So, what’s up with gold? What happened to the idea that fundamental economic worries drive folks into gold? Hey, if we don’t have fundamental economic worries, then what the heck is driving the VIX up, the market down, and just about everybody on the planet into treasuries?
A quick look at the five-day chart for gold doesn’t look pretty for the gold bulls. Yet, a five-day slide doesn’t mean much, at least in the past it didn’t mean much. Given the shrill levels of the those screaming about the sky falling, and the fairly large percentage drops in gold’s price, it does make me wonder if something else is a foot, something that might not be as bad as, well, the picture is right now.
Clearly, currencies and treasuries are pressuring gold. The scared money is flowing into the safest havens in the world, the U.S. dollar and U.S. treasuries. Ironic, isn’t it? Money is flowing into the “over-printed” U.S. dollar and the bonds that back the largest debtor nation on the planet. Think about it. The Federal Reserve announces yet another massive printing of dollars and money flows out of gold into the very debt that will be created. Again, what is going on not just with gold, but the market as a whole? Is the market sensing something?
Ya know something is not right as silver too is sliding. Silver hitting $100 per ounce seems like a fantasy now that the price is flirting with $30. Watching silver and gold slide amidst the gloom of a failing global economy and massive global debt that threatens everything is astonishing. Confounding, confusing true, but I think mysterious better describes this new reality.
Now, I love a good mystery, and this is a mystery for me. Yes, yes, I know some of you gold and silver bugs will argue that the price drops are no mystery at all. Simply, margin calling is the reason for the price drops. Okay, but that begs the question, why the margin calls? Is it because the prices are falling? Quite the conundrum, yes?
Okay, so here is my theory, and yes, you are right if you think I am going to go positive on you. I think the European/U.S. debt debate has been and still is the largest reason for the global economic slowdown. I think the continual negative energy from these issues has driven both the global consumer and the global business community into a “wait and see” attitude. Now, this is no small thing, as the world over needs one thing and one thing only to drive global commerce – consumers and businesses spending money. Lately, that reality has been suspended. Now here is where I go positive on you …
I think the money powers are getting tired of working so hard to make their money grow. I think those powers are now hard at work pushing the respective fiscal and monetary policy makers to announce a coordinated effort to tackle the European and U.S. debt problems. I think this will push the resolution down the road, but it will be enough to alter the flow of money. So, back to the mystery of this – is the drop in price for gold, specifically, a reflection of the repositioning of big money? Is a shift about to happen in the flow of money? I can’t wait to turn the page …
Trade in the day – Invest in your life …
