The collapse in the gold market does not look to be a bubble situation given the intrinsic value actually moved higher faster than other assets.
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However, the rapid rise did spike volatility, leading to a round of long liquidation by global investment traders.
Don’t Miss a Day: From crude oil to coffee, sign up free for Barchart’s best-in-class commodity analysis. Much of this money found its way over to crude oil, oddly enough, just before the US went to war against Iran. How fortunate.
In mid-February, I discussed the question of if gold and silver were bubble markets. My conclusion, based on the continued strength Cash Indexes in relation to futures, was no, neither should’ve been considered bubbles at that time. Yet here we are 6 weeks down the road and both markets have melted down, raising the question, why? For this discussion, I’ll set aside my Market Rule #5: It’s the what, not the why; and pretend to be a normal member of the commentary industry and make up reasons for recent market moves. This should be fun.
