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Quick observation on gold being up sharply this morning

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Published : April 12th, 2017
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Category : Market Analysis

Many who offer up their analysis on the gold market will attribute today’s sharp rise to the geopolitical environment, which is fraught with danger to say the least and certainly a contributor.  But that’s not the whole of what is driving the gold market in recent days.  A second, and not-to-be-underplayed, factor is the prevailing and publicly well-cultivated policy of the Federal Reserve toward interest rates, up to and including Janet Yellen’s most recent comments.* The first provides momentum to the second – license.

* “Looking forward, I think the economy is going to continue to grow at a moderate pace.  Our job is going to be to try to set monetary policy to sustain what we have achieved.”  Janet Yellen as quoted in New York Times/4-10-2017

The markets will read “accommodation” in those words meaning the Fed will do what it can to make sure the interest rate tracks behind the inflation rate and creates a negative real rate of return on yield bearing assets.  That latter, a negative real rate of return, has underscored, driven and sustained  bull markets for gold in the past.

MK

Source : www.usagold.com
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Michael J. Kosares is the founder of USAGOLD-Centennial Precious Metals, Inc., the author of "The ABCs of Gold Investing: How to Protect and Build Your Wealth with Gold", and numerous magazine and internet articles and essays. He is also writes a popular weekly Client Letter on the gold market. Mr. Kosares is frequently interviewed in the financial press and is well-known for his on-going commentary on the gold market and its economic, political and financial underpinnings. He has over 30 years experience in the gold business. USAGOLD-Centennial Precious Metals is one of the oldest and most prestigious gold firms serving private investors in the United States, Europe, Canada and Australia.
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