View all newsletters
Sign up to our newsletters

Support 110 years of independent journalism.

  1. Business
29 April 2013updated 22 Oct 2020 3:55pm

Am I chastened by the gold crash? Yes. Have I changed my views? No.

Gold bounces back from "flash crash".

By Nick Beecroft

A few weeks ago I wrote in this blog words to the effect that I was surprised that gold had not reacted more positively to the Bank of Japan’s massive programme of Quantitative easing. As can be the case, failure on the part of the markets to react in the expected fashion to a piece of news, such as the BOJ’s QE, was THE most valuable of market indicators, giving the clearest possible indication of market positioning, and hence we saw gold’s “flash crash” on 15th April.

Am I chastened? Yes. Have I changed my medium-term view that gold is a must-have holding for any portfolio? No.

Since that day, when gold futures hit a low of $1361.10 per Troy ounce, gold has bounced back to $1470 as I write – a rise of 8 per cent and a pretty good “dead-cat” bounce.

Among the many theories propounded to explain the “flash crash” was that which suggested that investors took fright as, such was the size of the BOJ’s money-printing operation, the US Federal Reserve may feel the pressure had been taken off to perpetuate its own QE programme. Any such fears have subsequently been put to rest , first by a concerted barrage of dovish comment from the Federal Reserve’s ruling elite, and then by anaemic  1st quarter US GDP figures, which went to underline the need for continued monetary accommodation in the US.

It seems likely that the BOJ’s QE may have inspired locals to become bullish on the prospects for domestic investments, such as equities, leading them to liquidate holdings in other assets, such as gold, to bring money home.

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

Now the dust has settled, investors are once again focussing on the almost ubiquitous use of quantitative easing to combat economic stagnation and also the stealthy way in which central banks’ mandates have quietly been tweaked to focus less on inflation and more on employment.

I believe we will look back on the gold “flash crash” of April 15th 2013 and see it in the same light as the US stock market “flash crash” of May 6th 2010, which may well have shared some of the same causes, and which in retrospect represented a great buying opportunity.

Content from our partners
The promise of prevention
How Labour hopes to make the UK a leader in green energy
Is now the time to rethink health and care for older people? With Age UK

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU