Wild Drop on Gold
October 11th, 2008WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
Selling gold to move into dollars? Goldman/Paulson/Fannie/Freddie Bucks? Tell me another one.
Anyway, this is why we say: Many eggs, many baskets.
Via: Reuters:
Gold dropped as much as 9.6 percent on Friday, reversing sharp morning gains as a wave of panic prompted investors to dump assets across the board to meet liquidity needs.
Gold traded in a wide range of more than $100 an ounce on Friday, capping a volatile week with gains of only 1.3 percent even as global stock markets lost heavily.
Bullion in overnight trade touched a 2-1/2 month high of $931 as a slide in the global equity markets sent investors racing to a safe haven from the financial crisis.
However, even gold could not withstand relentless selling across all asset classes as investors sought cash to cover margin calls amid steep losses in stocks. It hit a low of
$823.50.
Spot gold dropped to $845.80 at 2:50 p.m. EDT (1850 GMT), down 7.2 percent from Thursday’s nominal close at $911.50.
“It’s total panic. People are so scared that they are looking to liquidate everything that has cash value and to stay away from everything,” said Bruce Dunn, vice president of New Jersey-based Auramet Trading.
Dunn cited a sharp rally of the dollar and heavy losses in crude oil for gold’s dramatic turnaround on Friday.
I’ve read other places online that the fat-cats are using the “bail-out” bill money to fuel a speculative run on the US Dollar. And as is generally the case, when the Dollar is (seeming to) do well, gold and oil take a hit, which they certainly are right now.