The fools who parted with their money to buy gold, thinking it was a safe haven, are paying a high price for their folly. This is the gold price chart from the FT this morning:
Silver is also polummeting, as is oil, as its chart shows:
At prices like this, much of US shale production is loss-making, and there is nothing to be made from further North Sea oil exploration.
So what is happening?
It could just be a correction.
It could be an indication that the headless chickens in the financial markets have no idea what they are doing.
It could be a sign that the realisation has dawned that commodities of any sort are not a safe haven if the world is really going into recession.
It may just all be a blip.
One thing can be said for sure, which is that markets are not rational and most definitely do not set prices based on all available data. There has been no significant change in data over the last week. Prices have, however, changed radically.
What happens next? The moment of a recession's onset rests with those who trade in markets like these and the stock market, where irrational exuberance persists. This is the world neoliberalism has built. We will all pay the price for it.
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Looking @ the charts, the name Bunkerhunt came to mind. Wonder if there was some sharp buying before the rise and sharp selling @ its peak. Tried gold back in the early/mid 1980s. Waste of time (& money) then, waste of time now. Gold & silver have some uses – but, for example, the solar industry has found alternatives for silver in solar panels. Thus gold & silver only have a perceived the value – which as we can see varies somewhat.
Yes, Nelson Bunker-Hunt – those were the days.
Interesting to note that in 1980 Gold peaked at $850 an ounce…… a level not seen again (in inflation adjusted terms) until 2024.
Gold is a wild market as it is small relative to bond and stock markets. So, even a small allocation towards gold delivers an outsized price move.
I think it’s “safe haven” status is misunderstood and it took my father to explain it to me. He studied during the war with two Jewish students who had fled Germany. A few gold coins are not a bad thing to have if you need to leave in a hurry.
It has never been a great hedge against inflation….. if you want that then buy Index Linked gilts. Gold is a “Hedge” (if that is possible) against war and/or revolution.
Agreed
Help me out here please.
You/Clive said: ” if you want that then buy Index Linked gilts. Gold is a “Hedge” (if that is possible) against war and/or revolution.”
– as I understand it, most people who “buy gold” don’t physically hold it or have access to it. If you want gold as security for war/revolution, don’t you also need to be in possession of it?
– so that suggests the buying Comex gold doesn’t really work for the main benefit of having gold?
I tend toi agree with you.
I would never trust anyone who claimed they held gold for me.
Ex-teacher,
Yes, unless you have the coins in your pocket you are reliant on the Exchange being “good for” their side of the bargain. You can let your future position expire and take delivery of physical gold but in extremis, Exchange rules can allow for “cash settlement” and the Law of the Land might be altered to prevent delivery (Eg. Compulsory Gold purchase in the US in 1933).
The problem is that for speculation, the bid/offer spread on coins is about 5%.
[…] looking at the prices of gold, silver, and oil this morning, I thought I might also take a look at the price of Bitcoin, as the symbol of the crypto industry, […]
Most relevant and timely!
Might it also be accurate to hold those, not least the politicians who implemented the greedy parasitic theory of Neoliberalism and the main stream media journalists who chose not to analyse its theory and practicalities and who promoted it are, at least, as much to blame?
And Rishi Reeves wants ordinary folk who have limited resilience to gamble on the neoliberal casino, instead of strengthening the national state pension system.
The ‘wisdom of markets’ eh?
Bollocks!