Gold on the mend early, Mobius says physical the way to go

(USAGOLD – 9/9/2019) – Gold is on the mend this morning after once again finding support near the $1500 level.  It is now up $7.50 on the day at $1514.  Silver is level on the day at $18.20.  Both metals, which were on a tear through the usually slow summer months, corrected from highs at $1555 and $19.60 respectively. Thus far, though, speculators short the market and investors looking for a clear point of entry have embraced any weakness as a buying opportunity – particularly when gold trades near the $1500 mark. Four pressing concerns continue to drive demand for the metals in both paper and physical forms – recession fears, plunging interest rates, the U.S.-China trade war, and competitive currency devaluations.

Mark Mobius, the widely-followed market analyst, has been very vocal of late on the merits of gold ownership recommending that investors allocate 10% of their portfolios to the metal. “Physical gold is the way to go, in my view, because of the incredible increase in money supply,” he told CNBC’s “Street Signs” on Friday. “All the central banks are trying to get interest rates down, they are pumping money into the system. Then, you have all of the cryptocurrencies coming in, so nobody really knows how much currency is out there.”

Quote of the Day
“Bull markets can be classified as either secular (long term) or cyclical (bull phases within an overall bear market). Before its $1,400 per ounce breakout in June, gold appeared to be tracking, on a technical basis, similar to its 36-month cyclical bull market from 1993 to 1996. However, its current $1,500 price level hints at a potentially longer, sustained rally—perhaps more similar to the secular gold bull market of 2001 to 2008.” – Joe Foster, Van Eck Securities

Chart of the Day

Chart note: Historically, gold and the dollar have travelled in opposite directions.  Since this past July, though, as a consequence of the U.S.–China trade war, the two have risen in tandem as investors adjust their portfolios to a more defensive posture.  Gold, silver and bonds, likewise, have been beneficiaries of the trend. Gold is up 18.5% through August.  Silver is up 18.8% over the same period and the 10-year Treasury yield has gone from 2.66% to 1.5%.  The Dollar Index, a measure of the greenback’s value against a basket of currencies, has risen from 92 to 99 – up 7.6%.

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