Why Gold Prices Fell and Why Gold Is “Going Much, Much Higher”

Gold in USD – 5 Years

Jim Rickards via The Daily Reckoning

The coronavirus continues to take its toll on the stock market.

For investors accustomed to “buying the dip,” this is quite a change. As noted macroeconomic analyst Mohamed El-Erian said earlier today:

I understand the inclination to buy on the dip. I understand that the path of least resistance in this market is to bounce up… but I stress, this is different.

Meanwhile, the all-important 10-year Treasury yield fell to a record low this morning as investors continue to pour into safe-haven assets.

The 10-year yield dropped to 1.32%, falling beneath its previous record low of 1.325%, which it set in July 2016 following Brexit.

That means the bond market is projecting a poor outlook for the global economy. And over the long haul, the bond market has an excellent track record of being right.

Gold was down big today, losing $45.20. But that’s not because of gold itself. It’s all about the falling stock market.

When you think about it, it doesn’t make sense.

After all, if investors are fleeing for safety, which we’re seeing in the Treasury market, why wouldn’t they be buying up gold as well?

Gold was up close to $30 yesterday, before the price began dropping late in the day.

Here’s the likely reason why gold is falling right now when it should be rising…

With the stock market plummeting, hedge funds and other institutional investors have had to suddenly raise cash to meet margin calls on their positions in the equity markets. And they had to get the cash from somewhere.

Gold is a very liquid asset that can quickly be traded for cash.

They can either sell the actual gold bullion they own or they can unload their positions in gold ETFs (like GLD).

So my estimate is that they dumped their gold positions to raise the money. And that’s been driving the listed gold price lower.

It has nothing to do with gold’s fundamentals, which are actually very strong. Demand is increasing, central banks are hoarding record amounts of gold and new supplies are dwindling.

That’s a recipe for skyrocketing prices, and the bull market in gold is still very much intact.

The latest selling is just a quirk of the market, in which institutions have to raise cash in order to cover their positions when the market’s dropping.

Again, it has really nothing to do with gold itself. This is just a temporary blip.

If you haven’t bought gold yet, this is an ideal opportunity to scoop up gold at a bargain-basement price. Or, if you already own gold, to stock up on more.

For gold at least, it’s an ideal opportunity to “buy the dip.”

Gold is going much, much higher.

I’m not sure how many more opportunities like this we’re going to see. I urge you to take advantage of it while you can.

Regards,

Jim Rickards
via The Daily Reckoning

See related content in News and Commentary below
regarding the sell off and whether it was solely due to margin call selling or whether their was bank or official intervention and manipulation of gold prices via the futures market last week. Both are possible and investors and safe haven bullion buyers need to fade out the short term noise, take a long term view and own gold and silver coins and bars in the safest ways possible.


NEWS & COMMENTARY

Gold rises 1% as virus risks boost rate-cut hopes

Gold Stages a Fightback After Slump Last Week

China factory activity shrank at its fastest rate on record in February

Coronavirus: buying opportunity or end of the road?

Is gold falling along with coronavirus-afflicted global stocks due to margin calls?

Stocks and gold — what happened last week

Gold is said to have been sold to cover margin calls in other assets

Data suggests governments, not margin-call pressure, smashed gold last week

Turkey launches Operation Spring Shield against Assad regime


GOLD PRICES (USD, GBP & EUR – AM/ PM LBMA Fix)

28-Feb-20 1626.35 1609.85, 1262.37 1254.88 & 1474.61 1468.18
27-Feb-20 1646.60 1652.00, 1278.58 1282.45 & 1505.32 1504.97
26-Feb-20 1647.95 1634.90, 1273.37 1264.76 & 1515.45 1505.42
25-Feb-20 1655.90 1650.30, 1275.54 1271.39 & 1528.06 1522.73
24-Feb-20 1682.35 1671.65, 1304.49 1293.69 & 1555.84 1540.26
21-Feb-20 1633.70 1643.30, 1264.81 1269.12 & 1512.48 1515.29
20-Feb-20 1610.35 1619.00, 1250.11 1258.45 & 1491.99 1496.77
19-Feb-20 1609.50 1604.20, 1239.80 1237.80 & 1490.40 1486.29
18-Feb-20 1588.20 1589.85, 1218.47 1220.37 & 1467.34 1470.77


Is Your Gold S.A.F.E.?



SIGN UP FOR OUR AWARD WINNING MARKET UPDATES HERE



Mark O'Byrne

Also on news-goldcore-com

Videos

Gold Mining Operation Supply Issues Points to a Sustained Bull Market for Gold

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

How High is Too High for Rising Government Bond Yields?

Blog posts

Gold to Gain Momentum in 2021 – Here’s Why

Big ideas are like supertankers filled with oil; both take forever to get moving. The move from one state to another is a boring form of entertainment. However, each is impossible to stop once the momentum has built. Substantial progress can be seen over a period of time and one can notice and understand the […]

READ MORE

Gold to hit $3,000, Bitcoin to $20,000 Chart Warning Signals!

Today on #GoldCoreTV, Gareth Soloway, Chief Market Strategist of InTheMoneyStocks.com, shares some insightful charts that help to understand the warning signals in #Bitcoin, #Gold, and #Silver markets. Watch the Video to Learn More Make sure you don’t miss a single episode… Subscribe to our YouTube channel. Are Central Banks Targeting your Bitcoin? Watch this Episode to […]

READ MORE

Crypto Mania: Dawn of a New Era

Metals prices are up month over month. This is a nice thing to report and rare since last August. The news this week has been entirely about crypto, again. We report on them insofar as crypto seems to divert money and attention away from silver and gold. Perhaps the crypto mania is peaking. That would […]

READ MORE

Featured

Newsletter
Category
Archives
Popular

No posts available

Videos

Gold Mining Operation Supply Issues Points to a Sustained Bull Market for Gold

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

How High is Too High for Rising Government Bond Yields?

Blog posts

Gold to Gain Momentum in 2021 – Here’s Why

Big ideas are like supertankers filled with oil; both take forever to get moving. The move from one state to another is a boring form of entertainment. However, each is impossible to stop once the momentum has built. Substantial progress can be seen over a period of time and one can notice and understand the […]

READ MORE

Gold to hit $3,000, Bitcoin to $20,000 Chart Warning Signals!

Today on #GoldCoreTV, Gareth Soloway, Chief Market Strategist of InTheMoneyStocks.com, shares some insightful charts that help to understand the warning signals in #Bitcoin, #Gold, and #Silver markets. Watch the Video to Learn More Make sure you don’t miss a single episode… Subscribe to our YouTube channel. Are Central Banks Targeting your Bitcoin? Watch this Episode to […]

READ MORE

Crypto Mania: Dawn of a New Era

Metals prices are up month over month. This is a nice thing to report and rare since last August. The news this week has been entirely about crypto, again. We report on them insofar as crypto seems to divert money and attention away from silver and gold. Perhaps the crypto mania is peaking. That would […]

READ MORE

Featured