Interesting Items: Gold’s Big Drop

By Jason Fittler

Gold price had its largest fall in the past 30 years.

The question is why?

No one really knows needless to say that Friday week ago when the US market opened 15% of the annual world mine supply was dumped (400 tones) on the market.

Not the normal way this type of transaction would be conducted.

We also note that the bond yields are dropping, indicating a move into the bond market.

Gold is often considered to be a lead indicator for both inflation and deflation. That is if investors expect inflation they will buy into gold to protect themselves and the opposite for deflation. 

As a rough guide gold will move 18-24 months prior to the market.

The speculation now is that we could be in for a period of deflation and could expect to see a pull back in the market in the coming years.

Given the size of this drop I will wait and see before making any assumptions.