Gold gets its head above water on tepid GDP number


Gold managed to get its head above water in today’s early going after the GDP came in 2.3% higher in the first quarter. That’s down from the 2.9% gain for the fourth quarter last year and pretty much directionally challenged from the Trump administration’s point of view. As it stands now, the markets seem a bit confused about the results, but things should become clearer as the day progresses. The markets are also attempting to sort out whether or not the latest cozying-up between the two Koreas translates to a real change or another false spring.

Gold is up $4 at $1322 and silver is down 5¢ at $16.51.  As pointed out in yesterday’s EARLY REPORT, the dollar remains range-bound despite recent monetary policy announcements in Japan and Europe that should have sent it soaring.  Both countries will leave their quantitative easing programs in place while the United States tightens. The fact that it cannot seem to get unstuck may be taken as a sign that the dollar’s mini-rally that began mid-April might be running out of gas.  Beyond that, there is the larger concern that the dollar might resume the downtrend that began in 2017.

Chart of the Day

Chart note: The log chart illustrates gold’s journey through the fiat money era without the drama implied in the arithmetic chart we are used to seeing. “Common percent changes,” says Investopedia, “are represented by an equal spacing between the numbers in the scale. For example, the distance between $10 and $20 is equal to the distance between $20 and $40 because both scenarios represent a 100% increase in price.” Linear charts, in short, emphasize nominal price movement while a log chart emphasizes the percentage movement and, as such, offers the more practical portrayal of price movement from an investment perspective.

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