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 Replies: 11 / Views: 944 |
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Pillar of the Community
United States
3342 Posts |
Today the Fed announced that future reductions in interest rates were likely. No actual reduction, but the price of gold jumped $50 an ounce, or +2.5%. Without making this into a political discussion, it is rare for gold prices to make moves this large. It seems far in excess of the economic effect of a slight future interest rate reduction. Speculators? Just out of curiosity I looked at an APMEX purchase I made a year ago. Spot price was $1642, today $2047. 24% appreciation in ONE year. Metals aren't like this every year, but still.... "Two minutes ago I would have sold my chances for a tired dime." Fred Astaire
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Pillar of the Community
 United States
6449 Posts |
That could also be big players closing or opening options positions. Most of the things that happen in the markets don't really correspond to the financial newscasts. They try to make a coherent story out of chaos. A lot of times the market is overbought or oversold, and the daily moves are low volume noise. Maybe the price fluctuated 2.5%, but was that on strong volume?
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Pillar of the Community
 United States
3342 Posts |
It's the one year trend that bothers me. The 2023 loss in the dollar's value has been estimated by other methods at 10-15%, so maybe gold price inflation overstates it. But it makes a case for gold as a better store of value than the dollar.
On another blog, someone noted that gold outperfomed the market today. That is not a good sign.
"Two minutes ago I would have sold my chances for a tired dime." Fred Astaire
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Bedrock of the Community
Australia
21786 Posts |
Always check the compounded inflation rate over the time duration
against bullion metal prices for the same period
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Valued Member
Canada
96 Posts |
Since when was any fiat currency a store of value?
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Pillar of the Community
United States
3342 Posts |
sel, in the last year US interest rates have been close to 5% to control inflation. But that has not mitigated the rise in gold's price in dollars. I suspect the same rise in gold has been seen with most world currencies, but haven't checked.
"Two minutes ago I would have sold my chances for a tired dime." Fred Astaire
Edited by thq
12/14/2023 08:25 am
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Pillar of the Community
Canada
1759 Posts |
I agree with Brandmeister: Quote:
That could also be big players closing or opening options positions. Most of the things that happen in the markets don't really correspond to the financial newscasts The Big Boys out to play.  |
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Pillar of the Community
United States
2829 Posts |
You have to take into consideration.... for the last 10-14 days or so (leading up to this Fed decision) both the GLD & SLV had selloffs. The markets bullish anticipation to the Feds somewhat Dovish sentiment was going to be a buy signal & we're seeing that w/ all-time high in the DIA & SPY is getting close to the 480 range. A one-day gappers like this aren't common, if you go back to last March, you'll see a similar trading pattern. Also to note, in an interview yesterday, Barret Gold CEO mentioned (for what its worth) he sees a "2024" year end gold price target of $2,400.
Edited by coin rejector
12/14/2023 12:44 pm
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Bedrock of the Community
Australia
21786 Posts |
The price of gold and inflation rates will vary against each other over any given time period, for whatever reason.
It is up the the speculator (or gambler?) to determine if, and when to exchange gold for fiat money, or vice versa.
The comparison between the two can provide a helpful indicator to help make that decision.
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Pillar of the Community
United States
6449 Posts |
One thing to keep in mind is that cash is a commodity, too. It just so happens that the prices of other commodities are expressed relative to it. When the Fed and banking sector make large moves, the demand for cash can strengthen or weaken. If you see stocks and bonds move in the same direction, for example, that is an indicator that the commodity value of cash is fluctuating.
We saw this happen during the financial crisis of 2006-2008. The demand for cash to deleverage was so powerful that it dragged stocks, bonds, and other commodities into simultaneous price changes completely abnormal to their traditional functioning relationships.
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Pillar of the Community
United States
3342 Posts |
Here's an interesting analysis. The authors find gold price correlating best with M2, not CPI. They discuss countries where inflation is "pernicious" and gold is the favored hedge. The M2 correlation brings the Weimar Republic to mind. https://www.reuters.com/plus/beyond...lation-hedge"Two minutes ago I would have sold my chances for a tired dime." Fred Astaire
Edited by thq
12/15/2023 3:11 pm
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Bedrock of the Community
Australia
21786 Posts |
Interesting and mind absorbing information.
Chart 8 seems, to my way of thinking, to be most relevant to the discussion in this thread.
Unfortunately, it does not reveal research information beyond about 2019, - 4 years ago.
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Replies: 11 / Views: 944 |
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Posted 12/13/2023 11:42 pm
