"Rapunzel, let down your hair": Current volatility to navigate the financial landscape
In Disney's Tangled, Mother Gothel accesses the hidden tower by calling for Rapunzel to let down her 70 feet of magical golden hair, which Gothel then climbs.
Much like Mother Gothel using Rapunzel’s golden hair to reach her tower, market players are utilizing current volatility to navigate the financial landscape.
Following the nomination of Kevin Warsh and the rise in bond yields, shifting sentiment led to a sharp drop in gold and silver prices at the end of January. This provided a strategic window for short-sellers to cover their positions.
On the 9th of February Chinese financial regulators have advised major financial institutions to limit their holdings of US Treasury securities, urging limits on new purchases and recommending that banks with high exposure reduce existing positions due to concerns about concentration risk and market volatility in US government debt markets.
Since the start of the year, the greenback has lost around 16% in front of GOLD, and 8 % in front of silver.
The fall in USD and rise in commodities prices will be accelerated by china’s actions.
As we head into the Chinese New Year, the Shanghai market's closure will likely drive a short-term downward move for gold and silver, giving the shorts one last chance to "maintain their youth" before the next big swing.
Author
Hany Saleeb
Independent Analyst
Hany Saleeb is a highly experienced Senior Treasurer. With over a decade of experience in treasury, served as Head of Treasury at BM in France and head of research in Sinai Securities.
