Gold- The Immoveable Object

Summer’s doldrums, August’s dog days, call them what you want: the world’s gone nuts and Gold’s gone to sleep for the one billionth time instead of responding to any one thing in any one direction. Price settled Friday at 1219; the prior Friday’s settle was 1222; the Friday before that also was a settle at 1222. The immovable object, indeed.

To be sure, Gold has recorded down weeks in eight of its last nine: but the overall descent does seems to be leveling off with a soft landing in the offing. As we wrote to some traders earlier in the week: “…I think Gold and Silver are basing: hopefully the 1100’s are so ‘obvious’ they shan’t trade…”

That said, the 3Ds (Debasement, Debt & Derivatives) are alive and well and expanding as ever. Then the Turkish Lira blew up, in turn tanking the Euro to its lowest closing level ($1.14400) in better than a year with the EuroBanks getting boffed in the balance … but Gold merely peeked out from under its sheets, and as a sporting gesture dropped a minuscule 80¢/oz. for the day before returning to dreamland. Of course, “currency contagion” notwithstanding, ought we really be all that concerned? After all: we’re talking Turkey here, the annual gross domestic product for which is smaller than that of California or Texas or New York or Florida. Gold clearly doesn’t.

“But it could have been worse for gold because the dollar had a strong day…”

May we refer you to last week’s missive in which was substantively shown concurrent rises in both the Dollar and Gold — along with a rising Fed funds rate — essentially throughout 2005?

Still, it’s unsettling given all that is unsettling around the globe to see Gold being comprehensively ignored. A high-level, hardened, Gold-stacking hoarder who can delineate the Gold Story as well as anyone we’ve ever met, let alone read, wrote in the past week rather agog about it all with this simple query: “What’s going on?” In sharing this question with another valued reader, they hit on the key word:”Competition”.