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Last update: Sat 21st May 2022 06:59 (Melbourne)
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Business as usual: Markets return to their pre-euro-crisis state as status quo resumes.

In April 2020, came under new management, articles published before this time, such as the below, may not reflect the views or opinions of the current team.

Everything in the last week has played out as anticipated, Greece has once again been granted more debt by euro lenders to push the Greek problem away for another day, something we assumed was always going to be the case, something you can check in our previous article from the third of July:

The outcome of this situation is seeming to be heading towards another Euro loan for Greece, rather than a full Greek exit (Grexit) [Full Article Here]

Upon securing the deal, markets gained significantly, especially in Germany, France, US Dow Jones and locally in Australia. Reversing all previous downward trends since the Greek situation came to mainstream attention.

It also appears that the events in China were indeed an over reaction to the Greek crisis, as mentioned in another prior article on Sunday the 12th of July.

With such a high level of everyday people making up the main investment in Chinas stock markets, the drop in value could simply be an over reaction to the situation in Greece. These losses likely do not represent a loss in value or demand from China’s goods and services, instead are related directly to the opinions and decisions of their everyday citizens, many of whom do not have a professional background in finance. [Full Article Here]

Chinese and other Asian markets are today back to almost full recovery.

As for the strange trend of using Bitcoin as a safe haven, the value of this virtual currency has also started to fail, since stability returned yesterday, the value of Bitcoin has been on a downward slope. We expect it to return to it’s previous position seen a week ago within the next month, levelling at around $270 USD.

Why was gold stagnant during this period? The picture is clear now, the lack of professional investors turning to gold during this time, and hence the fact Gold price movement has mimicked rises and falls in the USD value shows that the potential crisis at hand was extremely unlikely to ever eventuate.

The professionals used this period of household investor worry to capitalise on other stocks and make a few dollars. In times of a genuine crisis, such as if Greece was refused another loan, or elected to leave the euro, this would have caused gold’s value to rise. The fact it barely moved during this time spells out the true situation here, and this can probably be better termed as “the crisis that never was”.

There is no doubting the European financial situation is in trouble, that a true crisis could occur at any time, but while the printing presses continue to push out more money to stimulate the economy, the event of an actual crash which would force recession, creditor collapses and a shrinking in regional and global economies, is delayed until further into the future.

And with the problem delayed further into the future, comes the opportunity to further speculate on the market, in the end this is mostly what it is all about, keep the markets pumped up, save face, and carry on where ever possible. If there is a way to print money to avoid a situation, you can bet that will always be the first route of choice globally. Short term stocks investors would have made a small fortune off the last weeks trading conditions, buying up cheap stocks while knowing there was probably a 95% chance Greece would be given another loan, something household investors rarely foresee.

This is because professional investors love an opportunity like this, they know the public will react to the summary presented on nightly news of the potential crisis instead of gathering the full facts and details, hence such investors quickly sell off assets in shares when such a perceived crisis is at hand, professional investors also know that as the value of these stocks drop, they have a great opportunity to buy up some of the stocks offloaded and make a quick dollar as markets quickly recover this week.

Real crisis always starts with the Gold value rising, when you see it simply following USD trends, it means the big investors are not interested in preserving their wealth and are instead likely going to collect cheap short term stock holdings instead. Gold is the number 1 safe haven investment, hence if markets are falling, and gold isn’t rising, the story is likely there is little need for a safe haven at that point in time.

the loss of gold’s value during this time was due mainly to movements in value of the USD. Movements in the Gold price over the last week have mimicked those seen in many major currencies, especially when comparing the AUD to USD charts alongside the USD and Gold. [Full Article Here]

AUD / USD chart vs USD / Gold is a good example of how to track whether gold is moving relative to the US dollar rather than by market demand, as the Australian dollar has a very high exposure to the USD, and hence movements in the USD greatly affect the AUD.

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