My “Bewitched” twitchy nose is full on annoying me today.
Something is stirring with Gold and Silver.
Let’s just take a moment to quickly reflect the short term since just the start of the year.
The am gold fix on 4th January 2016 was £725 GBP.
The am gold fix today 29/04/2016 is £873.80.
That’s a simply remarkable 20% increase in 4 months.
Never mind what any of the naysayers have to say about precious metals, they should have a place in everyone’s portfolio. Sure the prices go up and down and our opinion is that the physical precious metals market is not just about an increasing value asset, it’s about more than that.
You insure the house, the car, your mobile phone and your health, so why would you not insure your financial well being?
This movement in price in such a short term cannot be underestimated.
If any other stock, share, commodity or currency was to respond in such a way, the airwaves would be all over it like the proverbial rash. If it wasn’t for Jim Rickards book launch this week, the only gold you would have heard about would have been Tony Hadley singing his old hit on Wednesday night at the Palladium! Couldn’t have put it better myself--
Always believe in your soul
You've got the power to know
Always believe in, that you are
Gold is Strong
You will have read today about Facebook rising and the 3% change in the Yen Dollar rate but simply nothing about PM’s. My twitchy nose is telling me something and that something is that gold is strong.
We must remember that gold is bought and sold internationally in USD and it is that price we should focus on just now. It tells us where gold is and makes no account of the USD GBP exchange rate .
This allows a fairer appreciation of the strength of feeling surrounding gold. Gold in USD over the same period is up 17% . On it’s own a big move.
More importantly, with the price now trading at $1,275, it appears to have it’s eyes fixed firmly on $1,300 USD a breakthrough point.
Now I’m no chartist or expert in Fibonacci curves (still trying to work out the Philips curve from A level Economics) but gold has tried and failed to fall below $1,200 USD for sometime now and as I look back at the previous few years, these crucial moves upwards through a 00 are always fraught with bounces around that figure.
As gold heads above $1,275 we will probably see some pull backs to below $1,250 and this can happen many times. It may then probably bounce very close to $1,300 and even slightly through it.
In will come the profit taking short term traders and down it may drop, and in the very short term even quite dramatically, a swing of $20-30 USD per day may not be unusual. But onwards and upwards it looks.
Why is it Moving?
Take your pick from a thousand reasons.
I find myself flitting daily between the most important reason for this movement in gold and this week’s number one is again the falling USD.
Better people than I are able to explain the relationship between the confidence in USD and the direct relationship with gold, but there certainly is such a relationship. It can occasionally come apart but this moment seems explicitly linked with the falling value of USD.
The Chinese RMB and the USD are Linked
A falling USD means a falling RMB and so the Chinese can sell more goods. If the Chinese can drive their economy forward then the rest of us can draw breath, apparently. Now the rumours are that a few “special” people got together in February and decided that no formal policy would be issued but that in conjunction with each other, the aforementioned depreciation in USD would be allowed to happen.
Not surprisingly gold has responded in the only way it can.
We will never know what happens behind closed doors and all we can do is watch what happens.
But perhaps we can protect ourselves that little bit further by dipping our toes into the Precious metals market again?
Let’s watch carefully.