Gold tracks lower overnight, suddenly bolts higher at COMEX open
(USAGOLD – 10/16/2019) – Gold continued to track south in overnight trading at one point hitting the $1477 mark before suddenly bolting to the upside at the start of COMEX trading. It is now trading at $1490 – up $8 on the day. Silver is priced at $17.42 and level on the day. At the moment, we see nothing in the news significant enough to explain the sudden turnaround with the exception, perhaps, of news out of Europe that the Brexit talks have taken a unsettling turn for the worse. Volatile trading in the British pound, now on the downside, confirms a gloomy outlook – at least for the moment. ZeroHedge reports another possibility for gold’s surge this morning – a surprise oversubscription for available Fed advanced repo funds by about $5 billion ($80.35 billion subscribed, $75 billion offered).
Stewart Thomson takes a philosophical approach to gold’s pricing over the past several days. “It’s been my firm contention,” he says in an article posted at 321Gold, “that rather than roar higher or melt lower, gold is poised to consolidate with sideway action. The $1465 support zone is acting like a sponge more than a trampoline or trap door, and that’s positive. While the Western fear trade gets the most attention from gold market fundamentalists, it’s like the hare while the love trade is the turtle. In the long term, it could be the love trade that drives and sustains gold at prices that currently seem almost unimaginable.”
Quote of the Day
“My next argument for central banks holding gold is that a country’s reserves should be diversified to minimise risk. Research shows that gold is an ideal portfolio diversifier. When I was given the Brunei fund to manage, I had to go on a crash course because I knew nothing about gold management. I took much expert advice and even commissioned, at great expense, advisers to give me an idea of how much gold should be in a portfolio. The boffins who deal with those matters believe that, over a long term, the ideal gold holding in a major portfolio is about 20 per cent. That is because gold is an ideal diversifier as its returns are what is technically known as “negatively correlated”, which means that they operate in a counter-cyclical manner. When bonds and equities fall in price, gold tends to go up.” – Sir Peter Tapsell, speech before Parliament, June 1999
Chart of the Day
Chart courtesy of Animated Stats
Chart note: Fascinating to watch. It takes about four minutes.