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Thursday, February 7, 2013

Gold Drops on Draghi's Comments

For better or worse, what comes out of the mouth of European Central Bank (ECB) President Mario Draghi can move the markets, and that's the case Thursday with gold, the euro, and the U.S. dollar.

The euro zone has foolishly been kept in the back of minds of many investors, as the mainstream media has been extremely lax in its understanding and reporting on the condition of the region. Much of that is based upon the desire for social engineering by radicals and the Obama Administration, which is trying hard to take the focus off the dangerously weak global economy and on many irrelevant side issues, which are starting to look circus-like in nature in comparison to the challenges we economically face.

What drove most of the response from the market were the comments that there are more negative risks in Europe than there are positive ones. That resulted in the euro plummeting almost 1 percent against the U.S. dollar.

Even though Draghi said he thinks economic activity will be stronger in the latter part of 2013, that largely fell on deaf ears because it's far less likely because of the negative risks he sees.

Another comment from a different source, this time Federal Reserve official Jeremy Stein, concerning the fact that low interest rates could produce risks to financial stability, also weighed on gold and silver.

Gold futures for April delivery settled at $1,671.30 an ounce, dropping $7.50 an ounce.

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