LAWRIE WILLIAMS: Equities plunging further, bitcoin and palladium too. Is this the boost gold needs to resurrect its mojo?

LAWRIE WILLIAMS: Equities plunging further, bitcoin and palladium too. Is this the boost gold needs to resurrect its mojo? from Sharps Pixley

When does an equity correction turn into a rout? We may be seeing just such a phenomenon now with the Dow, S&P500 and NASDAQ following European and Asian stocks sharply downwards today.  Bitcoin is also collapsing further with BTC heading down towards $3,500 and ETH dropping below $100. After its big recent runup, palladium is down sharply too, perhaps confirming its status as an industrial metal – after all if the economy is turning down, as the markets may be suggesting, the palladium demand likely will too.  If anything should start to drive safe haven investment back into gold this may be it.

The big question now facing Wall Street is will the Fed blink at the FOMC meeting in two weeks’ time and delay the December interest rate increase – which seemed almost a 100% certainty only a couple of weeks back. The Fed may be nervous that its tightening program may be blamed for the equities downturn and for forcing the U.S. economy into recession and reduce its tightening program as a result.  It has already intimated it may be reducing its planned number of interest rate rises next year.

If the Fed does hold back on increasing rates at its December meeting, the gold price could really take off into the year end.  With U.S.equities falling and the gold price rising, if this happens, we could end the year with gold’s price performance matching that of U.S. equities, after lagging them quite substantially since early April.

But, of course, we may see an equities bounce, although I fear bitcoin will continue its downward path – perhaps to oblivion.  And any rise in the gold price seems to be being well-controlled despite a falling dollar.  The powers that be do not want gold to take off in the manner suggested and may be doing all they can in the paper gold futures markets to mitigate any gold price surge.  But they may yet wilt under the pressure should equities and the dollar continue their decline.

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Lawrence Williams

Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. He is a qualified and experienced mining engineer having graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London – recently described as the World’s No. 2 University (after MIT). He has worked in mines in South Africa (gold, uranium and platinum), Canada (uranium), Zambia (copper) and U.K (coal) and holds a South African Mine Managers certificate. He also worked as a gold mining company analyst for one of the major South African mining houses. He left South Africa to join Mining Journal as Financial Editor and worked his way through that organisation to edit Mining Magazine, and then join the Board. He was Managing Director (CEO) of the company for 13 years up until it was sold in 2001. During part of this period he was also President of Nevada-based U.S. company Mining Media Inc which was publisher of North American Mining magazine.