The post U.S. election recovery in the gold price is yet another sign that the ‘fear trade’ is beginning to impact the gold market as investors seek safe havens again
Gold’s price pattern since the results of the U.S. Presidential election has been an interesting one. Most analysts had predicted that gold would rise if President Obama retained his position, and now other factors have come into play – perhaps most noticeably that the post-election nervousness about the path of the U.S. economy, coupled with no end in sight to the Eurozone problems (indeed things appear to be getting worse with expectations that the Eurozone is heading for recession – including mighty Germany).
What had been surprising about the path of the gold price through the past year or so is that it often fell back on poor global economic news when the old safe haven arguments for the yellow metal might have been thought to come increasingly into play.
There is no reason to expect that renewed efforts at federal budget deficit reduction will result in anything more than the usual smoke and mirrors, further increasing, not reducing, long-term U.S. sovereign-solvency risk. In reality, the U.S. economy has not recovered, and no recovery is pending. Consumer liquidity remains severely impaired, and broad business activity continues to falter anew. As a result. the actual federal budget deficit going forward will be much worse than the relatively rosy numbers being used as the basis for government negotiations – John Williams, www.shadowstats.com
Former Banker & Quantitative Finance Expert
In Germany, gold is now available from vending machines, Gold to Go, in airports and railway stations. Shoppers can buy a 1-gm wafer ofgold or a larger 10-gm bar. Seeking safety for their savings, individuals purchased 150 tonnes of gold, mainly in the form of coins. Investors poured money into special funds- exchange-traded funds (ETFs) – which pool investor monies to buy over 1,000 tonnes of gold. Having earlier sold off their holding, some central banks are rebuilding gold reserves. The world has remembered JPMorgan’s words to Congress in 1912, “Gold is money. Everything else is credit.”
When the next round of the Financial Crisis hits, the Fed will be powerless to stop. At that point the financial system will collapse.
Here is what Celente had to say: “How could anybody believe a guy like the head of the European Central Bank, Mario Draghi, who keeps making up these games? How about breaking down the BS and calling it printing money out of thin air, backed by nothing? That’s all this is.”
“What I really want to make 100% clear, so that we get past all of the camouflage and the wording, is there was nothing in anybody’s charter, be it the United States, Ireland, Spain, Greece, Portugal, (all of) Europe, etc., which said that if any of these banks made bad bets, when those banks failed the governments would go to the people and say, ‘You have to bail out these banks.’
Option Pit Mentoring and Consulting’s Mark Sebastian discusses gold amid huge market selloffs.