Gold tracks lower in quiet seasonal trade, Hendry sees ‘the dawn of chaos’
(USAGOLD – 6/30/2020) – Gold tracked lower in quiet seasonal trading this morning despite a warning from Fed chairman Powell that “the path forward for the economy is extraordinarily uncertain” and a Bureau of Labor Statistics report showing that nearly half of the U.S. population is out of a job. The yellow metal is down $3 on the day at $1771. Silver is up 1¢ at $17.93.
Former hedge fund manager Hugh Hendry (who says he is “long gold”) is out with an elaborate and somewhat unconventional analysis of the present economic situation. “… [W]ith overseas nations printing central-bank reserves to buy dollar assets,” he warns in The Dawn of Chaos, “and with banks and credit markets now uncomfortable with owning Treasuries, and what with a podcast star running the Fed, I can see US stock and gold prices rising considerably higher and volatility exploding to the upside … I can see the dawn of CHAOS, people, and it’s going to change the course of history once and for all!” [Emphasis added.] Hendry believes a massive devaluation of the dollar is required saying “[i]f The Fed doesn’t change then the world’s going to snap.”
Chart of the Day
Chart note: As you can see, gold and the dollar index moved higher in tandem from late 2019. Since the dollar’s mid-March peak, they have moved in opposite directions with the dollar going lower and gold higher indicating that the long-established inverse correlation might be coming back into play.