Gold climbs higher for the sixth straight day
Swiss-based MKS Financial sees ‘perfect storm’ for gold, ‘even perfect hurricane’

(USAGOLD โ€“ 7/7/21) โ€“ Gold continued its climb higher this morning as bond yields declined, the dollar weakened, and safe-havens attracted renewed investor interest. It is now up for the sixth straight trading session at $1810 (+$11.50) after hitting a low of $1753 in late June. Silver is up 26ยข at $26.46. Gold has fallen into an odd pattern of late โ€“ rising, sometimes sharply, in overnight markets and selling off during U.S. trading hours. Though much of the commentary on the metal has taken on a bearish tone of late, there are still pockets of bullishness. Calling its forecast “conservative,” MKS Financial, the Swiss-based financial advisory, sees gold regaining the $2000 mark over the coming twelve months and $1850 as the average price.

“As paper money loses value and markets remain volatile,” it writes in a report released yesterday, “gold shall face a significant influx of buying interest, and play its role as a safe haven and capital preservation asset. We expect a few very volatile trading sessions ahead of us. It is a perfect storm for gold or even a perfect hurricane! Some temporary downside correction is possible once a Covid-19 vaccination is safely and widely released on the market. But we expect that it will take several years for the global economy to get back on track and gold is set to continue its bull run beyond June 2021.”

Chart of the Day

bar chart showing level of margin accounts at stock brokerages

Sources: St. Louis Federal Reserve, Board of Governors of the Federal Reserve System

Chart note: This chart shows the dangerous and astronomical growth in margin debt on account at stock brokerages and dealers. This is one blow-out number that cannot be directly blamed on pandemic distortions. Rapid growth in stock market margin debt are generally associated with overbought conditions and subsequent severe corrections. In percentage terms, the year-over-year growth rate for the first quarter of 2021 (almost 70%) is the largest since 2000.

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