Gold’s bounce off $1300 level provides renewed impetus

FEBRUARY 8, 2019

Gold’s close encounter with the $1300 level yesterday seems to have given it renewed impetus this morning. It is trading at $1315 – up $4.50 on the day. Silver is up 10¢ at $15.87. Asian trading was quiet in keeping with the Chinese New Year celebration but showed a spark of life in London on continuing Brexit concerns. Financial Times reports this morning that the British government is hatching a secret plan to deal with a possible “no-exit” end to the stalemated talks with the European Union. That revelation will send a clear message likely to be heard by nervous investors on both sides of the English Channel. As we have reported over the past several months, physical and ETF gold demand is running strong in Europe as investors prepare for a worst-case scenario. The small spark in London became something more as the action moved to New York and news surfaced that the U.S.-China trade talks might be more seriously strained than previously thought.

Quote of the Day
“[JP Morgan’s Marko] Kolanovic, who has dominated Institutional Investor’s annual rankings of top strategists for a decade or so, was out with a research note Thursday arguing that President Donald’s Trump’s isolationist foreign policy is a ‘catalyst for long-term de-dollarization.’ Put another way, the dollar is in jeopardy of no longer being the world’s primary reserve currency and all the benefits that go along with that, such as interest rates that are lower than they otherwise might be and the government’s ability to fund budget deficits in perpetuity.” – Robert Burgess, Bloomberg opinion columnist

Chart of the Day

Chart courtesy of the World Gold Council

Chart note: This chart is perhaps one of the most telling we have ever published in this section of our daily reports. It depicts the performance of various currencies – past and present – against gold over the long term. Those who tout the proposition that gold is not really an inflation hedge, or that it is not really a safe-haven against currency debasement would be well-served to give it some undivided attention. Those who own gold and believe in it as a vehicle for long-term asset preservation will see it as vindication. For those who do not own gold, we hope it will serve as inspiration and a call to action.

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