SPDR Gold Trust: Counterintuitive Behavior of GLD & SLV Prices To Continue

Lately, the price of gold and silver has been trading in an undisputedly counterintuitive manner. After the Federal Announcement on December 13, 2012, gold prices turned bullish. At that moment, GLD was trading above $1,700 an ounce but the price of gold has since fallen below that. Late in January this year, the price tried to break above $1,700 but to no avail.

Confirming this counterintuitive pattern of precious metals prices, Grant Williams said that this behavior was heavily influenced by government involvement. The more the level of government involvement; the more the counterintuitive behavior. In normally-functioning markets, there is usually minimal government interference. Since the government is the biggest participant in the bond market means that the natural market forces are actually being corrupted.

GLD and SLV form very thin markets. Hence, it does not require a lot of effort and financial resources to control the direction of these precious metals. However, their prices can be a double-edged sword. Gold and silver markets can easily reach a tipping point beyond which market forces easily overwhelm intervention of any kind. At the moment, the allocation of portfolios for both precious metals is 0.5%.

Price of GLD: For more information Click Here!
Price of SLV: For more information Click Here!

Chart indicating the price of silver!

Chart indicating the price of gold!