26-Oct (USAGOLD) — Gold continues to trade in a consolidative manner within the recent range. The yellow metal is being weighed by rate hike expectations and the resulting firmness in the dollar, while being simultaneously underpinned by some uncertainty about the true health of not just the U.S. economy, but the world economy as a whole.
Former Dallas Fed insider Danielle DiMartino Booth posted an article today noting the dramatic slowing in global trade. The WTO recently slashed it’s forecasts for both 2016 and 2017 growth in trade. If this plays out, 2016 will be the first time in 15-years that trade would grow at a slower pace than global GDP. That’s a rather ill-wind to be sure.
Even as the Fed threatens monetary tightening, the reality of slowing trade and growth means that accommodative policy should prevail based on central bank dogma. DiMartino Booth believes that structural reforms are what’s really needed to break out of the malaise.
ECB President Mario Draghi concurs:
Certainly something else needs to be tried. After all, if ZIRP and NIRP have been unable to wrest the hard earned dollars, euros and yen from the clutched fists of global investors, what will? I doubt the first line of fiscal policies — austerity and/or tax hikes — will yield any better results.
As policymakers tinker, protecting one’s wealth becomes of paramount importance. The best way to do that is with an asset class that has stood the test of time. Gold.
