The Briefing Room
General Category => Economy/Business => Topic started by: mystery-ak on April 15, 2013, 02:06:39 pm
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http://abcnews.go.com/blogs/business/2013/04/gold-investors-exit-amid-price-collapse/ (http://abcnews.go.com/blogs/business/2013/04/gold-investors-exit-amid-price-collapse/)
By Richard Davies
Apr 15, 2013 8:02am
Morning Business Memo…
The biggest story on global financial markets today is the collapse of gold and silver prices. Gold is down more than $90 an ounce since Friday – a fall of about 7 percent. The price drop comes on top of last week’s 4.7 percent tumble. Silver prices tumbled 8 percent, or $24 an ounce. Copper is also falling. The reasons for the plunge are linked to the recent rise in the stock market, the slow, steady improvement of the US economy and the recent strength of the dollar. Crude oil futures have tumbled on global markets, down to less than $89 for West Texas crude, the lowest price since December, 2012. For years gold bugs have predicted economic apocalypse with hyper-inflation and a collapse of stock prices. That simply hasn’t happened, and many investors have given up on gold, shifting funds out of precious metals. Last week Goldman Sachs issued a report, predicting gold prices would tumble. More volatility is expected in the days to come.
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The world is a confusing place, and there is no place in the world more confusing than Wall Street. I am at a loss as to how to reconcile the fall in gold prices. The steady improvement of the US economy? Really? Where?
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The world is a confusing place, and there is no place in the world more confusing than Wall Street. I am at a loss as to how to reconcile the fall in gold prices. The steady improvement of the US economy? Really? Where?
More likely is the fact that the goldbugs overextended their hands and fueled a speculative bubble. That, and the money supply is tightening, at least for now.
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More likely is the fact that the goldbugs overextended their hands and fueled a speculative bubble. That, and the money supply is tightening, at least for now.
This is really a pure paper plunge. Sovereign buying of physical gold is way up YOY. Course, sovereign buyers (Russia and China) will gladly stand aside and let the U.S. and G.B. crash the price. Buy the real stuff a lot cheaper if they can. Get a lot more gold for your USD fiat. The financial crisis has proved once again that paper burns.
The money supply isn't really tightening. Just the Fed talking about thinking about doing it. Japan is committed to printing yen, U.S. is still printing 85B/mo (that's almost $1T/yr), Euro will need to print as well. A contraction in the money supply would crash the U.S. and world economies. Who knows, maybe that's in the plan. Happened in the 30's till WW II was launched.
Gold could always go lower and could stay down for a long time. OTOH, it may rebound from these levels. Nobody knows except the banksters and their unlimited paper. If you were thinking about buying though, this is a better time than in a long time. "Blood in the streets" and all that.
JMO, this is not investment advice, DYODD.