Victoria Day Weekend Early Bullion Report

Gold dropped to its weakest level in almost a month today, hurt by a firmer dollar and as holdings in exchange-traded funds fell to the lowest in over four years, potentially stretching bullion's losing streak to a sixth day.

If gold ends lower on the day, it would be its longest losing streak since March 2009.The drops have already helped to fuel another scramble for bullion that has push Asian premiums for physical gold to record highs. Gold is less than $60 away from two-year lows hit in mid-April. Prices have fallen nearly 18 percent this year and are well below a record top near $1,920 struck in September 2011.
Financial markets are also rife with speculation that the U.S. Federal Reserve may begin winding down its aggressive economic stimulus, undermining the argument for holding gold as a hedge against potential inflation.
We find this extremely confusing as practically every central bank in the world is printing money and will continue to do so for many years.

Buying in China, the world's No. 2 consumer after India, has helped limit price losses. China bought a large amount of gold on Thursday morning after prices fell by more than $20 overnight, said Peter Tse, director at ScotiaMocatta in Hong Kong.

An anomaly that perplexes us is that as precious metals prices are trading lower we are seeing increased demand for physical gold and silver, which is unusual since increased demand usually results in higher prices!