Gold turns higher on inflation expectations, China property sector woes
Silver surges 3.9% higher in early trading

(USAGOLD – 10/19/2021) – Gold turned higher in overnight trading on rising inflation expectations and growing concerns about China’s property sector defaults. It is now up $20 in early U.S. trading at $1786.50. Silver us up 91¢ (+3.9%) at $24.19. “Low interest rates have created a tremendous leveraged bubble,” notes Equity Management Academy in a report recently posted at Seeking Alpha, “which we won’t know the extent of until it bursts. We are just seeing how over-leveraged China Evergrande was, and there are bound to be countless other firms that are equally over-leveraged. With money so cheap, it is extremely tempting to borrow money to invest, which leads to over-leveraging. … Gold and silver are real monetary assets and with them trading at fairly low levels, it is an excellent time to build a position in precious metals. As governments print more and more paper currency, the currency is devalued and it leads to inflation – which will make hard assets, such as gold and silver, worth far more than they are presently priced.”

Chart of the Day

Coal, natural gas, crude oil
(One year, % gain)

overlay line chart showing coal, oil, nat gas prices one year 10-21
Chart courtesy of TradingEconomics.com • • • Click to enlarge

Chart note: Concern is elevated that we might be in the middle of another energy crunch – a problem reflected in the price of coal, natural gas and oil, as shown in the chart. “Gas prices in Europe,” says Irina Slav in an article posted at the OilPrice.com website, “are breaking record after record. The U.K. is facing supply shortages reminiscent of the late 1970s winter of discontent. Chinese factories are shutting down because of power shortages, and the outlook is grim. In fact, it may be the first crisis of many.”

 

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