AFTERNOON UPDATE

Gold gains ground ahead of Fed
Despite end of ‘easy money era’ gold ETFs post strongest stockpile gains since 2004 

(USAGOLD – 1/25/2022) – Gold gained ground ahead of Fed results scheduled for tomorrow – an unusual departure from the typical pre-Fed price action. A number of influences coalesced around the price, with Putin’s thumping the war drum, extreme stock market volatility, and general economic weakness topping the list. The yellow metal is up another $6 this morning at $1850 – an important psychological barrier for the metal. Silver is down 15¢ at $23.87.

Chart courtesy of Gold ChartsRUs.com

Bloomberg reports that funds and institutions are holding on to their gold despite “the end of the easy money era.” One Frankfurt-based fund manager is quoted as saying that he does not expect his gold position (8% of his fund) to change, adding somewhat cryptically, “We don’t see a dramatic change in the interest-rate environment.” We suspect that he is making a veiled reference to the deeply negative real rate of return on yield investments. Along these lines, Bloomberg also reports gold’s largest ETF logging the strongest stockpile growth since 2004. “Gold,” it says, “just got a very bullish sign from investors who are returning to the precious metal in a big way.”

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