churchill

By Greg Canavan • May 18th, 2012 • Related Articles • Filed Under

We left off yesterday wondering why the market had turned on goldrecently - the supposed "safe haven" metal. But we woke up this morning and saw things had turned again...gold surged 2% overnight as the US markets sank around 1.5%.
No doubt this type of price action will confound many investors...especially those who sold in a panic in the last few weeks. The recent sell-off amongst the gold stocks is up there with 2008 for severity.
In a clear example of how the emotional decisions of investors send price diverging from value, gold stocks have plummeted while theAussie dollar gold price, which, along with production, determines revenue, is only slightly lower.
The gold price certainly does move in mysterious ways. Today our task is to try and work out why. To do so, we need to look into the mysterious world of the London gold market.
This won't be easy reading. Sometimes you have to look under the hood to work out what the real problem is. If you're not a mechanic, looking under the hood can be daunting. But stick with us, because this could be one of the more important Daily Reckonings we've written for some time.