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Investment Analysis Clubs / Macro Economic Trends and Risks
|Subject: Marc-to-Market: Ignore Gold Demand||Date: 4/21/2013 8:21 PM|
|Author: notehound||Number: 421142 of 481967|
In an essay from today entitled "Five Shocks Push Investors Off Balance," ??Marc Chandler, author of the Marc-to-Market web site, explains away the now well-documented disparity between the demand for GLD (paper gold) and the demand for physical bullion over the last week. The same piece includes some interesting analysis regarding other recent anomalies in the current market environment, but the following statement jumped out at me:
...the distinction between decline in paper claims on gold (futures and ETFs) and physical demand (gold bullion and coins) that some gold proponents have resorted to is not very helpful. It is similar to contending that the drop in the corn futures is somehow less significant because consumers are still buying corn on the cob or cornflakes... [Emphasis added.]
I don't know what other METAR readers think about the above statement, but I think it is at the very least disingenuous - and my initial reply to Chandler's cornflake analogy would be as follows:
"If grocery stores around the world rapidly were running out of corn on the cob and cornflakes due to sudden, intensified consumer demand which persisted for 5 consecutive days (with streams of shoppers queuing up cash in hand), dealers in corn futures ought to take notice and adjust accordingly."
In last week's physical gold bullion retail markets, consumers worldwide reacted in virtual unison - suddenly becoming purchasers upon learning of the precipitous fall in gold prices. This is significant in that it runs counter to the paper market's expectations. I.e. - I just don't think that Chandler's "cornflake" analogy works.
Sometimes I think those who deal in financial assets can become detached from reality. It is no wonder that 90% of the "smartest guys in the room