When asked about the direction gold will take, Big Rich always says, “It will go up, or it will go down, or it will stay the same.” Seldom does it do both so enthusiastically during one 24-hour period than it did Monday and today, however. As Bloomberg News reports:
Gold rebounded from yesterday’s biggest drop this year as investors sought a haven amid turmoil in emerging market economies and falling commodities.
Russia’s ruble plunged to a record low after the country’s largest interest-rate increase in 16 years failed to revive confidence in the currency. The Turkish lira also tumbled to an all-time low.
Your Christmas (or Hanukkah) present is you don’t have many Turkish lira. Lucky you.
(Silver did not get the same kind of love. When nervous people with money look for comfort, they don’t look to silver — usually.)
The New York Times has much more about why gold did the big turnaround. It’s the ruble. It was less than 20 years ago that Russia defaulted, bringing down Long-term Capital Management and its two Nobel prize-winning advisers who didn’t understand that things can change on a dime — or 10 kopecks.
The economic news had another victim not mentioned in the news reports: Obama haters. Remember how they were sure that Obama’s “soft power” tactics were making the United States a pitiful has-been? Well, the five countries that are subject to US (and to some extent international) economic sanctions are all on the verge of economic collapse: Russia, Iran, North Korea, Venezuela, Cuba.
It might not be a great idea to collapse countries with nuclear weapons, but the sanctions were meant to have an effect and they are having it.
As always, Kamaaina Loan is ready to buy or sell gold for you at whatever the day’s price is. We don’t care about the ruble.