Summary
At a banking meeting today in Germany, ECB Chief Mario Draghi produced an inspired speech about the great lengths the ECB is prepared to go to support inflation in eurozone.
Such a speech would be scandalous in the U.S., but Europe fears falling into a similar pit as Japan and could act as early as December in extraordinary manner.
If the ECB follows through, spot gold indicated today in early AM trading that it would have a significant downward impact on gold prices. I expect ECB action in December.
Just as gold shorts, your author included, were starting to question the strength of the dollar and the recent rise of the SPDR Gold Trust (NYSE: GLD) and other relative interests against it, European Central Bank (ECB) Chairman Mario Draghi came to the rescue. But after a drop in the price of gold on his speech, it rebounded in the spot market before dawn. A slew of factors are in play, but it looks like it will take actual action by the ECB or the dispelling of inflation fear in the U.S. to reinvigorate the gold short opportunity.
ECB Chair Draghi spoke at the Frankfurt European Banking Conference in Germany Friday and offered a note that probably should have been paid for by gold shorts. Perhaps on a caffeine kick, the ECB chair presented what seemed like an inspired speech about the great lengths the ECB was willing to go to drive regional economic growth and to stir up inflation. Such talk would be scandalous in the United States today, but in Europe it is a necessary drug to keep investor hope alive.
