Binky Spurt

Just a quick note as this seems a bit entertaining to me.  The things you hear about gold prices are all over the place from it being the wisest investment on earth to gold being as worthless as coal these days.  Decide for yourself which is right for the long term.  One thing that is clear is that for the short term the price tends to swing widely, like over 3% down yesterday, in part tied to expectations on Fed rate hikes because rising rates lowers the price of gold.  And yes, oddly enough expectations recently have been growing for a December rate hike despite the GDP forecasts progressively going down for the U.S. and the world, whether you look at GDPNow as I recently did, or the IMF, which just slashed its 2016 GDP prediction for the U.S. from 2.2% down to a meager 1.6%. 

http://www.zerohedge.com/news/2016-10-04/imf-slahses-us-gdp-gowth-outlook

Not exactly the growth target the Fed is looking to achieve, yet expectations for a hike are on the upswing and gold is slumping in part because of it.

http://www.zerohedge.com/news/2016-10-04/gold-tumbles-below-1300-yen-crashes

Indeed, today Bloomberg carried an article on how the Deutsche Bank AG Chief Global Strategist believes the drop in gold will continue and it is 20 - 25% overpriced.  According to Binky - yes, his name is Binky - while rate hikes might have an impact, the real driver of a reduction in gold will be a recovery in global growth!  Yes, you heard that right, the economies of the world can prepare to rejoice as a growth spurt is on the way.  Let's officially name it the Binky Spurt!

http://www.bloomberg.com/news/articles/2016-10-05/gold-looks-25-overvalued-according-to-deutsche-bank-s-chief-global-strategist

And you can see why, with a chief global strategist like Binky, that Deutsche Bank is doing so well. Yep, time to sell any gold you might have.  Take that ring off your finger now and hawk it while it is still worth something.  After the Binky Spurt it will be too late. 

We'll see how this call works out for Binky.

10/7/16 Update

Since the initial post above, Binky seems right.  Gold has continued to drop, some economic news was pretty good and expectations of a Fed increase in rates were rising.  That is until today.  Today the BLS jobs number came in at 156K (below what the elite prognosticators were predicting) and the unemployment rate increased minimally to 5.0%.  So now the jury is out on what the Fed will do in December.

http://www.zerohedge.com/news/2016-10-07/payrolls-rise-156k-missing-expectations-unemployment-rate-rises-50

As one might expect, this is giving a bit of a bump to gold.

http://www.zerohedge.com/news/2016-10-07/gold-leads-bonds-bleed-jobs-miss-sends-rate-hike-odds-tumbling

Which may be due in part to our friends at Goldman saying that demand for gold remains high and intact, so a significant drop in gold prices seems unwarranted.

http://www.zerohedge.com/news/2016-10-07/golds-sharp-drop-strategic-buying-opportunity-goldman-sees-physical-demand-intact-ch

But I am sure Binky will stand firm in his convictions on this as the global economy is certainly ready for a spurt and all this other stuff is just noise.