Economics 1:
As a young person, I went to a store to buy APPLES. The store manager said you can 5 lbs of Brand A, or 4 lbs of Brand B, or 3 lbs of Brand C. I couldn't decide. So the store manger offered me a basket of various apples in various amounts. But I was guarenteed a Fixed portion of A, B, C every time I came in. So if tomorrow I come back, and want the same basket I can get it. The only problem is that the price may vary. One day the market pushed the price of brand C to 5% higher. But my baskets, went down in price? Something was wrong?
The store owner was the problem. He bought all the brand C Apples.
GOLD:
Gold is a currency & a commodity. And has a double supply/demand curve. Commodity demand can be pushed down by currency supply. This is the Godzilla that you must look for. But Gold is price in US Dollars. And as such has an influence over gold. So why do I suspect the Hedge fund intervening in the market between gold and the USD... Cause something JUST aint right.
Go here:
pacific.commerce.ubc.ca
if you do a plot of SDR: Special drawing rights Versus Gold
And a plot of US Dollar versus Gold, you'll see a divergence in the last few days.
This is a sign of market hedging. The special drawing rights {which contain nearly 40% US dollar} went down in price, while the POG went up. This is not a sign of Gold buying, but currency pushing. Selling beyond a point... in US dollars, Pounds, Yen. And the effect can be seen in the SDR.
My guess is that a super hedge was set up on the US dollar, Gold, and the YEN. And that in a few days the full detrioation of the Yen will start, with a further drop in Gold. Or how else does one explain the SDR gaining purchasing power relative to gold? While the US dollar lost?
pacific.commerce.ubc.ca
imf.org |
