RISK!

Risk is a function of market participants having a perception of lower risks while governments increase their intervention of market prices.–Chicago Slim

One Sign of Increasing Risk: GOFO

The lack of liquidity in the leasing market for gold has pushed the gold forward rates (“GOFO”) into negative territory, meaning that gold for forward delivery is trading at a discount to the physical spot market price–a rare situation that has only occurred a few times in the past twenty years–the last time in Nov. 2008 when a scramble for physical spurred a sharp rally in the dollar price of gold.

This week the GOFO rate did something it has only done a handful of times in its long history–it went negative out to three months which means somebody was willing to pay to have gold instead of dollars right now.

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Be careful out there!