Today is the 6th anniversary of the 9/11 terrorist acts in 2001. So it might seem an appropriate date to discuss the relationship between the price of Gold and geopolitical risks.
In general I tend to favor the liquidity factor as an explanation for high gold prices, as well as the link with the oil price, but ironically last week took place the most spectacular rise in the price of gold that I have witnessed since 2006.
Was it related to the anniversary of 9/11.
My first instinct was to relate it to the weakness of stock markets (with some lag), the crisis of liquidity and the particularly weak jobs statistics in the US on Friday.
But many see a relationship with geopolitical risk, and from there you might even create whole conspiracy theories about the price of Gold and the manipulation of the market by the central banks.
I think it is fun, and partly true in the short run. But in the long run, the gold price is dependent on more fundamental factors.
Showing posts with label Terrorism. Show all posts
Showing posts with label Terrorism. Show all posts
11 September 2007
05 September 2007
Interesting...
"Those concerned about the worst-case scenario recalled that large put contracts were placed on airline stocks, notably American, a unit of AMR and United Airlines, in the weeks leading up to the Sept. 11, 2001 terror attacks. "
This is an extract of this article
This is an extract of this article
05 July 2007
Vindication
The analysis in the previous post has been vindicated.
The correction of the price of Gold was exagerated and ultimately it was countered by the movement in currencies as I had predicted. The Dollar hit new lows against the Euro and the British Pound. The Terrorist attacks might have helped as most journalists analised it, but I am not so sure because the geopolitical factor does not impact Gold so much these days.
Now, the Gold Price is at 655,95 and has gained more than 13 $ since June 26th which proved to be the latest Low point.
But paradoxically, after this rally I am not so confident that it is going to continue. We are at a turning point for Gold, but it might go sideways a little longer.
We're going to have to analyse the currency movement a little more before drawing conclusions. It has proved to be the real guide for Gold price.
I am preparing my own little Dollar index to measure how the Dollar (and thus, "a contrario" Gold Price) fares against the most important currencies.
More on that later.
The correction of the price of Gold was exagerated and ultimately it was countered by the movement in currencies as I had predicted. The Dollar hit new lows against the Euro and the British Pound. The Terrorist attacks might have helped as most journalists analised it, but I am not so sure because the geopolitical factor does not impact Gold so much these days.
Now, the Gold Price is at 655,95 and has gained more than 13 $ since June 26th which proved to be the latest Low point.
But paradoxically, after this rally I am not so confident that it is going to continue. We are at a turning point for Gold, but it might go sideways a little longer.
We're going to have to analyse the currency movement a little more before drawing conclusions. It has proved to be the real guide for Gold price.
I am preparing my own little Dollar index to measure how the Dollar (and thus, "a contrario" Gold Price) fares against the most important currencies.
More on that later.
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