Gold, silver traders and speculators buy the dip

(USAGOLD – 8/20/2019) – Traders and speculators bought the dip overnight sending both gold and silver higher in overseas markets. That momentum carried over to the open in New York where the yellow metal is now trading at $1504 – up $8 on the day.  Silver is up 14¢ at $17.03.  Both metals seem to be gathering support at key levels, i.e., the $1500 and $17 marks respectively.  Four pressing concerns are driving demand for the metals in both paper and physical forms at the present – recession fears, plunging interest rates, the U.S.-China trade war, and competitive currency devaluations.

“What comes next?” asks Financial Times’ Rana Foroohar in a recent opinion piece. “The answer, I believe, is very likely to be a synchronised global recession, punctuated by a step-by-step market downturn — one in which there may be the odd rally, but the general direction is down. This could last for some years. In the next few weeks, I would expect new lows in bond yields, a deepening of the yield curve inversion, higher prices for ‘safety’ assets like the yen and swiss franc, and a continued bull market in gold.”

Quote of the Day
“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” – Ernest Hemingway

Chart of the Day

Line chart of declining Argentina peso versus dollarChart courtesy of

Chart note: Sudden devaluations can wreak havoc on economies and financial markets.  Financial Times reports that, because of the recent plunge in the Argentina peso last Monday, prices on Volkswagons would rise 15% by the following Friday. An Argentinian who owns a bakery in Buenos Aires is quoted as saying: “We may be used to these blows, but we are never ready for them.”

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