Why is gold rising so steeply?

Discussion in 'Gold' started by TreasureHunter, Aug 14, 2019.

  1. TreasureHunter

    TreasureHunter Well-Known Member

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    I've been watching the markets for years and for some reason I was away and I missed some of the current trends. And left me perplexed: what makes gold rise so high right now?

    There were countless other factors in the past from "QE Infinity" to the "Russian-Ukrainian crisis", from the "European migrant apocalypse" to "Brexit", from various negative US economy-related news to etc. etc. ...and, gold still held well below 1,400-1,300 $.

    What the heck is this abrupt spike?

    In the middle of summer (this is supposed to be the time when it dips!). And it's still holding on!

    Some say it will slam 1,600 $.
     
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  2. leo25

    leo25 Well-Known Member Silver Stacker

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    Gold went up more from 2009 - 2011, peaking around $1900 USD.

    I guess people think central banks will soon make the last round of QE look like child play. Also remember central banks have been doing non stop money printing for the last 10 years.
     
    Last edited: Aug 14, 2019
  3. Number 47

    Number 47 Well-Known Member

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    It reflects the dropping value of the fiat.

    Lowered interest rates, and the printing presses are running hot.

    I truly believe that gold and silver don't change in value, it's the buying power of our currency that change.
     
  4. Silverthorn

    Silverthorn Well-Known Member

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    It has made a nice long base and now people realise rates are going to be cut rather than rise. Nice looking chart.



    [​IMG]
     
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  5. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Compound this with the very real possibility now that the AUD will crash as the RBA gives serious thought to QE. I'm not looking forward to it, but I am prepared to weather the storm. I'd rather make $$$ in a genuine free-market as opposed to the artificial boom-bust opportunities created by attempts to manipulate the economy by thick-as-pigshit central planners. It's destructive and only a few win in that zero-gain atmosphere.

    Edit to add: that's not to argue that not-thick-as-pigshit central planners exist mind you. ;)
     
  6. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    What Number 47 said. Lowered interest rates and QE. Might have to do with the crazy yield curve inversions too...the 2 yr and 10 yr now.
    It wouldnt surprise me to see $1600 without much resistance at all.
     
    Last edited: Aug 15, 2019
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  7. SilverDJ

    SilverDJ Well-Known Member

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    We are now 11 years since the last market correction, a.k.a GFC. Things are even bigger now, stock market at record highs, interest rates going through the floor, the can kicked so far down the road you can't see it any more, it no wonder countless people are getting the heebie jeebies and are moving at least some money into THE safe haven asset.
     
  8. TreasureHunter

    TreasureHunter Well-Known Member

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    I'm still curious about more concrete, impactful influential factors. I don't see any really major force behind gold, but it doesn't look like speculation.
     
  9. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Market sentiment, central bank manipulation, share market in a potential bubble, currency devaluation, trade wars...

    That's about as concrete and "impactful" as you're gunna get in the financial markets short of all out hyperinflation or war.
     
  10. TreasureHunter

    TreasureHunter Well-Known Member

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    ^
    That's been going on since 2010, 2011, 2012. Why the huge spike now?

    There were stronger forces in the past: QE infinity, possible wars with Iran (2011-2013) etc. What the heck is going on now?

    Perhaps its' because of lower GDP figures? Many economies are slowing down. And they just announced that Germany is in recession.

    Odd
     
  11. leo25

    leo25 Well-Known Member Silver Stacker

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    Because now everyone is losing trust in the system. Most people are very hard headed and it takes them 10 years to see the obvious.

    Just like how it wasn't until the Titanic started sinking fast before most people got the hint that this boat is going to sink.

    [​IMG]
     
    Last edited: Aug 15, 2019
  12. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    Nothing is the same as those years. Everything has grown exponentially.
    The Trump-Obama economic plan is falling apart before our eyes and a beautiful thing to see. Maybe it will wake some people up to see the truth finally.
     
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  13. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Spike is pretty much the same.

    Screen Shot 2019-08-16 at 7.26.48 am.png



    And as Leo said, you can only kick the can so far down the road. More and more people are now accepting that the GFC didn't end, that QE doesn't work, that cash injections of the like Rudd gifted taxpayers just increased consumption for a short period and are not a solution, that trade wars destroy wealth and so on. But saying that it could all blow over for a while and they may just be able to keep kicking the van down the road a little further.

    Edit to add: if you're referring to gold in AUD it's probably China and the RBA toying with the idea of QE - both of which are heavy clouds over a devaluing Oz dollar.
     
    Last edited: Aug 15, 2019
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  14. bubblebobble2

    bubblebobble2 Well-Known Member Silver Stacker

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    ^^
    this is FAKE NEWS!
     
  15. TreasureHunter

    TreasureHunter Well-Known Member

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    Gold might dip a bit in September or October. Or just wait until the end of the year. That could be a good buying opportunity. If "something" doesn't happen.

    The masses are still numb and dumb.

    I remember back in 2008 I tried explaining someone that there's a crisis going on (in the middle of it) and the guy kept laughing me in the face and telling me "it's a hoax", "it's just manipulation" and so on... people are the same today!
     
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  16. TreasureHunter

    TreasureHunter Well-Known Member

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    I still want to dig deeper and discover the concrete forces behind gold.
    I've been studying the forces behind it and it was always clear to me why exactly it's rising. Yes, we have terrible geopolitical tensions.

    I think among the greatest forces to push gold are the UK's and Germany's economic slowdown, the overlap of the US-China "trade war" with the Brexit hysteria (UK should do it one way or another, I'm sick of the soap opera push-pull masquerade!!!)...
     
  17. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    When an individual chooses to reject reason, then religion or conspiracy theories are the only alternative to explain what they believe to be the "mysteries" of the universe. Reason requires effort and intelligence.
     
  18. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Brexit and Germany’s slowdown and Iran tensions had been on going for sometime. I think the predominant reason is China’s slowdown and fear of rmb devaluation due to trade war.
     
  19. jultorsk

    jultorsk Well-Known Member Silver Stacker

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    Not necessarily an endorsement, just posting this for your reading pleasure...

    https://www.afr.com/markets/equity-markets/why-gold-could-reach-us10-000-20190819-p52ios

    Why gold could reach $US10,000
    Robert Guy Senior Writer Aug 20, 2019 — 11.14am

    A long-time critic of the embrace of unconventional monetary policy, Mr Rickards said the Fed boss faced a tough task in trying to balance the need to normalise US rates to prepare for the next recession without steering the world's largest economy into a slowdown.

    He said there is only a 35 per cent chance of a recession in the US over the next year, thanks to the Federal Reserve's change in monetary policy direction in July when the central bank cut rates by 25 basis points to 2-2.25 per cent.

    "Jay Powell is the right guy at the right time but he has been handed not a difficult situation, but an impossible situation," Mr Rickards said ahead of his appearance at the ABC Bullion National Conference.

    "He's a smart guy. He doesn't suffer the disability of being a PhD economist."

    He questioned the wisdom of raising the Fed funds rate to 2 per cent given quantitative tightening – or the winding back of the Fed's balance sheet – had added a "phantom" 1 per cent tightening on top of official monetary policy settings.

    But he said the move to cut interest rates for the first time in a decade had lowered the risk of a recession, though there was still a chance that US rates could head to zero depending on how the trade war with China played out.

    "The Fed woke up just in the nick of time. The inversion of the yield curve is a recession signal but that's usually 18-24 months later. "

    He said that if the Fed stuck with its current tempo of 25 basis point cuts, then it wouldn't hit zero until the northern summer in 2020.

    "The easing that is going on now we're not going to feel until 2020 – it may be good timing for Trump. We're in a funny period right now where we're still suffering the prior tightening. We havn't quite realised the benefits of the easing."

    Global markets have been rattled by the escalation of the trade dispute between the US and China, with stocks coming under pressure and bond yields falling to new lows.

    Mr Rickards said the trade war was part of a broader showdown between the two superpowers and economic rivals, a rivalry that also spanned currencies, technology, as well as geopolitical and military power.

    He said that while US President Donald Trump has been attacked for provoking a trade war, the current administration marked a turning point from its predecessors which had overseen the growth of yawning trade deficits and the theft of intellectual property.

    "Everyone said he started the trade war. I would say he is the first President to fight back."

    Mr Rickards is very bullish on the outlook for gold prices, forecasting a potential rise to $US10,000 an ounce over the next five years.

    Alternatives to greenback
    "I'm not trying to shock anybody, I'm not looking for publicity. There is a very solid methodology behind that number."

    He said the base money supply in US, England, Japan, Europe and China is about $US24 trillion. Additionally, there are 33,000 metric tonnes of official gold, or gold owned by entities like central banks.

    "What percentage of gold backing do you need for confidence in a gold-backed currency? It's a judgment call but I use 40 per cent."

    Working backwards, that 40 per cent gold weighting leads to $US9.6 trillion of gold-backed base money, which then infers a price of roughly $US10,000 an ounce.

    "It is the implied non-deflationary price of gold."

    He argued Washington's move to weaponise the US dollar had encouraged its major rivals Russia and China to seek out alternatives to the greenback. Both countries have tripled their gold reserves in recent years.

    "By weaponising the dollar, which has been very effective, and by throwing our weight around, which has been very effective, we have invited the blowback," he said.

    "And the blowback is a non-dollar system because the US will always get its way as long as we – Russia and China – depend on the dollar.

    "When you see Russia and China triple their gold reserves you have to ask a question: are they stupid or do they see something that most people don't see?"
    --
     
  20. ddevil

    ddevil Active Member Silver Stacker

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    To me, the main reason why we have seen it rise so quickly is the trade war between the US & China and the AUd being a lot weaker
     
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