Silver as an investment

Rates Up – Gold Up – Why ??? / By Ross Norman / Thursday, 16 March 2017

To observers of financial markets it must seem odd that they often behave exactly the opposite to what is expected. Explaining it is also a strange thing too.

Essentially when the US Federal Reserve jawbones a potential move such as a rate hike (for the best part of a year), investor positioning is congruent with the expected outcome – that is to say dollar / equities up an by extension, gold down.

But what happens when they are too successful in leading the markets expectations and the market positioning is too extreme for the expected move. Well you have a heap of investors who are short gold and long the dollar / equities who don’t get the win they expected… that is to say the move is over-priced into the news. As such, those investors – be they speculators in the futures markets or physical buyers who have forestalled their purchases for a hoped for price correction … are vulnerable.

In this environment a little counter-intuitive buying of gold and selling dollar / equities is usually sufficient to frighten them into covering their position. In short, markets end up moving exactly the opposite way to how classic economics would tell us. And the


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