So is it time to give gold a serious look? As I’ve been sharing my opinion and the opinions of many gold traders around the world, as we all watch the action in interest rates, the dollar index, equities and the price of oil.
Ever since Chairperson Janet Yellen hinted that negative interest rates are on the table, numerous discussions have started in the media and all over the internet. What caused a change of direction in just a short period of time? As we hear conflicting opinions from FED governors each week, are they intentionally creating a smoke screen for what’s to come? If their intention is to try to create confusion in the direction of future rates hikes, I give them an A+.
While this is going on, we hear central banks around the world are adding to their gold holdings. Good job Janet, let your central bank friends get in before we really have a direction in the price of gold.
This confusion regarding future rate changes is creating volatility in the price of gold. There are conflicting opinions of many Wall Street traders on whether to go short gold on anticipated rate hikes or follow the trend that the ETF investors have shown.
Across the pond we see many central banks adding negative interest rates to their arsenal. Sweden, Denmark and Switzerland are using this tactic to force investors into moving cash out of savings into other investments. Individual gold purchases in just these three countries increased in a big way.
So is it time to give gold a serious look?
As I’ve been sharing my opinion and the opinions of many gold traders around the world, as we all watch the action in interest rates, the dollar index, equities and the price of oil.
Let’s not forget that recently, gold as an investment has caught a lot of media attention on the business channels and in major newspapers like the Wall Street Journal and the New York Times, BUT they are neglecting to report on one MAJOR factor…
As I shared in many of my comments in previous months, whatever happened to the supply and demand issues that have moved the price of gold over the years instead of hearing about all these other factors?
Well, guess what my friends? We are about to find out…especially IF negative interest rates become a reality. There will NOT, I repeat NOT, be enough supply to meet the demand. And if that comes to pass, it will be like adding gasoline to an existing fire.
As for those who remember the TV show, “Lost in Space” what was the robot’s famous line? “DANGER, Will Robinson. DANGER.” Janet, I’m sure you remember that show. Maybe you should watch a couple of episodes?
Author Name: Walter Pehowich
Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.