Gold Falls 4% As Futures Sold Aggressively While Buying Of Coins And Bars Surges

Gold fell for a few days after the Lehman collapse but ended 2008 higher by 5.6% and it continued its gains in 2009, 2010 and in the sovereign debt crisis of 2011 and 2012

◆ Stock markets around the world collapsed yesterday as market panic led to massive sell offs of over 10% on U.S. markets, the worst crash since October 1987 and European stocks had the largest falls seen since 1940.

◆ Gold started the day well and only started falling at 1130 GMT and ended the day 4% lower; the sell off was once again solely a futures market phenomenon as government mints, refineries and gold bullion brokers around the world including GoldCore, saw very significant demand for coins and bars – and very little selling.

◆ Margin call selling is being blamed for this latest gold futures sell off but given the evidence and convictions regarding gold manipulation by banks in recent years, it would be naive to rule out the possibility of banks attempting to push gold lower either for profit motives or on behalf of officialdom in order to calm markets. If gold had been allowed to surge 10% on the day in a free market, then it would likely have unleashed a ‘gold rush’ the like of which the modern world has never seen.

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◆ Gold remains up nearly 5% year-to-date and over 23% over a twelve month period, while most stock markets are now down more than 20% in lees than a month. Bitcoin collapsed nearly 50% yesterday, further underlining that it is a highly volatile and risky and speculative crypto asset rather than a safe haven asset.

◆ Stocks have bounced higher today but it will likely be one of many “dead cat bounces.” The scale of yesterday’s collapse was breath taking. The FTSE 100 closed down 9.8%, the DAX 30 plunged 12.2% the CAC 40 tumbled 12.3%. Dublin’s ISEQ index collapsed another 10% and in Milan the Italian stock market collapsed 17% in one day.

◆ Prudent investors will continue to diversify into gold on weakness as the devastating financial and economic impact of the pandemic on already massively indebted companies and governments is realised.

◆ Corporate and government bonds are also very vulnerable and investors still have the opportunity to re-balance portfolios out of risk assets including bonds and own gold.

Market Performance YTD 2020 (Source: Finviz)

Source: Finviz

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