The gold price heated up during the historically cooler summer months for the precious metal
Mickey Fulp | November 18, 2019 | SmallCapPower: Bullion was US$1270 per ounce on May 21 and was $1520 per ounce as of early September. Folks, that’s a 20% gain in three and a half months! It can be argued that gold has run up too far too fast and is overdue to test downside resistance. I agree with that assessment but at this juncture, why don’t we just sit back and enjoy the ride?
[Editor’s Note: This article was originally published on September 9, 2019 on goldgeologist.com]
An impressive uptick has come mostly during the traditional summer doldrums, a season in which the gold price usually founders and sometimes reaches its yearly low.
Here’s my baker’s dozen of reasons why gold has made an unprecedented move to the upside this summer is as follows:
- Lowest interest rates since 2016; inverted yield curve for U.S. treasuries; negative rates in EU.
- Ever-increasing world government debt at $63 trillion; $15 trillion at negative interest rates.
- Central bank bullion buying, especially by 2nd and 3rd World countries.
- Ongoing trade disputes between the U.S. and China and also the U.S. and the EU.
- A slowing world economy, especially in China and attributable to its trade war with the U.S.
- Renewed European Union economic stimulus that includes buyback of its own bonds.
- Major banks and other financial institutions long speculations on the gold price.
- Increased holdings of paper gold in ETFs, now at nearly 2500 tonnes and highest since 2016.
- Ongoing devaluation of all the world’s fiat currencies.
- Long-lived gold bear market; 6.5 years since the price crash from $1680 to as low as $1050.
- Geopolitical turmoil: China-Hong Kong; Iran-Venezuela sanctions; UK-EU over Brexit.
- Fears of an imminent world recession stoked by mainstream media sensationalism.
- Increasing demand for physical gold by private hoarders.
I can summarize my list of reasons for gold’s recent run up in one succinct paragraph: Gold is money. It has filled that role over the entire course of human history. Gold is the world’s only safe haven and insurance policy against financial calamity and economic collapse. Smart money hoards gold to preserve its wealth. Remember the golden rule: He who has the gold makes the rules.
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