GoldCore comments on recent precious metals markets volatility, and Marc Faber’s comments regarding gold, Apple and bubbles.
Recently the gold market has seen peculiar, lackluster, low volume trading punctuated by large, sudden, oddly timed sell orders. This leads to quick price drops, followed either by a slow, gradual recovery or a sharp bounce, and then the cycle repeats.
This was clearly illustrated by the $1.24 billion ‘Goldfinger’ trade on April 30, which was attributed to a ‘fat finger’ or algo trading in the gold market. There was a similar spike in volume at exactly the same time in silver.
While there have been a few instances of this type of volatile trading in the precious metals markets, there are buyers who continue to accumulate on the dips. Ultimately prices will be dictated not by strange and potentially manipulative trading on the COMEX, but by the global supply and demand of physical bullion.
Gold’s weakness may also be due to short correlations with equity markets, resulting from investor jitters after recent poor data and ahead of the US payrolls report.
As for gold being in a bubble, Marc Faber, author of the “Gloom, Boom & Doom Report,” says the majority of the investing public owns virtually no gold. A bubble occurs when the majority of market participants own an asset. “I think there are more people that own Apple stock than gold,” he says.
Faber maintains that 25% of a portfolio should be in precious metals. He does not rule out downside pressure for the yellow metal, but notes that worldwide money printing assures long-term support.
To read GoldCore article: Gold Bubble? More People Own Apple Stock Than Gold
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