The Bursting of the Fear Bubble

Gold has been dropping lately which is not what a lot of folks had expected. The metal peaked over $1,900 per ounce two years ago, and it has had a rough time ever since. This past June, gold fell as low as $1,180 per ounce. The gold bulls enjoyed a rally through July and August, and I think many bulls expected this to last. Not so. Over the last six weeks, gold has gradually drifted, and on Friday it went below $1,260 per ounce. The Midas Metal is up today about $14 per ounce.

So what does the gold sell-off mean? That’s hard to say exactly but it’s interesting that it comes at a time of strong cyclical performance. My hunch is that this is the unwinding of the risk trade that was so popular during 2011. Less than watching a new equity bubble, we’re really seeing the Fear Bubble pop.


Posted by on October 14th, 2013 at 10:24 am

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