Why is Gold up nearly $60 this morning?

Thursday, February 11, 2016
By Paul Martin

By: Michael J. Kosares
GoldSeek.com
Thursday, 11 February 2016

t has something to do with Yellen’s not dovish enough Congressional testimony. It has something to do with global financial system problems associated with low interest rates. It also has something to do with emerging countries at the doorstep of penury. And last but not least, it has something to do with disinflationary pressures that threaten the financial system and world economy as a whole. However, these things, albeit good reasons to own gold, would normally play out in the price over an extended period of time.

Let’s dig a little deeper – beneath the popular generalities being bandied about the past several days – to discover the reasons why gold would move so forcefully over such a short period of time.

I find three:

In this quirky zirpy, nirpy world, gold offers a return, like cash, even if the price stays put. In a world where you are likely to lose money if you save it, gold looks the most rational choice in this lop-sided investment environment. As it is, gold, at this writing, is up 17.5% on the year – a bonanza in this economy and a magnet for smart money around the world.

Knowing that gold would likely become a safe-haven getaway for weary, burnt out investment capital, the shorts decided that covering their positions might be in their best interest. As this is written, the proverbial mad dash for the exit has already begun.

Capital flight. At the beginning of 2016, financial authorities in Europe signaled that investors could be called upon to take losses on financial institution stocks, bonds and deposits in the event of another financial meltdown. Policy-makers, then, should not be surprised if such renderings cause a little angst panic among investors, and a general flight in the direction of gold.

I won’t paint the bigger picture on the immediate effects of these developments at this time with respect to gold, in the interest of getting some analysis out there for our clientele to consider. There are probably other factors driving gold at the moment, but I see the combination of those three as the chief determinant. They offer some explanation as to why gold has moved so quickly and with such determination since the beginning of the year.

The Rest…HERE

Leave a Reply

Join the revolution in 2018. Revolution Radio is 100% volunteer ran. Any contributions are greatly appreciated. God bless!

Follow us on Twitter