Tuesday, 2 December 2014

Black Friday & Manic Monday in Gold & Commodities

Very unusual action between the OPEC meeting and Swiss gold vote.
From Mike Shedlock

Commentary at Acting Man
we also mention last week’s capitulation in the crude oil market as an influencing factor. In fact, it is hard to tell what had more of an effect on the gold price, in spite of the fact that crude oil has very little to do with gold. These are after all two completely different markets, but there are a few ways in which they are linked. The first link is monetary inflation and its effects on prices and currency exchange rates. Rising US inflation expectations, which usually coincide with expectations of looser monetary policy........The second link between oil and gold prices is through investment funds that are focused on commodities. If they are forced to sell one major commodity (due to redemptions or margin calls), they often have to sell other commodities as well.......In fact, the sharp decline in crude oil prices mainly affects the profit margins of gold mining companies, since energy is one of their major input costs (crude oil has declined rather noticeably against gold in recent weeks). Gold mining margins should continue to improve
Short Side of Long....on the Gold:Silver ratio

No comments:

Post a Comment