Gold Chases Last Week’s Highs of $1,300
Last week gold hit $1,300 for the first time in 2017. Although it eased back slightly this week, still gold chases last week’s highs. Gold opened the week at $1,289 and closed at $1,290. Mid-week it climbed over the $1,290 mark to nearly reach $1,300 again.
Political uncertainty and a weak dollar index drove gold up this week. Janet Yellen and other world central bank leaders held their annual Jackson Hole, Wyoming summit that analysts and investors watched for signs on where monetary policy is heading next. The central bank chiefs were mostly defensive of their regulatory policy. Treasuries rose along with stocks, but gold did not show any significant pull back other than in the lead up to the summit.
What this means for investors: Uncertainty is becoming an even more prominent feature of these markets. There doesn’t seem to be much that could cause a drastic gold pull back now. Although gold is still wavering at solid support at the important $,1300 mark, the bull market appears established. There is uncertainty around tax reform, health care, foreign tension, and conflict that will continue to drive it. Additionally, the long term trends of low rates and stagnant growth are eventually going to catch up.
Silver also has rallied with gold. It has been staying just over the $17 mark this week. It is a great option for diversification as well.
German Central Bank Finishes Gold Repatriation
Germany’s central bank has been repatriating its gold from New York, Paris, and London since 2013, and it has retrieved its gold reserves three years ahead of schedule. During the Cold War, West Germany moved its gold reserves out of the country in fear of a possible Soviet take over. It moved well over 300 metric tons of gold to each of the respective cities.
In 2013 Germany began auditing its foreign held gold and the process for repatriating it back to Frankfurt. Germany was one of several countries that were prompted by the financial crisis to shore up security by repatriating physical gold holdings. The EU powerhouse completed its repatriation efforts ahead of schedule, despite some worries that its New York holdings may have been dipped into.
What this means for investors: Germany – and nearly every other central bank and government – clearly consider gold a safeguard for financial security. In fact, there was concern that the U.S. had used some of the reserves in New York when they asked for an extension of the timetable to return it. It seems it was all accounted for though. Germany’s desire to have its physical wealth secured within its borders though speaks to the long-held value that gold has and will always have. Gold hoarding by central banks has been dramatically rising lately.
[WATCH] Ron Paul: “50% Stock Market Plunge Is Conceivable”
The former presidential candidate thinks it’s conceivable, but not necessarily the fault of President Trump.
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What this means for investors: The former Congressman’s warning is based less on the recent political turmoil and uncertainty around the President and more on dangerous long-term trends and policies. Most investors are agreeing that the S&P is overvalued , and gold could be on track to outperform the stock market for the first time since 2011. Don’t let gold’s recent climb stop you from buying now. If Paul’s (and other analysts) projections are right, gold will have a long way to run. The amount of volatility and uncertainty right now are prime conditions for gold, and these deeper market trends will catch up.
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