PMs predictably volatile
Paper gold and silver have sold down in light trade. The bullion establishment is scrambling to close its shorts and go long as the outlook for gold gets increasingly bullish.
The chart below shows that gold could be described as consolidating nicely giving it a firm platform for its next leg up against the dollar. Meanwhile, the war in Iran is destabilising the world’s exporter of investment capital — Japan. The consequences are bound to speed up the collapse of bond and equity prices, and therefore the life of all fiat currencies. Despite its current volatility, physical gold remains the true safe haven.
This week, gold and silver were marked down heavily in financial markets awakening to the reality of a prolonged conflict against Iran. Yesterday (Thursday) was particularly challenging though there has been some recovery from the lows. At the time of writing, gold this morning is $4670 down $345 over the week, and silver at $71.90 is down $8.60. On the sharp selloff, gold’s volume on Comex has picked up sharply indicating a possible bottom, while silver’s less so.
For investment managers the playbook replicates that of the 2008—2009 financial crisis, when gold fell from $1,000 to $680 while equities crashed and the dollar’s trade weighted rose from 72 to 88. The highly liquid dollar is perceived as safety at times of extreme crisis and this time is no different, with the dollar’s rally taking it back up from 96.30 to test the 100 level:
