Good morning!
I suspect this has to do with the yen intervention.
Propping up a currency without fixing the fundamental problems usually just means trashing others. Making something shrinking look like it’s holding up by shrinking the rulers right along with it.
Gold doesn’t shrink so easy.
+ Iran?
Some. The thing is we’ve seen similar Iran news several times, and while it does usually pop gold a little, what we’re seeing today is much bigger. I think the Fed dragging its feet on rate hikes two meetings in a row, especially after all the tough talk, is also kicking in some. But the size and timing of this jump in gold, along with the mechanical link between currency shenanigans and currency values is a smoking gun with the yen intervention behind the crosshairs.
Keep in mind the context … all currencies go down. Inflation. If one goes up, the issuer inflates it down to “stay competitive”. If it goes down, the other issuers inflate theirs down to stay competitive. Over time, gold retains its value, while currency depreciates so it takes more of it to buy the same gold. Also the same stocks, houses, groceries …
The gold rally has also broken new technical ground, suggesting there’s more ahead. Not necessarily immediately – sharp moves have a way of being at least partially reversed, and we still need to keep an eye on the Fed – but it’s broadly bullish for the coming months.
⚡️BREAKING: The Iranian Negotiation Team told Fars News that the Hormuz Deal with Oman doesn’t mean the Strait will be Opened
“The Reopening of the Strait of Hormuz will require separate Arrangements that also include the fulfillment of US Commitments, like lifting the Naval Blockade, Iran’s Frozen Funds, and Energy Sanctions”
Hmmm … doesn’t seem to have held gold back, but stocks took a header in today’s session …
Copper and silver up hard too … platinum not so much after yesterday’s moonshot ….
Gold Surges as the Debt Reckoning Begins
The Daily Reckoning’s Adam Sharp fills in some interesting detail on my big picture view:
“It was a good day for gold bugs…
If you read mainstream financial outlets, they’ll tell you precious metals are jumping due to the prospect of peace with Iran, which should keep interest rates lower.
Pffffft.
This move is more about debt, the dollar, Japan, and fallout from the Iran war.
Let’s start with what’s happening in Japan…”
…………….& yet where are the Gas lines?
Not very “Jimmy Carter” as yet
Mike
The main ingredients for gas lines aren’t there (yet). Shortages happen only when prices aren’t allowed to match demand with supply. At various times the 1970s featured price controls, subsidies and rationing regimes like five gallon maximums. odd-even rationing, and other forms of government interference. At the end of the day, people can’t buy more stuff than can be sold. In a free market, price limits consumption to production. Attempts to overrule the market by force may result in lower prices, but some other mechanism must materialize to take their place to limit access.
It’s broadly similar with socialized medicine. You can make it more affordable, but either supply must increase or demand be limited by other means such as long waiting times, bureaucracy restricting access, etc.
Barron’s just ran a headline claiming “the Fed’s next rate move might actually be a cut”.
If it is, back up the truck!
Gold going up BABY!
Echoes of last year. It was right around mid August that gold jumped on the escalator.
We are entering a generally favorable seasonality pattern. Mike’s Money Talks has a good summary and chart. Synthetic Systems by the way does take seasonality into account (see the fuller list here), so if you’re looking at its forecasts, don’t double count it by adding it in again.
Today gold’s getting a bit of a kick from what the market interprets as a weak jobs report and a marginally easier Fed ahead. So we’re getting a weaker dollar and more inflation.
This “weak jobs report” stuff by the way is a load of media hooey. Due to a decline in immigration, it takes fewer jobs to be at full employment. Yet Wall Street media continue to look at the absolute raw numbers in the context of yesteryear’s high immigration norms, when it took a couple hundred thousand new jobs monthly just to keep up with population growth. Maybe it’s because they like anything that bolsters their pleas for more inflation. The headline jobs number they fixate on doesn’t account for population trends. The far more meaningful unemployment rate, which does, actually fell this month, indicating that the supply of jobs was more than enough to meet demand.
The jobs market didn’t weaken; it tightened.
It remains to be seen whether the Fed is fooled by this.
But nobody’s fooling gold.