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Ancient Cultures And The Status Of Gold

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Purportedly, Diogenes, a 4th century Greek philosopher of the Cynic school, went about Athens in the daytime with a lighted lamp looking for an honest man. What better place today to start than modern Greece, which apparently cannot find its “honest man” in debt negotiations with the rest of Europe, the IMF and other creditor entities?

Except insofar as it affects gold and other trading opportunities we’re going to be looking at, Greece is a small pimple on the face of the planet. What the disingenuous Greek officials at the table do realize is that their exit would have longer terms ramifications for the rest of the continent’s economic system.

This uncertainty is beginning again to bleed over into gold, which inexplicably rose today despite the fact that U.S. equities struggled to find positive territory. That should have helped neutralize gold’s rise or turn it negative. That didn’t happen. So, we saw some haven buying.

The reason gold rose may be lurking elsewhere. Europe and Asia were both down on various kinds of troubling news (Europe beyond Greece, China on low inflation). Indeed in China, commodities and producer prices are in a serious disinflation period. Would it be any wonder then that China’s investors are turning away from the centuries-old practice of reposing much of its savings in the shiny yellow metal?

More generally, the soaring Shanghai stock market is luring in all comers in the giant country, the old being the only cadre that’s in the least shy of equities. (Old = over 80.) Everyone else is throwing money into an already overheated casino. We think it’s downright scary, actually.

Otherwise in gold, some short covering and bargain hunting appear to be in play although we wonder about the sustainability of such a power source.

Crude moved up shortly on reinvigorated seasonal demand and the stutter stepping of the U.S. shale sub-sector. However, as we’ve pointed out many a time, if that price stays steadily at $65 or goes to $75, shale people will uncork the wells and the champagne bottles.

The rise in West Texas Intermediate and Brent North Sea had a positive outside market influence on gold.

If you noticed, the mini-dollar slide of recent origin slowed to near stop today. Trading was choppy and light, as investors look to the U.S. retail sales report on Thursday. If it is robust, it will reinforce optimism about the economy generated by last Friday's unexpectedly strong 280,000-job increase in jobs during May.

That will naturallyincite the fire of rate-hike hysteria to break out once more and push gold down. Watch it closely.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer