I've been trying to figure this out, but its not making sense. Why is the threat of Greece leaving the euro affecting metals/oil prices and causing them to go down. I mean, if greece is hording euros, I understand that makes for a stronger euro, but a stronger euro = a weaker dollar which should mean things priced in dollars like gold and oil should be trading higher right? Also if there is euro hording in greece, there is a strong chance that some people are also buying gold/silver in greece which should also push prices up...but its not. What am i missing here? Only logical conclusion I come to is that the drop in PMs and oil was unrelated to greece and everyone pulled their money out of precious metals & oil to buy facebook last week which is why there was a drop. *shrug* Any other guesses?
You gotta look beyond news on Greece. The Greeks maybe hording Euros, buying gold/silver, drying meats, hording barrels of cooking/heating/etc oil.... Slowdown in US, Europe, China, etc. impacts those commodities prices. Additionally, if the Greeks are hording now, that means there will be less demand later as they churn through the inventory. So futures prices will be impacted by that - albeit very little compare to the marco side of things.
Hey Peil I am trading GLD from a technical position but fundamentally I can argue the dollar rises as the euro drops which would make gold go down. The part I am confused about is what will happen if country defaults or "leaves" over the weekend, how would that play out? seems the crisis would drive gold up (which I am hedged) but if positions unwind would people sell profitable positions (gold) to cover equity losses???
Greek is totally a wild card now dependent on what the EU ultimately, do they continue the loan, take a huge hair cut on the debt, or continue to enforce harsh austerity forcing the default. I think the Euro camp is very divided at this point due to the new French president which changes the dynamic quite a bit. The market has shown that it's very fearful of a Greek exit and I think the EU is slowly running out of moves. Greece is holding the EU hostage for more money and the funny thing is if the EU give them more money it's only delay the inevitable which is still Greece defaulting. It will still be a hard landing after all. The sooner the reset button is hit the faster things could start over again.