DMR–Gold lays groundwork for solid start to the week, hits a wall in early NY trading


Gold was in the process of laying some groundwork for a very good start to the week – trading up to the $1296 level in Asian and European markets overnight – until it hit a wall of what looked to be programmed trading at the open in New York and dropped almost $8 in a matter of minutes.  It has retraced some of those losses since and is now priced at $1292 and up $5 on the day.  Silver is up 6¢ on the day at $15.64.

Much of the gold’s gain overseas can be tracked to a stronger yuan and concerns about a less than inspiring earnings period ahead of us.  Adding to the stock market’s woes is a report out of China this morning that its trade deficit with the United States grew 17% despite the imposition of tariffs. Lurking in the shadows, and not getting a great deal of attention in the United States, UK’s parliament votes on Brexit this week and that could be a catalyst for surprise capital rearrangements that few anticipated.

Quote of the Day
“I think we’re getting to the point now where the breakout is going to be on the inflation upside. The only question is when.” – Alan Greenspan, February 2018

Chart of the Day

(Interactive chart)

Chart note: This interactive chart compares price appreciation for gold and the dollar index. Gold has consistently outperformed the dollar in twelve of the last eighteen years – a formidable record. Even if one were to add in average yields on dollar-based investments, gold still comes out the clear winner in those twelve years. Gold had an off-year in 2018 – down 1% while the dollar was up almost 7%. Given the performance record, though, contrarian investors might see the present disparity as a buying opportunity.

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