Quanticipation in the Gold Price

By: Adrian Ash | Fri, Aug 31, 2012
Print Email

Will he, won't he? Either way, gold says more QE is coming in due course regardless...

So Here's a turn-up for the gold price.

Today saw gold priced in Dollars - and everything else - rising after disappointment over new quantitative easing from the US Federal Reserve.

Maybe Ben Bernanke's much-awaited speech at the annual Jackson Hole shindig for central bankers wasn't so disappointing after all. Certainly the Wall Street Journal seems to think that, and its own inhouse "Fed wire" journalist Jon Hilsenrath to boot! But if today's speech was a promise, it fell a long way short of matching 2010's big event. Back then, Bernanke made the imminent launch of QE2 plain. Whereas the financial media's first-rush response today was headlined "Bernanke: No more easing, for now".

So maybe the gold market's just got its mojo back. Or perhaps this week's anticipation - the same anticipation we've seen for times this summer - merely put the gold price on hold, as the buying already under way took pause.

Gold $ Per Ounce Chart

As you can see, the gold price hit a classic bout of the doldrums in summer 2012. And within that $100 trading range, you can see quanticipation - the anticipation of quantitative easing - blowing a hot breeze first this way and then that.

Starting in May, gold priced in Dollars has risen on any and every "hint" of fresh money printing in the US, only to slip back when the Fed then disappoints. "Will he? Won't he?" All financial markets have been trying to guess the answer. But you can most clearly see it in the price of gold - that most sensitive asset to monetary policy. Because buying gold is always a vote of "no confidence" in central banks. Selling it means you think the Fed has got on top of its job.

And today, post-Jackson Hole, gold has now done something it's failed to do every time previous this summer. It rose despite Ben Bernanke's damp squib of a speech. So perhaps the bullion market has finally shrugged its shoulders and accepted that - whatever the Fed says - it will choose to pull the big lever marked "More Money" sooner or later.

Market-timing be damned? Quanticipation might now be driving the gold price regardless of Fed jaw-boning. The all-too typical autumn rally in gold looks very much in train either way.

 


 

Adrian Ash

Author: Adrian Ash

Adrian Ash
BullionVault.com

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the head of research at BullionVault, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

About BullionVault

BullionVault is the secure, low-cost gold and silver exchange for private investors. It enables you to buy and sell professional-grade bullion at live prices online, storing your physical property in market-accredited, non-bank vaults in London, New York and Zurich.

By February 2011, less than six years after launch, more than 21,000 people from 97 countries used BullionVault, owning well over 21 tonnes of physical gold (US$940m) and 140 tonnes of physical silver (US$129m) as their outright property. There is no minimum investment and users can deal as little as one gram at a time. Each user's unique holding is proven, each day, by the public reconciliation of client property with formal bullion-market bar lists.

BullionVault is a full member of professional trade body the London Bullion Market Association (LBMA). Its innovative online platform was recognized in 2009 by the UK's prestigious Queen's Awards for Enterprise. In June 2010, the gold industry's key market-development body the World Gold Council (www.gold.org) joined with the internet and technology fund Augmentum Capital, which is backed by the London listed Rothschild Investment Trust (RIT Capital Partners), in making an $18.8 million (£12.5m) investment in the business.

For more information, visit http://www.bullionvault.com

© BullionVault 2006-2014

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events - and must be verified elsewhere - should you choose to act on it.

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

SEARCH





TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/