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There’s almost nowhere to hide from the market rout today.

On Friday, gold offered a safe habour as it climbed more than $30 following the CPI report but today it’s given all that back. It’s down $27 to $1843, in a 1.5% drop.

When things are moderately bad gold can hold its own but when it gets really bad, everything is sold. That’s what we’re seeing today with stocks, bonds and commodities all down. The FX market isn’t too bad but the yen is the leader in a classic flight to safety.

The gold chart is still showing some higher highs so if markets can stabilize there’s reason for optimism.

On the fundamental side, there is a growing case for bullishness. The thinking is that if things get bad enough in equities and/or the real economy, the Fed will be forced to pause even with inflation high. In an extremely tough scenario, the Fed may even be forced to restart QE.

That result would be a recipe for dollar debasement and extremely bullish for gold. We’re still quite a few steps away but the more disorderly that financial markets get, the higher the odds rise.



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