Gold drops sharply below the $1800 mark on better than expected payrolls report
Revisiting a bit of wisdom and perspective from Electrum Group’s Thomas Kaplan

(USAGOLD – 8/6/2021) – Gold dropped sharply below the $1800 mark as a better than expected non-farm payrolls report boosted the dollar, tanked the bond market, and touched off a selling wave in the paper gold markets. It is down $26 at $1779.50. Silver is down 49¢ at $24.73. Given this morning’s steep selloff, we thought revisiting a few words of wisdom from Electrum Group’s Thomas Kaplan might offer some perspective. “Let’s put it this way,” he said in an interview at Stansberry Research about a year ago, “gold still remains on Wall Street and in the west probably the most under-owned, least crowded trade in the global financial markets. … The era in which gold was the asset which people loved to hate and hated to love is starting to come to an end. We’re still in the very early innings. It’s still a smart money trade as opposed to a big passive money trade but that’s about to happen.”

“The difference is this,” he continued. “The market is now ready for the next leg of the gold bull market. The first leg was the one that took us up 12 consecutive years in a row (Please see the chart below, i.e., 2001-2012) regardless of whether there were inflation fears, deflation fears, whether there was a glut of oil or a shortage of oil, political stability or political instability, dollar weakness, dollar strength. It didn’t matter. Every year for 12 years gold went up. The next move is going to be a third wave, a long wave that lasts for a decade or fifteen years, maybe more … I think that you really are looking at a complete paradigm shift that will make gold the generational trade.”

Chart of the Day

Gold Annual Returns

(2000 – 2020)

bar chart showing gold's annual percentage increase 2000-2020

Sources: St. Louis Federal Reserve, ICE Benchmark Administration Limited (IBA) • • • Click to enlarge

Chart note: Year to date, gold is down about 7%, but we still have more than four months to go. The seasonal charts tell us that precious metals have a history of rallying during the final one-third of the year.

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