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Christian Armbruester

Strange as it Ever Was


Amidst all the hoopla last week about falling inflation and whether we get a 25 or a 50bp rate cut in September, Gold made a new all-time high. Silver wasn’t far behind, breaking above 30 for the first time since July, but it still has some 58% to go before it breaks any records. Lest we forget it is an industrial metal and the economy is slowing, allegedly.


What makes even less sense than both Liverpool and the Dallas Cowboys losing this weekend, is the performance of the Gold Miners. Often used by traders as a cheap and leveraged play on the shiny metal, they have been lagging for as long as we have been printing money. Last week however they finally found a bid and outperformed by 6%.


What does it all mean?  When you don’t know if Gold is a currency, a commodity, or a safe haven, I suppose any type of interpretation is somewhat difficult. Fact is though, real rates are expected to come down which has always been good for Gold, and central banks have been buying Gold in record numbers.


The US Dollar is also under pressure, which is as strange as it ever was (Talking Heads, 1981), given that the pivot is also in for the Euro and Sterling. Putting it all together, there certainly seem to be very few reasons, not to buy Gold, if it weren’t for the S&P500. Yup, the one index to rule them all, continues to outperform at every level, and it pays dividends.

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