In the past few days, had experienced the Dax and S&P500 tart rate, burglaries and were broke in within a period of only about three weeks from the record high in a bear market. Something like this has never happened before. A bear market is a decline of more than 20 percent compared to the previous High.
on the one Hand, U.S. President Donald Trump with the imposition of the 30 day visa ban for Europeans-with the exception of English, which stoked fears of a global recession, while he obviously has no Plan, what measures can mitigate the effects of the Corona-pandemic for the U.S. economy.
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on the Other hand, investors doubt that the Fed and the ECB can bring with their respective measures, the economy is gaining momentum. Because the interest rate of the supply shock cannot be solved by cuts by the Fed. If because of the collapse of the supply chains in China primary products from the Land of lack, to US or European companies cut their production inevitably. Why not is asked in the context of Gold as a safe haven, why is the gold price falls rather? Gold in Euro 1.377,58 EUR -34,09 (-2,41%) To sell OTC
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investors in Gold to raise Liquidity
The price of gold was yesterday, Thursday, as the S&P500 collapsed to 9.5 percent, 3.6 percent. "The fact that the US government broke bonds, municipal bonds and Gold, it means that everything is currently for sale. A huge Margin Call, in which even the safe havens are no longer safe, with the exception of Cash,“ tweeted David Rosenberg, chief of the canadian investment firm of Rosenberg's Research. The financial professional was previously for seven years as chief economist for North America at Merrill Lynch in New York and finished in the analysts ' rankings regularly one of the front seats.
In the case of Margin Calls to make up for the investors who had speculated on the stock market on credit, because of the strong rise in losses suddenly of money. The obtain by liquidating a portion of their shares, bonds or gold stocks. This is going to happen in the last days, it is clear how the fall in the share price of a number of Risk Parity has shown Fund. In the past three days they have posted losses of a total of 8 percent – a negative record.
Risk Parity funds are a type mixed Fund. Because of the long period of very low volatility in the S&P500 had increased in the past few years, the equity share at the expense of the Bond component. Because during the Decline of the S&P500 is shot in the past few days, the VIX, measures the volatility of the Index to the highest level since October 2008 – a few weeks after the collapse of Lehman brothers-to the top, left of this shot back forcefully.
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US interest rates rise, surprisingly, in spite of the slump in the stock market
at the same time is increased by the previous slump in the interest rates for ten-year U.S. bonds to record lows and the volatility in the bond market, with the result that investors now bonds have sold. Therefore, the interest rates on ten-year US rose-bonds, despite the crash, the stock market in the past few days clearly.
In a normal environment, would run it exactly the opposite. If the shares to cave in to the markets, fleeing investors, usually in U.S. government bonds, causing their price to rise or interest rates fall. That you have risen in the past few days, but shows what an enormous turmoil it is currently in the financial market as a whole, which is why the investors procure money by the Sale of Gold.
investors push the gold price on the Futures market
For additional downward pressure on the price of gold has ensured that investors have fled in recent days in the Dollar, which he has recovered against the Yen and the Euro. Yesterday's decline in the gold price have used some of the investors to sell just before 13 o'clock German time, within the shortest possible time, in the Futures market almost 100,000 contracts in the value of tart 16 billion dollars, and the listing is broken into – it was a Liquidation.
For some experts, this nevertheless indicates a Manipulation of the price of gold down. If someone has such a large Position, he would sell it normally for hours and days on market-friendly, to avoid a price drop, especially as the price was High prior to the action of only 3.5 percent below the Seven-year.
The only ones that are likely to have about the slump in the gold price looking forward, the Fed and the other Central banks. He would shoot in the case of a Crash of the stock market up, that would be a strong crisis signal would be the loss of confidence in the Central banks and the Dollar are unambiguously reflect. This can allow the Fed, but under no circumstances.
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the Fed returns to QE-printing money back
However, the price of gold is likely to turn up soon. So investors expect that the Fed, at the latest, at the next meeting 18. March will cut interest rates by at least 75 basis points (0.75 percentage points) compared to the current level of 1.0 to 1.25 percent. Thus, there is a short interruption re-zero interest rates in the United States.
in Addition, the Fed has announced yesterday that they will not in the future, in the framework of the bond purchase program on a monthly basis of 60 billion dollars only in bonds of a maturity of up to one year, but longer-dated securities to buy. Even if the Fed is not referred to officially as the QE money printing program, but it is finally nothing else than QE.
in Addition, is expected to increase the Fed because of the enormous liquidity needs of the banks in the next few months, the program strong, to 100 billion dollars per month, or even more. Against the Background of the recent decline in the price of gold should be only of very short duration.
Where is Coronavirus? Real-time map showing the spread of the disease, FOCUS Online/Wochit Where is Coronavirus? Real-time map showing the spread of the diseaseDate Of Update: 10 May 2022, 16:14