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The coming depression blog | June 24, 2018

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Gold prices go south as $ strengthens

“Investors selling gold to buy dollars, betting on strengthening US currency – as it happened when Lehman Bros collapsed in 2008″

Gold prices fell on Wednesday as investors decided to take advantage of fear after a record rise in the price of the precious metal.

Analysts said investors sold gold to buy dollar on strengthening of the dollar. They noted a concern that a similar trend took place after the collapse of Lehman Brothers in 2008, a collapse that marked the beginning of the worst recession in living memory.

Gold is a traditional safe haven in the dark economic conditions. It has become such a popular investment recently that gold investment companies have hired top American stars such as Beck to shill for their businesses.

Gold miners have again taken on the hills of California to seek their fortune that few find it. And in Utah, the Tea Party activists successfully pushed to get the gold to make the official currency of another in the fear of the dollar was worth the paper it is written.

“Gold was a pseudo-currency trader,” said Stuart Rosenthal Factor advisers. “It was a vote of no confidence in the U.S. dollar,” he said. Now retailers have changed their minds and are selling gold to buy dollars.

In the midst of an economic malaise, the gold bugs have enjoyed the ride. Old money for the first $ 1,000 an ounce in March 2008 and analysts have predicted that reach $ 2,000 next year. But gold has fallen to $ 80 and $ 1,742 an ounce in early trading Wednesday, down 4%. Price of silver too, which was similar to the boom, also collapsed.

With stock markets around the world decline, investors seem to be betting that the worst is yet to come. The price of oil – the product most closely linked to economic activity – has fallen recently, led to lower on concerns over slowing growth in developed economies like the U.S. and Western Europe. The price of copper, coffee and sugar all fell on Wednesday.

But falling gold prices attracted more people by surprise. “We saw a similar trend at the end of 2008, there were a lot of developments that you would have thought were pro-gold,”” said Neil Meader, research director of GFMS, a metals consulting firm. Instead, gold prices weakened. They were “overwhelmed by an avalanche to pay the debt,” he said, means that investors are so frightened that they decided to take your money and run. If that means selling their gold, which is what they did.

Meader said the main reason for gold going down, this time, was that the dollar was rising. “The dollar and gold tend to be negatively correlated. Although we are far from out of the woods in the euro zone or the U.S., gold has suffered because the U.S. dollar strengthened. “

But gold can still come back, Meader said. He predicted that gold could be worth $ 2,000 an ounce within a year. Why the dollar has to weaken. It reached a maximum of eight months against the euro and strengthened against the pound

Gold has not fallen as hard as the stock market, said Rosenthal. “One day, the formula does not do,” he said. “But it’s hard to ignore.”


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