In the epic battle of Mahabharat, Duryodhan accused the Kuru clan patriarch and his commander-in-chief Bhishma that he was not fighting with intensity as he had a soft corner towards the Pandavs.
Enraged by this insult, Bhishma fought with such ferocity and valour that not only was Krishna forced to pick a chariot wheel to hurl at Bhishma (he had vowed not to fight in the war) but also caused Arjun to use Shikhandi as a shield to shoot at Bhishma and wounded him mortally.
In a different sort of way, gold has utilised the fear, panic and pandemonium caused by Covid-2019 (aka Shikhandi) to make a break towards the $1,700 per ounce mark. In fact, it came within a whisker of its highest level since January 2013 of $1,693.75 per ounce when it was seen around $1,692 per ounce briefly on Friday the 6th of March, 2020.
Over the last one month or so, the yellow metal has swung one way than the other in a $100 per ounce plus trading range (1,563-1692 per ounce) mainly following the ebbs and flows of Covid 2019 fears that have griped global markets.
In the last fortnight, gold first made its move towards the $1,690 per ounce mark as it became evident that the death toll on account of Covid-2019 had not only increased but there were a spate of cases from Italy, Iran and South Korea.
As panic spread gold jumped the gun as investors flocked to the yellow metal as a safe haven. However, professional sellers and profit booking took over and pushed the yellow metal lower to $1,599.65 per ounce on March 2, 2020.
The stock markets too crashed and recovered with the Dow declining to around 25,000 from its peak over 29,000 not so long ago. However, during the last week, the Dow was in positive territory over the last week.
Then, the emergency rate cut of 0.50% by the US Fed as well similar action by Bank of Australia and the Canadian central bank saw gold soar and end at $1,683.65 per ounce (London pm fix).
In fact, on the last day of the week on Friday, gold was seen in a $50 range $1,642-$1,692 per ounce range in New York. Most of the volatility around the two extremes was in two short 15-30 minutes time spans.
In the domestic market, the BSE Sensex fell to around 37,576.62 on Friday, down from a peak of over 41,900 just over a month ago. In Mumbai, aided by Covid-2019 and the rupee well below the Rs.74 to a dollar, gold was seen in the Rs. 42,326 per 10 gms and Rs. 44,415 per 10 gms range.
This was from a low of Rs. 40,583 per 10 gms on 12th February. The volatility and the high gold price could both combine to bring demand and imports to a halt. However, scrap inflows could increase. The IIJS Signature held in February evoked lukewarm response and the threat and spread of Covd-2019 also saw two jewellery shows in India adversely impacted.
The GJEPC coloured gemstone show at Jaipur was postponed to July from the 1st week of April, while Chennai jewellery show in March 3rd week was cancelled.
Hopes that the threat of Covid 2019 would dissipate over time due to low mortality rate have evaporated as the virus has spread far and wide. The only hope now is that the high summer temperatures would kill Covid-2019 and thereby reduce its threat to global economy and health.
Meanwhile, on volatile and eventful Friday, gold was around $1,679.10 per ounce briefly. Platinum was then at a record high discount of $790 per ounce to gold at $895.65 per ounce at the same time. How the mighty have fallen! For, once not so long ago, platinum had always been at a premium to gold.
It was the most expensive of precious metals. Currently, the gold: silver ratio is hovering around 95-96 as compared to the mid-80s earlier in the year. Perhaps, the surpluses in both platinum and silver are pushing the two white metals down.
Moreover, their industrial nature makes them vulnerable to industry shocks. Gold and more particularly palladium are more in deficit and therefore scaling fresh highs.
Finally, an economist also known as Dr. Doom has predicted that Covid 2019 would scalp Donald Trump in his re-election bid later in the year. He cited the examples of Ford losing to Carter after the 1973 oil shock and Carter’s loss to Reagan after the second oil shock of 1979.
Then, there was Bush’s loss to Clinton after the Kuwait invasion and the US war on Iraq in search for WMDs. He has also forecast that global equities would tank 30% to 40% during the year and thereby propel gold forward.
The author is an independent analyst of precious metals and diamonds, who has worked with GFMS and WGC.