As the New York Stock Exchange started trading this morning, in just thirty minutes the price of gold dropped $32.40. It is now $34.45 down, and falling.
Given that the US Government debt-ceiling farce just produced a Washington shutdown plus weakened Dollar (and what the FT todays calls ‘fears of a US default’) a dramatic fall in the price of gold disobeys every rule of Fresher Year economics as still taught at University. But despite all that, it just happened.
This isn’t the first time that all our lovely open, free, transparent globalised markets have disobeyed everyone from Newton to Einstein via Keynes and Friedman, but then such disobedience only applies if you are naively muddled enough to believe that transparency is about being able to see something….as opposed to seeing through something.
So anyway, somebody wants gold to be cheaper. Who on Earth might that be? Could it – might it – be Mario Draghi who wants his banks’ balance sheets stuffed full of the stuff? Or Beijing, which looks forward to a world in which it backs the only worthwhile currency – theirs? Or Ben the Bernanke, who’s simple trying to distract attention away from the awful prospect of a rising Dollar alongside a rising Bond yield?
Those are the big players, mesdames et messieurs. Faites vos jeux.