Gold Prices Rise and Stocks Fall with Increased Concern Over Global Economy
Gold and Silver Prices Strong This Week, Stocks Vulnerable
Gold and silver prices continued rise this week following its strong close the previous Friday. Ominous signs about the stability of the U.S. economy started to become apparent after a much weaker than expected jobs data report last week. A few days prior, Janet Yellen, chair of the Federal Reserve, had called for raising interest rates saying the economy was strong enough to handle it. The jobs data though said otherwise, probably taking the rise off the table for now.
What this means for investors: The strength of the U.S. dollar appears to be ebbing. Increasing volatility in the stock market will be favorable to gold prices and drive investors toward safe haven investing. Both gold and silver continue to perform well this year with silver seeing a slightly greater percentage increase.
Influential Investors Saying Now Is the Time to Hoard Gold
Hedge fund managers and banking analysts are moving funds into gold in greater numbers. Just a couple of these recently have been George Soros, who has been buying up gold, and Stanley Druckenmiller, who told investors to get out of stocks altogether and into gold. Adding to the gold advocates this week were chief commodities analyst at HSBC Jim Steel, who believes there is sufficient geopolitical and economic instability to keep gold prices rising, and DoubleLine Capital CEO Jeff Gundlach who thinks gold could go to $1400.
Veteran industry trader Jim Bouroudijan believes the recent movements in the gold market are a red flag of an upcoming market adjustment that will favor gold.
What this means for investors: Some top investors and investment advisors are foreseeing much global economic instability, and protecting their wealth against it with gold. With a recent price dip a couple weeks ago, now is a prime buying opportunity. Gold is up almost 20% this year
Is the EU on the Brink of Collapse?
The “Brexit” (British exit from the European Union) referendum coming up on the 23rd continues to play as a dark horse in the markets. Polls saw a rise in the past couple days in support of the “Leave” campaign. If Britain does choose to leave, the EU’s disintegration could ensue. If it doesn’t, the Union’s seams are under severe stress regardless. The biggest specters of doom hanging over the EU are the Greek debt crisis and the inability among member states to agree on a solution the refugee crisis. The past several years have seen a rapid rise in “Euro-skepticism” and dissatisfaction with what many see as a supranational organization that is chiseling away at member nations’ sovereignty.
What this means for investors: If the “Brexit” does happen, the pound and euro will plunge. If the EU collapses, this effect will be even more severe. Those who have not already safeguarded against currency collapses with safe haven investing like gold will certainly flock to it then as prices soar.
What Other Macroeconomic Forces Are Driving Gold?
The “Brexit” vote and the question of whether the Federal Reserve will raise interest rates are the influencers in the forefront right now for most investors. Another significant concern is the potential collapse of China’s economy. The second largest economy in the world, it has seen sluggish growth this year marked by a depletion of foreign currency reserves and flight of capital. In addition, Chinese political leadership is experiencing internal strife, which will make it more difficult to recover from their economic issues.
There has also been a growing lack of confidence in central banks around the world, which historically has been favorable for gold and is continuing to hold true. Government bond yields fell around the globe this week in Europe, Asia, Australia, and Europe.
What this means for investors: The falling bond yields are indicative of increasing levels of trepidation among investors and traders about central banks’ monetary policy and its ability to push their economies out of slow economic growth. Currently, the strongest macroeconomic and geopolitical trends favor a continuation of this year’s rise in gold prices.
Here are some articles from the web discussing the topics in this week’s post:
Gold and Silver Prices Strong This Week, Stocks Vulnerable
Read Here
Influential Investors Saying Now Is the Time to Hoard Gold
Read Here
Is the EU on the Brink of Collapse?
Read Here
What Other Macroeconomic Forces Are Driving Gold?
Read Here
As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at 602-955-6500 or toll-free at 877-354-4040.
