Published on Zero Hedge (http://www.zerohedge.com)
Guest Post: Physical Gold vs. Paper Gold: The Ultimate Disconnect
By Tyler Durden
Created 04/23/2013 - 21:29
The paper price of gold crashed to $1,325 in the wake of this huge trade. It is now hovering around $1,400. Our first reaction is to suggest that this is only an aberration, and that the fundamentals of the depreciating value of paper currencies will eventually take the price of gold much higher, making it a buying opportunity. But what we can't predict is whether big players might again deliver short-term downturns to the market. The momentum in the futures market can make swings surprisingly larger than the fundamentals of currency valuation would suggest; but the fundamentals will drive the long-term market more than these short-term events. The fight between pricing from the physical market for bullion and that from the "paper market" of futures is showing signs of discrimination and disagreement, as the physical market is booming, while prices set by futures are seemingly pressured to go nowhere. In short, we think this is a strong buying opportunity.
Source URL: http://www.zerohedge.com/news/2013-04-23/guest-post-physical-gold-vs-paper-gold-ultimate-disconnect
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