Say what you will about gold bugs hawking the precious metal as the savior during a financial meltdown, the price can be a good barometer of the global economic landscape.
On Thursday the price in dollar terms rose just over $25 an ounce to move over the $1,200 an ounce threshold.
As I have said earlier gold prices in yen, euro and yuan is soaring this year up well over 20%. Dollar strength has beaten back the price here in the US (manipulation aside).
So to have the $25 pop on a day when equities soared a bit more on percentage basis here in the US tells me that a few butterflies flapped their wings in Asia this week and that we may see a financial storm hitting US markets on Mon. or Tues. of next week.
Yes Grexit could have something to do with the move, but the price surge happen on the London fix and continued all day with no beat back on the New York fix. These are different times of the day when precious metal prices are set.
Even when the ECB came out with statements — at the close of their markets (1pm EDT) — of not guaranteeing that Greek banks will be able to open on Monday it did not move the price much into the NY close.
As an aside the Comex (Commodites Futures Exchange, which is owned by CME Group) did come out with a disciplinary action against small bucket shop, MIRUS FUTURES LLC (now known as NinjaTrader Brokerage) for price manipulation and quote stuffing in the gold market in 2013 and 2014. This firm is gone now — bought up by another commodities firm — so the traders are long gone.
I have spoken about a federal regulator probing these actions and although this is not the actor I said they were looking at, It may be a contributing factor in the price rise yesterday.
If this spike has any connection to this charge, then image if and when JPMorgan, HSBC and a handful of bulge banks get fingered with a more massive charge of price manipulation in the precious metals pits.
Either way, I have a 10% position in my portfolio on gold and silver. I am not a financial adviser, so I can only tell you what I have, but it seems to me to be a prudent holding these days.
Enjoy the weekend and Happy Father’s Day to all who celebrate dad’s contributions.