Gold attempts another breach of the $1500 mark – up $5 in today’s early going
(USAGOLD – 8/12/2019) – Following a quiet weekend on the news front, gold began the week with another attempt to breach the $1500 mark. It is up $5 in early trading at $1502. Silver is down 1¢ at $16.96. Four principal concerns continue to drive interest in gold – the threat of recession, plummeting yields, currency depreciation, and stock market instability. Goldman Sachs is the latest top-level investment bank to issue a warning about an impending recession saying that it “no longer expects a trade deal between the world’s two largest economies before the 2020 U.S. presidential election.”
The breakdown in talks leaves plenty of time for a potentially debilitating currency war to develop as an offspring of the trade war. “If a country enters a currency war it disproportionately hurts its own citizens,” says economist Daniel Lacalle. “If China and the US do it, it will likely lead to a severe global crisis. A currency war is not about who wins, but who loses the most. And if countries embark on an assault on their citizens’ wealth via devaluation the message to the world is only one: buy a reserve of value assets and hide.”
Quote of the Day
“If gold reassumes a central role in worldwide financial markets as a result of a multilateral consensus negotiated amongst the greatest powers – this could happen in the aftermath of a new major financial crisis of international proportions – some players would evidently be better positioned than others. In this scenario, perhaps the golden rule would apply. In other words, the players that control the largest gold holdings would have the chance to define the essential rules in the structural rearrangement of global financial governance.” – Jose Miguel Alonso-Trabanco, Eurasia Review
Chart of the Day
Chart note: The past year has been a good one for gold. On August 9, 2018, it traded at $1214.40. It closed Friday at $1497.70 for a gain of 23.3% over the past twelve months. Gold ranked third among investments tracked at BarChart for the past year behind palladium and bitcoin.