Gold Rises Vigorously, Euro Curbs Upside

Gold continued its rise today, touching 1283 before backing down to a less-heated 1276. Upside was only limited today by the weakness of the euro in the face of a strong dollar. There was also some automated selling once gold hit its high.

Spot gold is now at its highest since September 2, of 2014.

Again a flight from volatility drove the bus, making gold one the few desirable havens today. The dollar, of course also stood out. It was up 0.7%.

Deutsche Bank analyst Michael Lewis said: "The SNB announcement has added a bit of an extra juice to the gold story but from an interest rates and equity perspective it looks like there is a more solid foundation to its strength."

What is that foundation? The world is in a bit of economic turmoil as has been sketched out ere during the past week. China is soft, Japan is softer and the EU is softest. There is also less faith that the U.S. economy, by itself, can haul the world’s freight through this rough patch. To boot, BRIC countries – a combination of third- and second-world economies – are seeing economic slowdowns. India is the only exception. So, where to turn?

Certainly not to oil, although today it was up. Schlumberger is laying off 9,000 people from its operations. That is a sign of things to come. And, in a world where high-paying jobs are at a premium, there lies another consideration. These aren’t shelf stockers losing their jobs. These are solid US$100K+ jobs whose workers are being sent to the sidelines.

It bears repeating that the uncapping of the Swiss franc is now pushing gold and other havens higher. This naturally includes the franc itself. The Swiss were deflecting what they see as the almost assured move to stimulate by the EU, which could rive the euro down even  farther, especially against the franc. (The dollar and yen, too.) But gold, silver to a lesser degree, the Japanese yen and dollar are all seeing investors migrate their way.

A contraindication today was the U.S. equities market, across the three exchanges, up a healthy 1%+. Europe was also up. Asia was mixed.

Let’s also consider another facet of volatility. The war on terror is about t take another turn for the worse. We may find an actual war upon us sooner than we think.

Wishing you as always, good trading (and we certainly got that this week),