cover their positions.
"Gold should really have seen a 50% retracement [of its losses] to the $1,450 level," he said, adding that the fact that this hasn't happened is quite a negative in the market.
Longer term, because the current price of gold is close to the cost of production for many companies, Norman says gold's decline on Friday and Monday is a "short-term correction" and "not a bubble bursting."
Gold was last trading at $1,376 an ounce – down 11% from $1,560 at Friday's opening in New York.
In a blog post Norman described how gold was crushed on Friday – a fall which set up Monday's meltdown.
Norman argues with some conviction the decline was sparked by a "shock and awe" attack by a large fund or bank (not named) on the Comex market in New York which channeled trades through the Merrill Lynch floor team.
The trades that broke gold's back came in two short bursts, but constituted some 15% of annual gold production – too much for the market to absorb.