The Phaserl


The Increasing Irrationality Of The Gold Market

by Jason Hamlin,

The gold price fell through key support today, declining by $84 or 5.4%. Silver dropped by $1.81 or 6.5% to just $25.85. I have no problem with corrections in general, as they are a healthy part of any bull market and provide a platform from the which the next upleg can spring. But something is not quite right about the recent price action in precious metals as the markets have become increasingly divorced from reality over the past few months. Let’s look at some of the glaring contradictions and then discuss the implications.

Gold and Silver Drop Sharply Despite USD Holding Steady

Gold is down 4% today and silver has declined by roughly 5%, yet the USD trades essentially flat. Nothing says that gold has to always adhere to the inverse correlation with the USD, but it has been one of the strongest correlations over the course of this bull market. Kitco has a page that shows how much of the daily price change is due to the change in the USD vs. selling pressure. None of today’s decline can be attributed to weakness in the dollar. One has to ask what exactly is causing such extreme levels of selling in the face of a steady dollar?

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2 comments to The Increasing Irrationality Of The Gold Market

  • SilverHawk

    I wonder if they’ll let it go back up before the Tuesday COT report release on Friday…??? Monday could see a 50% recovery? Or are we just a few weeks or less from the total collapse, and they don’t care what the COT says?

    This article posted here, is very good at explaining last Friday.

  • 8Ball

    “Gold Market is irrational…” The whole flipping world is run by irrational, corrupt, leaders while the reamed masses still look to them as their saviors… What do you expect?

    See the comment on Argentina by Prioris in the “Trader Dan” article.

    priorisApril 12, 2013 at 7:28 PM

    The population of Argentina just acted like sheep. Despite the extreme betrayal, many continue to support the political apparatus and institutions. They are like people in the US who continue to support the politicians at the local, state and national level even though their votes don’t count and they are betrayed in the most extreme ways. Many people will use the – i vote the lesser of the evil 0 rationale. These are people wearing blinders. The Naderites, Libertarians and Green are also run by the US intel agencies. People just stay dumb about the world around them.

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