If Chinese demand continues, it could push gold and silver prices up together, making these metals a favorite for investors seeking safe havens amid economic uncertainty.
Michael Burry, famous for predicting 2008 crisis, made headlines with his latest 13F filing. He shifted towards commodities & renewable energy and decreased holdings in tech giants.
Gold is going to go up again, because the Federal Reserve is now trapped. This week’s CPI report is important, because it showed an uptick in inflation instead of a downtick, coming in at an annualized 3.5% rate, with “supercore” components above 4%.
As long as the effects of inflation continue to show up in higher prices for goods and services, a higher nominal gold price can be expected over the long term – eventually.
My favorite indicator is the GDX/GLD ratio. This is a simple relative strength ratio that compares the price action in big-cap mining stocks to the price of gold. It’s important, because the price action in these stocks tends to lead gold prices.
As I continue to see blame heaped on the Fed for this latest episode of financial instability, I have surprisingly adopted a more sympathetic view of the Fed’s work.
Through the past year gold has struggled somewhat as it continues to digest the strong gains of the last two years. Many wonder, has gold lost its golden touch? But remember, gold was $1,200 as recently as late 2018. It’s now almost 50% higher.
It has been a frustrating year for gold bulls. Every attempt of gold to move higher was short-lived, the spring rally was the strongest one of the year but was capped.
It has been difficult to trade the metals market over the past year. The fundamentals have been indicating that gold and silver should be shooting up, yet the markets have been going up and down a great deal.
It has been difficult to trade the market based on fundamentals since the pandemic struck. We appear to have several new black swans on the horizon to further muddy the application of fundamentals.
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A Perfect Storm For Gold And Silver
In theory, the past week should have been a perfect storm for gold and silver bulls, as the news fed investors a buffet of...
The University of Michigan Consumer Sentiment Index is at its lowest level since 2011. Retail sales dropped 1.1%, which includes inflation. So, in real terms, the drop was 1.5%, which is a huge drop in one month.
The bond market appears to have discounted all the talk about stimulus and the threat of inflation exploding. The markets are saying that the consequences of printing the amounts of money that the government is printing is unsustainable.
