Gold rallies higher on prospect of cross-border central bank stimulus

(USAGOLD – 6/12/2019) –  Gold rallied higher overnight and in early U.S. trading – up $6 at $1334.  Silver is up 3¢ at $14.80. Earlier in the week Counting Pips’ Zac Storella, an expert on CFTC Commitment of Traders data, said that gold is “now at the most bullish level in over a year – showing that sentiment for gold is coming back into favor.”  Today’s return to the upside after two days tracking lower buttresses that perception. Underlying the changing sentiment is concern about the possibility of a global recession and continued deepening of the U.S.-China trade war – two factors, in turn, adding to the prospect of cross-border central bank stimulus.

“It is fair to say that the global slowdown is a very real threat to the entire economy across all borders,” writes CME Group’s Scott Bauer. “China trend growth is declining as it moves into being an economy more like the United States and the Eurozone than an emerging market. The lack of European and U.S. economic momentum and policy paralysis invites comparison to Japan. This comparison will persist and reduce the attractiveness of growth-sensitive assets like equities and increases the allure of gold as a store of value.”  We should not overlook the fact that recent rallies in the gold price have begun during Asian trading hours – an unusual turn of events that illustrates Bauer’s point.

Quote of the Day
“Rather than let the market adjust itself, government typically starts the process all over again with a new and larger ‘stimulus package.’ The more often this happens, the more ingrained become the distortions in the way people consume and invest, and the nastier the eventual depression. This is why I predict the Greater Depression will be … well … greater. This is going to be one for the record books. Much different, much longer lasting, and much worse than the unpleasantness of 1929-1946.” – Doug Casey, International Man

Chart of the Day

Chart note: We faithfully reproduced this chart developed by UK’s Colin Seymour in 2001. Posted originally at the USAGOLD website, Seymour’s chart on the 1929 stock market crash and the annotations that went with it caused quite a stir on the internet at the turn of the century and the early stages of gold’s secular bull market. It is still widely referenced and linked on the world wide web. We recently re-reposted the study as part of a site-wide upgrade to current internet presentation standards. It is as relevant to investors today as it was in 2001. Here is the link to the original article titled Pompous Prognosticators.

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