There are some interesting arguments by people in the industry that the gold certificates in use today, supposedly backed by gold in mostly London, have only a small fraction of the physical gold behind them from what their denomination proclaims. The history of 'paper gold', in all its forms, including many national currencies until they floated in the 70s, is one of 'detachment' from the actual gold by the issue of more paper than what was backed by actual goods (fraud in other words). We saw the 3rd biggest one day loss in the entire history of S&P 500. The current market behavior is unprecedented. Perhaps once the selloff stops, the massive money supply support will re-accelerate the buying, but right now we are in uncharted territory. Until last week, where a new regime is starting emerge perhaps where CB tools have suddenly stopped working, at least short term. Every single selloff was bought heavily by traders because of the near-certainty that CBs will provide a hard backstop to the panic. This is survivorship bias at it's clearest.Īfter 2008, central banks managed to stop every single market stress with a firehose of money. ![]() ![]() Ex post we see of course many asset managers come out of the woodwork beating their drum on how their expertise allowed them to buy the safe haven asset that happened to work in a crash. It's difficult to find a safe haven asset in any crash, because there are so many feedback loops and non-obvious relationships. Gold has become (or always was?) as much a speculative asset as pretty much anything else.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |