European traders push gold higher on recession concerns, yield curve inversion
(USAGOLD – 8/14/2019) – Gold reversed yesterday’s downside drift to post a $14 gain in today’s early going. It is now solidly over the $1500 mark again at $1515. Silver likewise advanced with some conviction over the $17 mark. It is now trading at $17.25 – up 27¢ on the day. It looks like we are beginning to see some buying/short covering on the dips – a healthy sign for establishing $1500 and $17 as possible support levels.
In past DMRs we have made note of the changing dynamics in the daily (24 hour) pricing of gold. It used to be that European and Asian markets took their cue primarily from U.S. trading and generally fell in line. Now Asian and European traders are increasingly having a say in the daily price trend as demand ratchets up globally (something we covered in the latest issue of News & Views). Last night it was Europe leading the way on data showing a slowdown in Germany’s economy. Adding to building recession concerns, the yield curve on the ten and two year U.S. Treasuries inverted – a signal in the past that a recession might be imminent. (See chart below.)
“Is this time any different?” asks Sharps Pixley’s Lawrie Williams. “Maybe! Some strong pro-gold statements have been flowing from some of the most successful investors/hedge fund managers out there – notably Ray Dalio who heads up the biggest hedge fund of all in Bridgewater Associates, Paul Tudor Jones and Stan Druckenmeyer, all of whom rate among the world’s top fund managers and have strong followings. They have all recently spoken extremely positively about gold investment. Anecdotally, George Soros who also has a major investor following, has made a very substantial investment in the yellow metal as well.” Soros is a new addition to the list of billionaires who have gravitated towards gold over the past several months.
Quote of the Day
“And there’s an obvious reason for China to buy gold. It wants to break up the global hegemony of the U.S. dollar — the hegemony that former French President Charles de Gaulle called America’s ‘exorbitant privilege.’ It wants to make its own currency, the renminbi, a world player. And [Odey Asset Management’s Crispin] Odey argues that buying gold bullion is a natural move. Gold reserves should add to world confidence in the Chinese currency.” – Brett Arends, MarketWatch
Chart of the Day
Chart note: “Now, clear your eyes and look again,” says Elliot Wave analyst Avi Gilburt. “Can it be possible? Can you believe your lying eyes? Yes, my friends. Both gold and the dollar have been in an uptrend since the fall of 2018 despite all the noise you hear that this is simply not possible. But, how dare you think for yourself and ignore what everyone ‘knows’ is true about the metals complex? Yet, if you read almost any metals article, they will tell you the exact opposite of what your lying eyes are telling you.” Gilburt raises an interesting point. Take this analysis one step further and ask yourself what the algo-writers might be doing this moment as they digest the reality “of what your lying eyes are telling you.” Time to rewrite the programs, it would seem. . . . . .