Gold and the worry trade
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Is it a coincidence that the price of gold hit an all-time high just as David Cameron was becoming the prime minister of Britain? Yes. But it’s also indicative of the enormous amount of uncertainty that continues to pervade the market. If you’re just looking at the stock market, you’re not looking at the most sensitive barometer of fears about the global economy in general and the eurozone in particular. As Paul Krugman notes, the euro/dollar exchange rate is probably a better place to look, and that’s now back down below 1.27, after trading at 1.50 as recently as December. For what it’s worth, here’s the price of gold in euros:
It’s entirely conceivable that we could see gold at €1,000 an ounce pretty soon. Which, just as much as recent stock market volatility, is a pretty clear indication that there’s still a lot of worry out there, trillion-dollar eurozone bailout plans notwithstanding.
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Everyone shorting euro? :)
Despite the European Bazooka and the melt up in markets,gold has not come down from the highs it made during the Greek crisis.It’s a way of the market telling that they have now little faith in the paper currency being printed in the trillions by the developed countries.Read more at http://greenworldinvestor.com
To Sedrak: Not really. Some sovereign holdings are still very long dating back to talks about parity with sterling. Now talk has switched to parity with the dollar. How ironic and how things have changed in a matter of months. C’est la vie!
Finance is as we know, much like a fortune tellers ball! To monitor the exchange of value between different types of commodities is a full time role. Hence stock brokers! Gold is, like much of the market, effected in both highs and lows.
Barbara
http://www.mykonospa.com/