As I said in the previous commentary, to date I have seen very little written on how the ongoing events in Japan will impact, if they do, on the price of physical gold.  This surprises me, but then too I am somewhat surprised that the price of physical gold has fallen dramatically (by about U.S.$40) this morning from about U.S.$1,419 (5:00 a.m. ET) to U.S.$1,389 (9:00 a.m. ET).  Concurrently physical silver has fallen (by about U.S.$2.00) to U.S.$33.90.  To the extent my consistently reiterated view that physical gold is a safe haven holding in uncertain times is unchanged (and it is), all things equal I would have thought that the price of physical gold ought to rising this morning, not falling.  However, all things are seldom if ever are equal.

A Kitco article this morning generated at 8:03 a.m. is titled ‘A.M. Kitco Metals Roundup: Comex Gold Sharply Lower as Markets Spooked, Investors Liquidating Assets for Cash’ – reading time 2 minutes.  That article says that the crisis in Japan has generated extreme uncertainty in most markets worldwide, and that investors are “moving out of perceived riskier assets and into cash and U.S. Treasuries”.  As I write this every index summarized in Bloomberg with the exception of the Mexican BOLSA exchange is showing red numbers.  The Dow is down 270 points (about 2.25%) at its 9:30 a.m. ET opening.

While the author of the Kitco article may be right, I for one can’t see how U.S. Treasuries are a better place to be than physical gold, unless one is fully invested in the markets and isn’t holding any cash – cash being a better ‘medium of exchange’ than physical gold.  That said, the gold price is clearly under pressure this morning (at least to 10:00 a.m. ET), perhaps because gold (and silver) can always find a market at a price – and may well go lower if the equity markets continue down and investors and traders have a need to liquidate holdings to raise cash.  It will be interesting to see where the physical gold price goes in the next days and weeks.