Recession fears and a considerable spike in stock market volatility are once again increasing demand for gold. All eyes are anxiously fixed on every new tweet from the President’s account and every announcement and rumour out of the Fed. The global economy is running out of steam, while equity markets are stuck in a vicious cycle, as fresh tariff threats trigger downswings and monetary easing promises offer short-lived relief. In the meantime, prudent investors with gold holdings already in storage find themselves in a uniquely advantageous position. As the economic outlook darkens and as fear spreads in the markets, gold is gearing up for another big bull market.
Gold prices have skyrocketed by about 20% so far this year, while the key barrier of US$ 1’500 was broken a few weeks ago. Now, the next “stop” appears to be US$ 1’600 an ounce. This major breakout came in June and accelerated as the Fed drastically shifted its stance towards a dovish monetary policy approach.
Almost everyone attributes this development to the escalating trade tensions and the recessionary implications thereof. However, as discussed by our own Frank Suess in his recent article titled “A WORLD DYING OF MONEY”, there are much bigger and deep-seated problems driving the world economy to the edge.
While gold was largely shunned by the mainstream over the past few years, it is now starting to be discussed openly again, as we can see in this recent interview on Bloomberg (click on picture below to watch).
However, even as the alarm bells keep getting louder, both in the economy and in the markets, most investors still fail to pay attention. Those that have noticed and understand gold’s role as a reliable hedge, are now clearly a step ahead.
In view of the increasingly uncertain macroeconomic backdrop and as the Fed appears set on cutting rates after talking about tapering for the past few years, investors should be prepared for what lies ahead and take proactive steps, by building up their physically allocated gold holdings.