Broad risk flight; gold eyes worst two days since 1983

[WestVirginiaRebel]

Reuters:

(Reuters) - Gold headed for its biggest two-day drop in 30 years on Monday and oil, copper and grains prices also tumbled as investors fled most financial markets after disappointing Chinese economic data underscored global growth worries.

With U.S. stocks on track for their first two-day losing streak in a month and Treasuries prices near flat, few assets appeared to be taking in new money amid growing caution the world economy was headed for another recession.

"I think everyone's going cash. People are either not deploying capital or just taking profit," said Sean McGillivray, vice president of asset allocation at Oregon's Great Wealth Pacific Management, a commodities-focused asset manager.

Commodities-linked currencies such as the Australian and New Zealand dollars declined more than 1 percent against the U.S. currency .DXY, weighing further on energy, metals and crop prices. <FRX/>

"Nearly every commodity has taken a hit today. The only markets in the world that have been kind of detached from this are the German and French stock markets and U.S. large cap stocks," said James Dailey at Pennsylvania-based TEAM Financial Asset Management.

The 19-commodity Thomson Reuters-Jefferies CRB index .TRJCRB, a globally watched indicator, fell 2 percent and headed for its sharpest one-day loss since mid-September. The index hit its lowest level since the end of June.

GOLD TUMBLES

Gold, which dropped 5 percent on Friday, sunk nearly 8 percent more on Monday, sliding deeper into bear territory. The precious metal's spot price fell over $30 in a matter of minutes at one point, breaching support at $1,400 per ounce.

The sharp selloff in gold came as an "unexpected event" to many hedge funds, said long-time gold investor John Burbank, who runs San Francisco-based hedge fund Passport Capital.

Oil fared scarcely better than gold, sliding nearly 3 percent. Other precious metals were caught in the downdraft, with silver briefly dropping 10 percent. Industrial metals plummeted, with copper at its lowest price in over a year.

Wheat led the decline in grains, falling nearly 3 percent. In other crops, arabica coffee plumbed a near 3-year low. <GRA/> <SOF/L>

Both oil and gold have been under substantial selling pressure since last week. Bullion has come off the most, shedding around 9.5 percent since last Monday's close, while crude has lost about 3.5 percent.

Gold was under pressure from a variety of factors, including a proposed sale of Cypriot gold holdings, and more fund-based investors headed for the exits after China's data on Monday.

China's economy grew 7.7 percent in the first quarter, undershooting market expectations for an 8.0 percent expansion and frustrating investor hopes that the world's No. 2 economy would rebound after posting its weakest growth in 13 years in 2012.

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Gold bubble bursts.

[Geee]

Gold's Price-Plunge Is A Good Thing, As History Shows

By LAWRENCE KUDLOW

 

 

In the last two days gold has plunged so deep that it's being called the worst drop — at least in percentage terms — in 30 years.

That brings us back to the early Reagan period, when falling gold was regarded as a good thing.

Back then, lower gold showed inflation coming down after the horrible 1970s. It also showed confidence in the economy recovering and greater respect for the dollar.

Over the next two decades, in the '80s and '90s, gold basically dropped in round numbers from $800 an ounce all the way to $250. Stocks soared. So did jobs and the economy. It was one hell of a good period.

But markets have reacted a bit differently this time. On Monday, stocks fell over 200 points in tandem with gold's $150 drop.

Maybe it was tax-selling in the stock market. Or the constant rumor of Cyprus gold-selling to raise bailout cash.

But investors aren't happy. It doesn't look like the '80s and '90s. And I'm hearing the usual cacophony of impending catastrophe.

 

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