They really got carried away, though in the context of that time there seemed any number of legitimate reasons for this. Gold investors were bidding up the precious metal like there was some kind of shortage, the price in dollars making a new record high (LBMA morning fix) on August 7. The way it was reported in the mainstream, this was more confirmation of Jay Powell’s flood of money printing making its way into every last corner of the financial world driving gold bugs nuts in the process (as intended).
Nah.
A few days before all that, the 10-year US Treasury yield had sunk back down near its crisis extremes. On August 4, the note finished trading to rate just 52 bps, less than the previous record low close set March 9.
Since early August, gold and the long end of the yield curve (as well as the shape of the short end) have merely continued their close coincidence of inverse behavior. It just isn’t a coincidence, of course, the mainstream view of gold is almost all backward and has been for a very, very long time (like everything else when it comes to money, finance, and economy). Read more…..
Chart of the Day
Icarus TV
Joseph Cavatoni, managing director at the World Gold Council, talks the impact of the coronavirus outbreak on gold, before discussing other uncertainties that could hurt the gold market.
