Sunshine Profits

We haven’t touched on currencies for quite some time (our latest essay was dedicated entirely to gold

The Wall Street Journal had an especially colorful metaphor to describe what has happened to the price of gold that fateful week when gold tumbled 13% in the two sessions through April 15, the biggest drop in 33 years.

What happened on Friday, April 12 and Monday, April 15 on gold and silver markets looked like a gigantic earthquake – a drop of about $200 (13%) for the yellow and almost $5 (18%) for the silver metal. There has been a lot of hyperbole going on.

On Friday we witnessed a great plunge in gold (almost $80 – from $1560.30 to $1480.50) and silver (almost $1.7 – from $27.58 to $25.89) and we are seeing even lower prices this week.

This week we saw some interesting developments on the financial markets, mainly in the general stock market – S&P 500 has finally reached (and surpassed) the long-awaited 2007 high level and other more specific stock-market sectors have not been idle as well.

It seems that recently the whole precious metals sector has been devoid of the strong relationships with currencies and stocks (namely, strong negative correlation between gold and silver and the USD, and a positive one between metals and the S&P 500 Index) that we are so much used to, which makes the straightforward inference somewhat more complicated.

It seems that collective memory is becoming shorter and shorter. We just celebrated two important holidays in the Judeo-Christian traditions that commemorate events that took place thousands of years ago

We have been writing about a bullish outlook for gold, silver and precious metals mining stocks for quite some time now, even though the seemingly bad situation in these markets.

Cyprus lawmakers this week rejected a controversial euro bailout package, which would have set a dangerous precedent by taxing ordinary bank depositors to pay part of the bill.

The gold naysayers are still out there in droves, other than Lady Gaga who is ensconced after surgery in a custom-designed, 24-carat gold plated wheel chair.