GOLD AND SILVER SEEM TO LOVE MITT ROMNEY BUT WHO KNOWS WHY

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During the presidential debate on Wednesday in Denver, every time Gov. Mitt Romney seemed to score a point on President Barack Obama, gold futures ticked higher.  At points when Obama seemed to be recovering, gold futures ticked down.  As the debate ended and gurus, even on MSNBC, started proclaiming Romney the winner gold futures spiked.

After establishing a quick pattern of a higher high and a lower low, gold futures rocketed around 2:00 AM ET.  The buying was very aggressive.

There were three significant news items in the morning: the Bank of England’s rate decision, the European Central Bank’s rate decision, and the Mario Draghi press conference.  The trading data show that these three events had minimal and transient effect on gold and silver.

Every time a major media outlet regurgitated that Romney won the debate, gold spiked during the day. The correlation between gold price spikes and news about Romney’s debate performance is nearly perfect.

I am in the business of making judgments about cause and effect in the markets.  It rarely gets better than the correlation between the price of gold and Romney. The question every gold and silver investor should ask, “Why would Romney’s good debate performance spike gold and silver?”

The best way to figure out the answer is first to start with the correlation between rumors of QE3 and the price of gold, and subsequently the correlation between the price of gold and actual news of QE3…Read more at Forbes

 

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