Gold digests yesterday’s strong gains – up 1.65% on week. Silver up 3.6% on week.

(USAGOLD – 5/8/2020) –  Gold appeared to be digesting yesterday’s strong gains rather than reacting strongly to the 20.5 million job loss reported this morning by the Labor Department. It is down $4 this morning at $1722 after yesterday’s more than $30 gain. Silver is up 2¢ at $15.47. Overall, hopes for a quick economic recovery have increasingly given way to a gloomier longer-term outlook over the course of the week and encouraged safe-haven buying of precious metals. On the week, gold is up $28 – a 1.65% gain.  Silver was the better performer this week is up 54¢ for a 3.6% gain.

Gold is increasingly receiving mainstream attention as a portfolio alternative in the face of low-yielding bonds and rapidly changing monetary and geopolitical conditions. Reuters ran a comprehensive opinion piece this morning under the headline “New normal will demand new gold-standard portfolio” in which it asserts the solution might be to increase portfolio allocations in stocks and to add gold. “Gold,” it says, “either in its physical form or via exchange-traded funds, is another option. The yellow metal is a hedge against both deflation and inflation, ideal when it’s unclear whether cratering economies will depress prices or central bank money printing will push them up.”  In recent months, as the worst effects of the coronavirus crisis resulted in the options Reuters’ describes, gold has been a stellar performer – up 12.5%.  Stocks are down 16.3% over the same period.  (Please see our Chart of the Day.) The ten-year Treasury yield has hovered around .65%.

Chart of the Day

overlay chart showing the performances of gold and stocks year to date 2020

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