Or is the dollar at a new low?
Gold has just eclipsed its late October high of $2,790.11.
Some commentators have chalked this up to looming tariffs … supposedly buyers are rushing to buy ahead of potential levies on gold imports. I’m skeptical for multiple reasons. One, that gold just notched its best year in decades with no help from tariffs. Two, it assumes that US buying is the driver … the assumption that the US is buying more than it’s selling isn’t examined. Three, even those who advance this hypothesis cite the likelihood of tariffs on gold as low, given its reserve status.
Seems more likely that tariffs are just an easy all purpose explanation for everything since they’re the trendy headline topic.
Meanwhile we still have a Fed that stopped tightening policy a year and a half ago and whose latest actions have been easing and is still threatening more of the same. This is bearish for the US dollar. As I have been saying since the days of iTulip, the price of something involves not one, but two, commodities; the one being priced and the one being used as the pricing unit.
The upshot of it is that gold need do nothing for its price to rise if the pricing unit falls. So until and unless the drivers of the dollar change, the trend of the gold price has at least one of the two factors in its favor.
This view is buttressed by the price action in other assets. Stocks, bonds, copper, silver, platinum, and oil are all higher today, suggesting a common prime mover.
The common pricing unit chosen is the obvious culprit.
Trumps “Honeymoon” is coming to an end……..
He going to be shocked by how little power he have this time around……….
Come on gold, lets have $3,000………..Silver, am looking at you (Move your ass!)
mike
Trump is off to a better start than last time around but teeters on squandering his advantage. Sometimes he’s his own worst enemy. Excellent job on the border, an issue that made a big difference in his electoral success. But getting involved with the likes of TikTok and Softbank? And threatening to use the federal government to boost crypto? Now the media is having a field day with some comments he made about DEI and the air crash. A political tin ear.
He’s doing himself no favors getting into a tussle with Powell either. Public hectoring for lower rates could backfire by making the Fed want to be firmer just to demonstrate its independence. A firmer Fed may be the better outcome, but that’s not what he wants.
Not taking sides on that one. They’re both wrong. Powell’s not giving us much reason to support Fed independence, and no one person or committee should be manipulating interest rates anyway.
From a technical perspective the new record clears the way for your $3000 gold. No meaningful resistance between here and there.
https://x.com/Megatron_ron/status/1884994090762162178?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
The Winds of change are blowing once again, NATO failed
I have read reports that a lot of gold is being withdrawn from Britain and being shipped to the U.S. as a precautionary measure against possible Trump tariffs. I’m not sure why Trump would put a tariff on gold bullion.
“The wait to withdraw bullion stored in the Bank of England’s vaults has risen to between four and eight weeks compared with the typical few days.”
https://www.ft.com/content/86a5fafd-603e-4ee1-9620-39b5f4465f53
So this could be a temporary locale-based supply-demand mismatch that’ll clear up in less than one year.
I am sorely tempted to speculate and hedge my gold positions. 🙂
Thanks Milton. I’ve been hearing the tariff rationale too … just what I was referring to in the post. But for the reasons also cited, am not persuaded that’s the real driver of this surge in gold prices. Unless they’re also planning to tariff foreign stocks, which are actually up more than gold is as I type:
IAU +1.32%
VXUS +1.45%
It’s the standard media playbook. It likes to tie every market development to whatever happens to be in the headlines.
Tariff talk did apparently spark a plunge in stocks between about 3:35-3:45 this afternoon. This on some Trump comments reinvigorating the 25% Canada & Mexico proposal. But stocks then recovered the rest of the session.
Some back ground……
JPM forced themselves in “Partnership” with HSBC ref GLD.
The Deal was JPM would hold 50% & HSBC the other 50%……………
Last time i looked JPM had 85% of it (held in London), now its getting shipped off to NY.
HSBC said they be leaving UK/Europe to focus on China/Asia……
Mike
Thanks Mike. Just to make sure I’ve got this straight, that would be moving asset from one place of storage to another, as opposed to a sales transaction?
Be honest am not sure, but JPM built a MEGA Gold stock. I think they hold more than most European nations (More than Holland for example).
Mike
Thanks again … I thought you were saying these were GLD holdings in custody of JPM & HSBC.
At last check, gold was trading at $2794.04 … the $2800 mark inches away. We should probably get that under our belts before getting antsy about $3000;-)
GLD update:- Custodian JPM has added another 6 tons bring their total to 796 tons or 91% of the Gold in the ETF.
Mike
Gold holding just above $2800 for the moment. This leaves it up 7% on the year so far.