What The Hell’s Going On With Gold?
Gold was in the headlines on Monday. Still. It was still in the headlines.
Atahualpa's downfall is runnin,' dammit. Runnin' to new record after new record. Monday's high exceeded $2,350.
Consider this: Gold's up almost 20% in just seven weeks. It's up more than 12% since the beginning of March. This is a market, apparently, comprised entirely of Spanish conquistadors.
The figure above captures the gold rally alongside Monday's other top market story: Pricing for Fed cuts in 2024 began the w
Nice history jokes 🙂 although it’s painful to remember that the invaders dissolved the Aztecs civilization’s most important astronomical calendar, which was made of gold 🙁
Fear of post election civil unrest?
Or the Trump Whitehouse imposing capital controls in the event of a dollar collapse. Is it hard to imagine Treasury secretary Lighthizer and National Security advisor Navarro doing so under the pretext of some presidential national security power?
Apparently even gold can be a meme. 😐
AstronautPointingGun.gif
Always has been.
I read somewhere that the US is conjuring $1 trillion out of thin air every 100 days. All that money has to end up somewhere. Be it money funds, stocks, bitcoin, real estate, and now gold. Because gold is similar to bitcoin in that they both have no real value, I guess the same explanation for bitcoin’s rally can be said for gold’s. This is just another example of too much money chasing after too few risk assets, at the expense of US treasuries of course, because it’s the US Treasury that is printing all the money.
Silver is also skyrocketing, although possibly for different reasons, given its use in manufacturing- especially electronics.
Look at gold from the point of view of an investor living in China. What do you do with your yuan that may soon be devalued? The beloved RE market has imploded. Stock market falling. Bitcoin illegal. Capital controls. Despite the strong USD there is a TINA aspect to gold right now for many.
And China gold ETFs are behaving quite differently than here. Bloomberg had an article this am (Charlotte Yang) about an ETF that has had to stop trading twice in the past week because its price had risen over 30% above the underlying.
Yesterday Bloomberg published (Jennifer Zhou) “China PBOC Buys Gold for 17th Month as Prices Hit Record”
I have been investing in gold, off and on, since the early 1990s. “Gold fever” is a real thing, and rising demand can create its own inertia just like crypto. In my experience gold’s only real value is as a long-term inflation hedge.
I just finished reading “Wager”, the account of a British vessel in the 1700’s that was secretly pursuing, off the coast of South America, Spanish ships that were carrying gold, which the Spanish had stolen from indigenous tribes.
The men of the Wager devolve into complete anarchy, the worst of possible human behavior, and everthing that can go wrong in a rule and moral based society – when in pursuit of gold, wealth and riches.
Reading this book was yet another reminder that if man is “inherently” good……it might be only on the condition that there is enough food/shelter for all and the disparity in wealth/living conditions within the tribe is not too great.