Gold rises sharply on Mideast tensions
(USAGOLD – 6/14/2019) – Gold rose sharply in overseas markets last night after Secretary of State Mike Pompeo blamed Iran for the tanker attacks in the Gulf of Oman. That strength carried over to the COMEX open in New York where it is now trading at $1350 – up $5.50 after being up $9 yesterday. Though the tanker attacks are the clear catalyst for the upside, safe-haven demand and the price were already in a steady upward trajectory on recession, trade and interest rate concerns. Silver is up 3¢ at $14.98. Technical analysts have long identified the $1350-$1360 price level as strong overhead resistance for gold.
Stay tuned. We will update this afternoon if anything of interest develops.
Quote of the Day
“If we don’t quite know what the future holds, there is little point in getting carried away by very fancy mathematical calculations of optimal portfolios. Don’t rely on past data to be a good guide. Try to think through what mix of assets gives you the best chance of surviving some big event. That must mean including assets that are negatively correlated or uncorrelated in your portfolio. And I am very struck by the fact that over many many years, central banks, governments and individuals have always, despite the protestations of economists, held some gold in their portfolio. Obviously, there is no high running return, but when unexpected things happen, particularly when governments rise and fall, then gold is a means of payment that everyone is always prepared to accept. And I think that’s why even central banks have always had a role in their portfolios for gold.” – Mervyn King, former Governor, the Bank of England
Chart of the Day
Chart note: This chart shows how both the dollar and gold reacted to the start of the credit crisis from late 2007 to late 2008. The initial reaction for gold was a strong move to the upside. For the dollar, it was the opposite – a strong move to the downside. Then in early 2008 as the dollar strengthened, gold declined. But for both that slice of price history was more a beginning than an end. In the ensuing three years (not shown), as the depth of the crisis became apparent and central banks launched stimulus policies, gold kicked into overdrive rising from the $720 level to nearly $1900 per ounce. The US Dollar Index declined by about 18% over the same period.