Market Report: Coronavirus Spreads Outside China

by Alasdair MacLeod
Gold Money

This was the week when investors began to take the coronavirus seriously as it began to spread across America. Europe had already panicked over Italy, where there are now about 4,000 cases reported and 148 deaths. America has a problem in that it lacks a free to use public healthcare system and is unprepared for a pandemic.

As can be seen in our headline chart, gold rose strongly after Friday’s sell off, gaining $92 this week to trade at $1677 in early European trade this morning. Silver gained 70 cents to $17.34.

A feature of both metal contracts on Comex has been the bullion banks collective determination to square their books from being ultra-short. From an open interest of about 732,917 contracts on 25 February, Comex gold’s open interest had fallen to 677,276 on Wednesday, which we can attribute to market makers using the excuse of extreme volatility to shake out uncertain bulls. But the greater damage to prices was in silver, where the same operation reduced open interest by nearly 50,000 contracts, the equivalent of 250 million ounces.

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