Gold settles down after yesterday’s counterintuitive waterfall drop
(USAGOLD – 1/7/2021) – Gold has settled down a bit from yesterday’s waterfall drop. It is down $4 at $1917. Silver is down 22¢ at $27.16. Analysts, by and large, remain at a loss to explain the counterintuitive plunge. Washington’s gridlock is now broken in favor of the fiscally-challenged Democrats. So why the big selloff? Yesterday we made a passing reference in this report to investors selling the news out of Georgia. Gold Newsletter’s Brien Lundin expanded on that notion in a special advisory issued yesterday afternoon.
“Combined with silver failing to leverage gold’s move to the downside,” he said, “it seems that speculators using gold’s poor cousin and the mining stocks to play the gold theme aren’t too enthusiastic about jumping ship. So why has gold sold off, despite news that should be sending the metals much higher? Two reasons, in my opinion. First is the usual trader’s mentality of ‘buy the rumor, sell the news.’ Lots of hot money had placed bets in recent weeks on such an outcome, and these speculators rushed to take profits once the game ended. This provided the initial selling pressure. Next came the bond market’s reaction to the development, with yields understandably jumping as confidence waned in the future fiscal responsibility of the republic.”
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