Gold has been rallying for a while — nearing all time highs in the dollar, even while breaking all-time highs in the euro — but the metal’s action hasn’t been all that noteworthy.
That changed today for, as David Goldman at Asia Times notes, it stopped trying like a regular commodity and actually bucked them.
One session doesn’t make a trend, to be sure, but if the central banks are flooding the world with currency to support a massive bubble in government debt, the possibility of a portfolio shift out of currencies into gold has to be considered. And if this happens, gold (as I’ve said any number of times) has no natural ceiling. What will China do? The Chinese got burned on subprime and again on PIIGS debt. They stopped accumulating US Treasuries months ago, and have no reason to buy Bunds given the misery of the prospects for the Euro.
As you can see in this chart, via Kitco, the metal basically rocketed out of the gate, making a big power-move all day.
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