The euro rebounded on overnight trading, bringing gold and most other commodities along for the ride. Trading was lackluster at best as traders wait on word from the Fed.
In early trading gold was up $2.34 to $1,592.44 and silver was up $0.04 to $27.36, a silver/gold ratio of 58.2.
While commodities have been focused on the Federal Reserve this week a new set of scandals are brewing on Wall Street. First there was a string of reports about big banks manipulating the LIBOR rate, the interest rate banks pay one another for overnight loans, followed quickly about new revelations about how big trading houses, many of which are connected to those same big banks, getting analyst information before everyone else.
Compared to the crimes that have already gone unpunished in our nation’s banking system, the latest excesses may not seem like much, but these are only the beginning of revelations. There is a flood behind this trickle that I believe will reveal that the stock market has been a rigged game, operated for the benefit of a few, for a long time.
I also believe it will ultimately come out that the same type of manipulation happens in the commodities markets. The difference with commodities like gold and silver, is you can opt out of the futures manipulation by taking physical delivery. Once gold and silver is in your safe, it becomes largely immune from abuse by middle-men. To be sure those big players will continue to take the occasional bite out of commodities by manipulating futures, but there won’t be anyone shaving a couple grams off the gold in your safe.
That’s the primary reason I’m such a big proponent of physical delivery; an ounce of gold is honest. No one can chisel away at it with new fees, trade with your gold at night and then replace it in the morning, and all the other petty abuses that have become part of doing business in the equities markets.
I don’t say that to try and convince you to move your money out of equities, I still invest in equities, in both domestic and some overseas markets. When times are good, I sell off some of those gains and convert the cash to precious metals.
The price of gold and silver will go up and down, but at least I know it will really be there when I open the safe.