Gold Knocks Six Times on the Ceiling

-edited

Gold put in a strong performance today with the St. Louis Fed president presenting a case for cutting rates.

St. Louis Fed president James Bullard helped light a fire under gold today, Yapping About Too Little Inflation and the Need for Rate Cuts.

Technically speaking, the $1350 to $1370 area has been one tough nut for gold to crack.

On a weekly chart, gold has failed in this area five or six times, depending on how one counts.

Gold a Hedge, But Against What?

Some view gold as an inflation hedge.

It isn't.

Gold is a hedge against the notion that the Fed has things under control.

Gold fell from $850 an ounce in 1980 to $262 an ounce in in 1999 with inflation every step of the way.

People believed Greenspan, the great "maestro" had everything under control. It was an illusion.

Faith in central banks is about to be tested again.

Mike "Mish" Shedlock

Comments (22)
No. 1-13
Seb
Seb

For god sakes why not own both gold and crypto. This is why I’m agnostic against specific markets. You would have missed the move from 200$ to 8000$ in the same time. Wouldn’t have even needed to take a HUGE risk for outsized gains. And then you cash out at a point you feel comfortable with. All the while holding physical gold as well!

cienfuegos
cienfuegos

Absolutely agree...own both.

shamrock
shamrock

It's not exactly knocking at $1350 again. If it does, sell and take the money.

shamrock
shamrock

The other funny thing, Gold has returned about 50% since 1980. The s&p with dividends reinvested is up 6,850% in that time frame. Sorry losers.

HubbaBuba
HubbaBuba

No matter what whom ever says [and even though as a stock analyst I did NOT really enamor gold it's hot button driver is getting towards negative real interest rates. Sure, it's a conjectural debate on Central Banks, but nothing stokes it's fire like no holding costs [on the horizon - like now]. And may I recommend silver for those late to the party. It's ratio Vs gold is off the long term charts down - and can uncoil strongly in some catchup.

Greggg
Greggg

Time to buy more lead?

RobinBanks
RobinBanks

The trouble is if the price goes up too much then Vladimir might reduce his purchases of physical.Still, he's managed 2000 tonnes. Nice if he made it to 5000 tonnes before the SHTF.

Jackula
Jackula

Yep, people are having trouble understanding why when the economy is so great why are we taking about lowering interest rates when they are at historical lows for where we are in the business cycle.

Snow_Dog
Snow_Dog

“Gold is a hedge against the notion that the Fed has things under control.”

And a hedge against the notion that the State of Illinois has everything under control is?

Voila! Expanded gambling!

OT, but I just couldn’t resist. They worked on a Saturday to pass it, and just to put a cherry on top, included a casino in Shedlock’s hometown.

KidHorn
KidHorn

I think there are 2 reasons to buy gold. One is you like to wear it. The other is you don't have faith in your currency holding value.

Gold is made in Supernova's and every time we tried to make it in a lab, it ended up radioactive at an enormous energy cost. There's probably a lot of gold at the center of the earth, but seeing as how we can barely drill though the earths crust, we won't be accessing it any time soon. The supply is pretty much fixed.

Bam_Man
Bam_Man

We are going to go back on some sort of International Gold Standard in the NEAR future. Today's fiat currencies are being printed to oblivion, many bear negative interest rates and most will soon be given away to the masses via MMT/UBI. They will soon be completely unfit for international trade settlement - if they are not already. It will be a two-tiered system similar to pre-1971. However, gold-backed trade means BALANCED trade. What do you think Trump is right in the middle of doing now? Re-balancing our trading relationships. By the time he is finished, interest rates everywhere will probably be negative and what used to pass for "money" will be given out to the masses like pieces of penny candy. This is my argument for owning Gold (and silver).

Blacklisted
Blacklisted

"Gold is a hedge against the notion that the Fed has things under control."

While the Fed is part of the establishment and confidence game, they are not the important part, as the smart money knows they only follow the invisible hand. Govts, and other bastions of establishment power are where confidence is hanging by a thread. WHY DO YOU ALWAYS FOCUS ON THE FED, AND VIRTUALLY IGNORE GOVT - PARTICULARLY, THE CORRUPT CONGRESS, REGULATORS, AND THE JUDICIARY? ARE YOU A CLOSET COLLECTIVIST?

Esclaro
Esclaro

Another in a series of head fakes by gold. Don’t get too excited, boys, the USD is still king.