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MarketWatch: Gold Not a "Knee-Jerk" Safe Haven

LONDON, 9 November 2011 - Continued losses in the gold price are the result of hedge funds and other speculative investors being forced out of their positions by the new credit crunch, according to analysis from BullionVault - the world's No.1 gold and silver market online - featured today by MarketWatch, part of the Dow Jones financial news group.

"Gold offers financial insurance, not a knee-jerk safe haven," MarketWatch quotes Adrian Ash, head of research at BullionVault's offices in West London.

But short-term, "The marginal price tick-by-tick is set by action in the futures market, and besides Japan or the US collapsing, it's hard to think of a more deflationary event for global credit than Italy's current mess."

Pointing to the sharp drop in Dollar gold prices of late 2008, "Just as we saw with Lehman, [credit contraction is] necessarily going to push leveraged speculators out of all derivatives products" including gold and silver futures, says Adrian.

You can read the full MarketWatch report here...

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