Yesterday we got a $4 sell-off in the oil price in a matter of minutes, we got the usual plethora of tried and tested excuses ranging from a ‘fat-finger’ to release of the SPR (Strategic Petroleum Reserve) – something the Obama administration came out and denied followed by a ‘keeping all options open’ statement. Whatever the real cause of the near 4% fall in oil in a matter of moments it didn’t drag the gold price down that far. When oil was selling-off gold went from $1770 to $1755, a fall of less than 1%. The gold price has since recovered and is currently trading around the $1765 level. Regular readers will know that we stress just how important it is to own the physical gold (rather than some ETF) because the entire point of gold is that it isn’t someone else promise to pay. If you own gold you’re not reliant on anyone else making good on your gold ownership. In short it doesn’t have any counter-party risk. However, and it is a big however, this is only the case if you own the physical outright. If you own say an ETF, which is essentially a claim on gold held outside of your custodianship, this entirely negates the very point of owning gold in the first place. But surely all the gold ETFs have the gold they say they have, right? Well consider this news piece out of China regarding steel:

Source