Gold Only 10% Above 200 Day Moving Average – Growing Risk of Competitive Currency Devaluations and Global ‘Curr

Gold

Gold rose slightly yesterday as the dollar fluctuated and US stocks suffered small losses but has fallen 0.3% today. Gold was a whisker away from the $1,300/oz level on the spot market yesterday with some very determined sellers at this level. Those holding large short positions may be determined to defend this level in order to protect against further losses. Tentative speculative longs may take profits.

Gold is currently trading at $1,290.43/oz, €959/oz, £814.82/oz.

The growing risk of competitive currency devaluations (something we wrote about last year) and what has been termed a global ‘currency war’ (by Brazil’s Finance Minister overnight) has markets on edge and currency markets have been particularly volatile. The growing realisation that ultra loose monetary policies and "beggar thy neighbor" monetary policies may debase currencies is leading to continuing safe haven demand for gold. Gold is the only currency that cannot be debased and its value is not dependent on the performance of politicians and central bankers.  Problems with the periphery economies in the eurozone are not abating and appear to be spreading as seen in the crisis in Belgium. With questions about the future of the European Monetary Union being asked, gold should be well supported, especially in the euro.

Gold – 1 Year (Daily) and 200 Day Moving Average (Green). Click on image to view full size.

Many participants and much media commentary is expecting a correction here and this may come. However, the market is not particularly overvalued after its very gradual rise in recent weeks (up 3.5% so far in September). Gold is only some 10% above its 200 day moving average. Previous corrections in the last year (see chart above) have come about after gold had risen by between 10% and as much as 20%. Indeed in the last 5 years (see chart below), gold has risen as much as between 19.7% and 26.4% above the 200 DMA on different occasions. This suggests that gold could go higher prior to correcting.

Gold – 5 Year (Daily) and 200 Day Moving Average (Green). Click on image to view full size.

There was speculation at the LBMA conference in Berlin that pension funds who have very small allocations to gold (and many have no allocations to gold) are beginning to diversify into gold due to its lack of correlation with equities and bonds. This trend looks set to continue and is significant as pension fund assets are very large versus the small market that is gold. The entire global gold supply is worth less than $200bn a year while the largest 300 pension funds collectively hold about $6 trillion in assets. Therefore, even a small allocation of 3% to 5% to gold would contribute to higher prices; especially as the supply from central banks is set to go into reverse with central banks becoming net buyers again in 2010.

Silver

Silver is currently trading at $21.18/oz, €15.74/oz and £13.37/oz.

Platinum Group Metals

Platinum is trading at $1,610/oz, palladium is at $545/oz and rhodium is at $2,300/oz.

Mark OByrne

Also on news-goldcore-com

Videos

Tavi Costa- The Fed is Trapped

Silver Market Predictions – Ed Steer Talks about the Silver & Gold Price

Are We In A Financial Bubble? Peter Grandich Interview

Blog posts

Supply Chain Crisis Effects on Gold & Silver

The broken chain – could the supply crunch be worse than the oil crunch of the 1970s Anyone that has bought a new or used car in the last year has faced higher prices and long wait times for delivery. This is all because of the very small but essential semiconductor, which is in short […]

READ MORE

This is a Long Term Bullish Pattern for Gold – Gareth Soloway on GoldCore TV

“This is a long term bullish pattern for gold!” – Gareth Soloway Gold In this latest episode of GoldCore TV, Gareth Soloway joins Dave Russell to discuss what what the charts are suggesting for the stock markets, bond markets and #bitcoin. In addition to this he also takes a look at his gold price forecast 2021 and beyond.Gareth identifies the key levels that […]

READ MORE

The Inflation Tide is Turning!

In our post on January 28, 2021 “Gold, The Tried-and-True Inflation Hedge for What’s Coming!” we outlined four reasons that we expect higher inflation over the next several years. The brief bullet points are: Money Supplies have risen dramatically Commodity Prices are rising again Reduced Globalization as ‘Made at Home’ policies are proliferating Pent up […]

READ MORE

Featured

Gold, the Tried-and-True Inflation Hedge for What’s Coming!

READ MORE

How High is Too High for Rising Government Bond Yields?

READ MORE

Silver – 7 Reasons it is Still Set to Soar

READ MORE
Newsletter
Category
Archives
Popular

No posts available

Videos

Tavi Costa- The Fed is Trapped

Silver Market Predictions – Ed Steer Talks about the Silver & Gold Price

Are We In A Financial Bubble? Peter Grandich Interview

Blog posts

Supply Chain Crisis Effects on Gold & Silver

The broken chain – could the supply crunch be worse than the oil crunch of the 1970s Anyone that has bought a new or used car in the last year has faced higher prices and long wait times for delivery. This is all because of the very small but essential semiconductor, which is in short […]

READ MORE

This is a Long Term Bullish Pattern for Gold – Gareth Soloway on GoldCore TV

“This is a long term bullish pattern for gold!” – Gareth Soloway Gold In this latest episode of GoldCore TV, Gareth Soloway joins Dave Russell to discuss what what the charts are suggesting for the stock markets, bond markets and #bitcoin. In addition to this he also takes a look at his gold price forecast 2021 and beyond.Gareth identifies the key levels that […]

READ MORE

The Inflation Tide is Turning!

In our post on January 28, 2021 “Gold, The Tried-and-True Inflation Hedge for What’s Coming!” we outlined four reasons that we expect higher inflation over the next several years. The brief bullet points are: Money Supplies have risen dramatically Commodity Prices are rising again Reduced Globalization as ‘Made at Home’ policies are proliferating Pent up […]

READ MORE

Featured

Gold, the Tried-and-True Inflation Hedge for What’s Coming!

READ MORE

How High is Too High for Rising Government Bond Yields?

READ MORE

Silver – 7 Reasons it is Still Set to Soar

READ MORE