Everyone's scratching their heads lately at the news. In a first-season episode of The Sopranos that aired almost nine years ago, Tony Soprano's pronouncement that "Nobody knows anything!" still resonates. Anyone listening to the media and expert analyses has heard it all -- Gold's been a hot topic for months now. FXStreet had this to say just last night (June 5):
"Gold fell sharply on Thursday, touching below $865 per ounce after the dollar continued to rebound against the euro, reducing the precious metal's appeal as an alternative to the most common form of foreign currency reserves."
Ah, I get it now. When the dollar goes up in strength, it hurts gold, right? In the first two hours of the next day's trading, Gold surged eighteen dollars, a 2% markup, with zero mention of the dollar's performance. A week before, Bloomberg.com had also discussed gold:
"Gold rose on speculation that investors may stock up on the metal…'Gold's making a comeback as people think it's a little cheap. There was some light jewelry buying.'"
Gold's now going up because prices were going down? That’s some keen insight! If only all markets did that. "Light Jewelry Buying"? It’s a global market and the best idea to explain the gold rally is "Light Jewelry Buying"? Give me a break. Lastly, just this morning, USAGold.com weighed in with this gem:
"Gold has pushed higher on growing concerns that we are entering a new phase in the credit crisis."
So: after falling due to a dollar rebound, rising on an assumption of "it's too cheap," the price of gold now continues to rise as people get more anxious about the credit crash.
When it comes to "causation," the news can and will say that nearly anything "moves" the market. Dollar value increasing against the market's movement? Talk about a war somewhere. Peace breaking out but the DOW's crashing? Bring up interest rates. DOW holding steady despite an unemployment spike? Hail the good news about the sheep shearing industry in obscure economy X.
The more news you read, the more you too can conclude that Tony was right: nobody (in the realms of talking heads and "get-the-click" news articles, at least) knows anything. To be a credible expert, you need some backing to your theories. Some credible evidence and explanations for what you believe. The sound-bite headlines we read in the news aren't even fit to be called hypotheses, let alone theories. They're conjectures at best.
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