Turkey Sold Gold, What Does it Mean? | Market Rundown
Why Rehypothecation is Evil
Today:
Market Rundown
Gold and Turkey- MS Analysis
Zen Moment: Styrofoam fires are crazy
1- Market Rundown
Good Morning. The dollar is up 11. Bonds are up slightly. Tech stocks are strong but well off their highs. Dow stocks are actually down slightly. Gold is up $12 giving back some of its AM gains also. Silver is up 12c. Copper is down 30bps. Oil is very weak, down $2.40. Nat Gas is down 10c. Grains are lower again. Crypto is slightly firmer.
Comment: Gold is up following what is perceived to be a debt ceiling resolution. This is not common. We posted this on twitter at 8:20:
Gold likes the debt-ceiling deal which means gold doesn't like the policy. Haven't seen Gold go up on a debt ceiling resolution before. Big picture now playing the gold tune:
Default risk= buy Gold
Resolve=Debase= buy Gold?
This could be Turkey related as well. Hard to say. One other thing. Rollover is done. Fund selling pressure usually backs off a day or two when that happens.
AI continues to lead the charge in stocks.
2- Turkey and Gold
Turkey has been selling Gold for months after just adding at an accelerated pace starting in Q3 of 2022.
Erdogan, who had been buying Gold alongside Russia and China starting in late 2022, has now been selling it non-stop starting in March of this year. Why?
Because he needs liquid currency to pay debts and operate Turkey’s economy and government.
Backing up a little…
First Inflation, Then Debasement
Turkey’s FX reserves had been depleted in recent years due to market interventions designed to prop the Lira up and slow panicked holders looking to get out of the currency. Erdogan chose to do this instead of fighting the cause, which was inflation.