Gold edges higher after yesterday’s abrupt fall
Some thoughts on what it might take to shake gold out of its lethargy

(USAGOLD – 9/8/2021) – Gold edged higher this morning after yesterday’s abrupt fall below the $1800 mark. It is up $7 at $1802. Silver is up 5¢ at $24.43. The yellow metal has seesawed around the $1800 mark since mid-August raising questions about what it might take to shake it out of its lethargy. Analyst Brien Lundin offered some interesting thoughts in that regard in the most recent issue of Gold Newsletter. “In 2015,” he writes, “it took an actual Fed rate hike to get the paper gold traders to move on from their short positions. Today, I think the simple announcement of a QE taper timeline may be enough. That’s because there’s some doubt that the markets will allow the Fed to progress very far along with tapering, much less ever begin to tighten. The markets’ addition to ever-easier money is one of the primary roadblocks to tightening, while the massive and growing Federal debt load, with its associated servicing costs, is the other.”

Chart of the Day

Gold real rate of return

bar chart showing gold real rate of return 2000-21

Sources: St. Louis Federal Reserve [FRED], Bureau of Labor Statistics, ICE Benchmark Administration

Chart note: Gold’s real rate of return is the difference between the gold bars representing the appreciation or depreciation in the gold and adjacent black bars representing the year-over-year percent change in the consumer price index. As you can see, gold has logged a real return in thirteen of the last twenty years. In some years, that return has been significant and speaks to gold’s value as a long-term savings instrument.

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