12/02/09 Stockholm, Sweden – Today The Reformed Broker predicts that – in the event of a market collapse – the financial flight to safety will be sucking hot money out of gold-related assets and into the safety of the US dollar.
As its post describes:
“Gold is no longer any kind of ‘Safe Haven’. Those days ended when the 38th gold ETF came public and the 900th commercial for gold coins ran on Fox News during the Glenn Beck Paranoid Lunatics Anonymous Hour.
“Don’t get it twisted – gold is now the quintessential risk trade, moving in tandem with risk appetites and the pursuit of momentum by investors around the world.
“Don’t believe me? How about this…during Thanksgiving week, when half of the country’s traders were away from their screens, you got your proof:
“A camel sneezed in Dubai and the immediate reaction was a flight – TO THE US DOLLAR. Gold was smacked down immediately, albeit briefly, as the HOT MONEY came flying out of it right alongside crude oil, tech stocks and junk bonds.
“For that brief moment when the financial world teetered on the edge of a possible panic, the only green on the screen was in the greenback.”
Gold’s Dubai-related downturn may be overly emphasized for effect. Also, gold fundamentals seem in place to drive its value much higher in the long run. That said, The Reformed Broker’s hypothesis is interesting enough to demand consideration for the short run.
Where do you see gold prices heading in the event of a near-term panic? How would you expect the US dollar to perform?
Rocky Vega
Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update -- which he ran from Brazil, Chile, and Puerto Rico -- as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let’s Go Publications, Harvard Student Agencies, and The Harvard Advocate.
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This is the best article Rocky has done.
agreed – keep em coming, Rocky
Rocky,
You’re doing good work. Keep it up.
***But the real question is:
Where is the Mogambo Guru?!
CanadaNorth
Thanks Rocky, but there are some people worried about Richard, Richard if you are out there and well enough to raise a finger…., well we are worried about you that’s for sure. Anyway, just say Hello if you are able. Best Regards, CanadaNorth
If that was a dollar rally then I want nothing to do with it. What was that 5 basis points? Gold got hammered down 38 rallied back to close down 13 while the dollar rolled back over. Safe haven status has been damaged badly, one more act like that and the dollar I’m afraid will head way lower. I’ll stick with the metal thank you.
When was gold not a speculative play? We speculate on inflation. We speculate on a currency collapse. And some speculate on momentum.
The question is not whether god is speculative. It is. Food isn’t speculative, you will need to eat tomorrow.
Where will gold go in a short term panic? Depends on the panic doesn’t it?
I’d rather have gold under my bed than US dollars whose value is sinking faster than the Titanic did. And I don’t think i’m alone…
Of course it is speculative and also manipulated. We at least know where some of it is being kept under some peoples beds. Easy to get to that way.
Yeah, where is the great Mogambo Guru??
I am in need of the bunker mentality!!!
Right on bout GB! U 4got bout Hannity.
Ha, ha, you make me laugh. Right, flee to the dollar backed by a government that has 12,079,989,650,500 in debt. Nice try.
There’s one minor issue that’s been omitted from ALL the commentary on this Dubai phenomenon — if I’m not mistaken, Dubai is a huge international gold trading center — almost a “gold laundering” center? — so, naturally, if they were to experience credit problems, one can imagine the first thing to go would be those useless piles of gold in the back rooms. In fact, THEY probably sold enough gold ON THANKSGIVING when the U.S. Market was closed (co-inky-dink), to drive the price down all by themselves. Now, why that would cause anyone else to sell, I have no idea…