After spending a few days bouncing along it’s recent low, gold resumed it’s decline today in New York morning trading. GLD slipped below 116.75 and is below 116.30 as I write this.
Now, with all the chaos and uncertainty in the world – according to the news – why would gold be headed lower?
It’s quite simple actually. The news outlets get paid according to how much attention people give them. More people watching, for bigger chunks of time, means they can charge more for ads. This means bigger receipts at their equivalent of the box office. Then they give themselves raises, just like any sane person would do. So the news is highly skewed toward inflammatory, uncertain, violent, and even disgusting stories. Because that’s what gets attention.
Underneath the headlines there is a lot more certainty than your Facebook screens might reflect. France elected a new president who is pro-EU. So “spreading populism” is much less of a threat. US corporations are nearing the end of a blockbuster earnings season, with earnings reports MUCH better than most of us expected. The Democrats took the Republicans out back for a good ol’ whoopin’ in budget negotiations – in fact, you might think the Reps didn’t show up at all, as none of their A-list agenda made it to the budget, while the Dems got a dreamland wish list. (This continues the pattern of new presidents and budget negotiations, similar things happened in Obama’s first go-round too.)