Gold continues retreat from $1300 level

(USAGOLD – 5/16/2019) – Gold continued its retreat from the $1300 level begun yesterday.  It is trading at $1291.50 early in the US session – down $5 on the day.  Silver is down 3¢ at $14.77. “We have seen repeated attempts in the last few days to rise above $1,300 and it (gold) appears to be facing some kind of barrier. There is clearly some selling when it hits that level,” Capital Economics analyst Ross Strachan told Reuters yesterday.

Lingering hopes that the US and China might still agree to a trade deal and the Trump administration’s decision to put a six-month delay on EU auto tariffs (and avoid a two-front trade war) contributed to the pull back. In other news, Scrap Register reports that “India’s gold imports spiked by 54% to $3.97 billion in April from $2.58 billion in the same month last year, according to the latest data release from the Ministry of Commerce.” Strong seasonal demand was given an assist by rupee weakness and a correction from a five-year high in the rupee gold price.

Chart courtesy of Bullion-Rates.com

Quote of the Day
“Were Keynes alive today, he would likely be arguing along with German Chancellor Angela Merkel for more monetary discipline and a return to a more balanced international system. No doubt, however, his neo-Keynesian acolytes would be dismissing his concerns as hopelessly outdated and reactionary. Keynes was an economic theorist, but he was also a clear-eyed market analyst, and a passionate and committed speculator for his own account and for Cambridge University. If he took in today’s economic vista of near-zero interest rates and quantitative easing, it is clear that he would be buying gold hand over fist—regardless of what his disciples might think.” – Richard Hurowitz, Octavian Report (in a Wall Street Journal editorial published September 2015)

Chart of the Day

Chart courtesy of GoldChartsRUs/Nick Laird

Chart note: This interesting chart on consumer prices from 1550 to present shows the direct relationship between declining purchasing power in the British pound and the sterling price of gold after 1931, the year Britain departed the gold standard. Prior to 1931, there was an occasional minor bump higher in the price of gold, as you can see, but for the most part it followed along the same flat line as consumer prices. It was only after Britain separated the pound from gold in 1931 that gold showed its true colors as portfolio defense against a depreciating domestic currency. The metal’s price moved significantly higher after 1971 when the Bretton Woods agreement was abandoned and currencies and gold were allowed to move freely in international markets. The real lesson in this chart is that when a nation-state moves away from gold-backed to fiat money, gold coins and bullion become a logical and worthwhile alternative for citizen-investors – even after centuries of relative price stability.

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