Gold Price Will Ultimately Benefit from Market Drama
Source: Mineweb.com (8/20/07)
What began as a problem in a small part of the U.S. financial system, subprime mortgages,has become a "crisis of the elites," requiring the type of market fixes, which BMO Global Portfolio Strategist Don Coxe suggested could ultimately be beneficial for the gold price.
In his weekly conference call, Coxe said that the actions of the European central banks and the Federal Reserve to pump money into the markets helped, but still doesn't ease the concerns of investors as to when and if the money markets will work normally again...
Although the crisis slammed stock markets last week, Coxe theorized that the reason why gold only made a $10/oz move on Friday is "the market is taking the view...that this is not the kind of thing that will lead to substantial dollar devaluation." This belief may have been reinforced by central banks pumping money into the markets as investors and institutions are cutting their debt through a period of de-leveraging.