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The overnight sterling flash crash saw gold briefly spike to £1048/oz before slowly settling back to the low £1000’s by 8am BST.
The finger is being pointed at rogue algo’s, a large sell order and lack of liquidity causing the GBP price to plummet 6%.
Sterling is currently trading at $1.2442 and an eye-gouging €1.1195 AFTER the flash recovery.
The Telegraph tells more of the sterling flash crash story.
With the path to Brexit solidifying and sterling getting hammered, you might have thought that the equity markets would also be swooning?
But not so … yet.
Instead, we find the FTSE 100 at all time highs as this chart from the BBC shows.
Theories abound as to why?
From being jacked up on a heady cocktail of post-Brexit QE euphoria, check
UK domiciled multinationals repatriating dollar and euro profits into a weak sterling, check
investors seeking income from company dividends due to the zero interest rate environment, check
In the meantime,
Gold lost some of its lustre this past week,
but seeing how it instantly reacted to the sterling flash crash reminds me that it’s still a good hedge against the big stuff when the SHTF.
Current Spot Gold Price – Courtesy of BullionVault.com