Gold biding its time ahead of trade talks

(USAGOLD – 10/9/2019) – Gold is biding its time in advance of the U.S.-China trade talks scheduled to begin tomorrow.  It is trading $1506 – down $3 on the day.  Silver is up 2¢ at $17.81.  The World Gold Council posted a report yesterday that showed strong global gains in ETF stockpiles – a further indication of fund and institutional interest in the metal.

In the news, Bloomberg reports that gold ETFs have registered inventory gains for 17 straight days, “the longest run of inflows since 2009.” Much of that flow has to do with the on-going trade war between the United States and China, but recession concerns and Brexit have also moved near the top of the worry list for many investors. In a MarketWatch article this morning FXTM’s Han Tan summed up gold’s prospects. “A wider scope in this protracted conflict would only heighten the barriers to a meaningful reconciliation between the world’s two economic powerhouses, while prolonging its drag on the global growth outlook. Risk aversion shall continue being the de facto mode for global investors, which should bode well for safe haven assets, keeping gold above $1,500.”

Quote of the Day
“I think these are unlikely to be good real returning investments and that those that will most likely do best will be those that do well when the value of money is being depreciated and domestic and international conflicts are significant, such as gold. Additionally, for reasons I will explain in the near future, most investors are underweighted in such assets, meaning that if they just wanted to have a better balanced portfolio to reduce risk, they would have more of this sort of asset. For this reason, I believe that it would be both risk-reducing and return-enhancing to consider adding gold to one’s portfolio.” – Ray Dalio, Bridgewater Associates [Paradigm Shifts]

Chart of the Day

Chart note: Since the turn of the new century, gold consistently provided a real rate of return on investment when measured against inflation. In fact, it provided a real rate of return in twelve of the nineteen years represented on the chart. The period was one of subdued inflation. Gold’s performance, as a result, took many analysts and professional money managers by surprise and altered the perception that the precious metal is solely an inflation hedge.

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