Gold continues southward trek, euro in tailspin

LATE REPORT

Gold continued its trek southward today with a drop of $10.37 finishing at $1266.86. Silver in similar fashion finished the day down 15¢ at $16.77. Today’s downside came the result of speculation that the next Fed chairman would bring a hawkish tone to interest rate and monetary policy, but that decision is still very much up in the air.  Also the European Central Bank announced it would halve its bond buying program from 60 billion to 30 billion euros per month, but undercut the reduction by extending the time frame 9 months from January to September, 2018.  The announcement sent the euro into a tailspin, the dollar higher and gold lower.


Small Observation
A situation that may or may not occur combines with a different situation likely to inspire strong precious metals demand among the local citizenry.  The two somehow conspire to drive prices lower. Contrarians, please take note.


Quote of the Day
“[T]he time had come, as in all periods of speculation, when men sought not to be persuaded by the reality of things but to find excuses for escaping into the new world of fantasy.” – John Kenneth Galbraith, The Great Crash of 1929


Market Anecdote
Bernard Baruch, the famous early 20th century stock speculator, in explaining the behavior of markets:

“Have you ever seen in some wood, on a sunny quiet day, a cloud of flying midges — thousands of them — hovering, apparently motionless, in a sunbeam? …Yes? …Well, did you ever see the whole flight — each mite apparently preserving its distance from all others — suddenly move, say three feet, to one side or the other? Well, what made them do that? A breeze? I said a quiet day. But try to recall — did you ever see them move directly back again in the same unison? Well, what made them do that? Great human mass movements are slower of inception but much more effective.”

This is the same Bernard Baruch who just before the stock market crash of 1929 liquidated his stock holdings and put his money into bonds and cash, and then later, after the crash, dumped a good portion of his fortune into gold. When asked why he would do such a thing by the Secretary of the Treasury, Baruch replied that he was “commencing to have doubts about the currency.”

While others banked on the 1920’s stock mania, Baruch’s intuition was telling him that there was something amiss. There are times when it pays to distinguish yourself from the crowd – the midge that flies in the other direction.


If you are commencing to have doubts about the currency, or at the very least, if you are commencing to have doubts about the stock market perhaps the time has come to speak with a USAGOLD representative about hedging your portfolio with the precious metals.

In the meantime, if you would like a different perspective on the economy and the financial markets – one distinctly separate from what is bandied about in the financial press as the daily regimen – you would probably enjoy our newsletter.

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Government finances and gold (revisited)
What does it take to garner a real rate of return on your money these days
Four steps to becoming a successful gold and silver investor
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