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7 Week High for Gold This Week after Disappointing U.S. Economic Data

06 Aug
gold bars for diversification

7 Week High for Gold This Week after Disappointing U.S. Economic Data

Gold Market Discussion

7 Week High for Gold This Week

Gold on Nugget GrainsWe had a 7 week high for gold this week. Although Friday saw some pull back on profit taking, it was still a good week for gold. Gold finished out the week just short of $1,260, but climbed as high as $1,270 mid-week.

It was not such a good week for U.S. economic data, however. Inflation is lukewarm, consumer spending is down, and there is a question of if and when the Fed will raise interest rates after all. The dollar continued its downward trend and hit a 2 and a half year low against the euro. Political fallout also weighed on the markets and boosted gold.

What this means for investors: The growing uncertainty is pushing investors towards gold. Analysts at MUFG in London noted that for the first time at a monthly close, gold broke above a downward trend that prevailed since the high of 2011. This is a bullish sign for metals. Buy now before prices start moving up. Watch for when prices dip like they did Friday. Regardless though, with trends pointing towards a gold bull run and uncertainty, it’s the right time to think about protecting your portfolio.

Gold Has So Far Outperformed Stock Market This Century

gamble on stock marketGold had its second best month in 2017 so far in July. It finished the month up 2%. The only higher finish was in February where it was up 3.7% for the month. The dollar, on the other hand, his year lows and is down 10%. Overall, gold has significantly beaten the S&P this century, and with weak economic data casting a cloud on the economy going forward, it will likely continue this run.

What this means for investors: With the record highs that the stock markets have been hitting recently, this is not a feat to be underestimated. Furthermore, gold is trading above its 50 and 200 day moving averages right now, which investors typically see as bullish for metals. With warning signs in the stock and bond markets, this is another reason to start hedging with gold and silver.

Alan Greenspan’s Warning on the Bond Market

Check out what former Fed chairman Alan Greenspan had to say about what he says is the real threat is – the bond market.

Alan Greenspan: Interest rates on government bonds have never been lower from CNBC.

What this means for investors: Many analysts have been warning of a stock bubble and moving out, even as the markets continue to hit all time highs. Greenspan’s warning is that there is an even deeper problem that will trigger the stock market crash and incur stagflation not seen since the 1970s. During these kind of market events, gold becomes the safe haven investment of choice.

Venezuelan Currency Less Valuable Than Online Game Currency

World of Warcraft gold
This “gold” from popular online video game “World of Warcraft” is now worth more than “real” money in Venezuela.

Venezuela, despite its ample supply of oil and other natural resources, has one of the most mismanaged economies and corrupt governments. The country has been rife with tension ,violence, and food and medicine scarcity lately as opposition forces clash with the Socialist government of President Maduro. Long-simmering tensions reached a breaking point when the Supreme Court took over powers of the opposition-held National Assembly. Amidst the turmoil, the Venezuelan bolivar is now worth less than a piece of gold in the computer game World of Warcraft.

What this means for investors: According to the IMF, Venezuela will see 720% inflation this year. Venezuela is a perfect – albeit, extreme – example of how fiat currencies can be devastated by corrupt governments. A gold backed currency probably wouldn’t have saved the Venezuelan bolivar in this case, but gold backed currencies offer at least some security that fiat currencies don’t. Venezuelans are now buying their goods on the black market for the most part – the black market where World of Warcraft currency is more valuable than theirs.

 

 

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 Here are some articles from the web discussing the topics in this week’s post:

7 Week High for Gold This Week

Read Here

Gold Outperforms Stock Market This Century

Read Here

Alan Greenspan’s Warning on the Bond Market

Watch Here

Venezuelan Currency Less Valuable Than Online Game Currency

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.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

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