We write to you on the back of yet another record-breaking move in the gold price. Last night gold closed at $2,300. Many of the mainstream outlets attributed this to signals from the FOMC that they were still looking to cut interest rates later this year. Some are also pointing to escalating tensions in the Middle East and the levels of uncertainty that are arising as a result.
As I have mentioned previously, the relationship between interest rates and gold price performance has become increasingly less entwined in recent times. The much-relied-upon negative correlation between the gold price and 10-year rates has slowly broken down in the last few years.
The focus right now should not be what will happen with interest rates, but instead, what is driving this dispersion and who is driving up the price of gold?
We don’t know for sure but it wouldn’t be totally crazy to suggest that the market participants are waking up to the fact that there is some serious misalignment in the global economy. This is resulting in an increased demand for gold. Whether you look at the US deficit that is more than twice as big as Canada, Eurozone, Japan & UK combined or the fact that central bank gold purchases (driven by India and China) continue to outweigh sales, the winds are changing.
Whatever is happening there is a clear shift in who and what is driving the price of gold, and it’s only just getting started. If the next step up in the gold price perhaps has you thinking about adding to your holdings, or perhaps starting someone else on their gold investment path then you may want to check out our latest guide:
Our founder and Chairman Stephen Flood spoke to Peak Prosperity last month.
In Stephen’s conversation with Chris Martenson they peeled back the layers on why gold, continues to be a pivotal asset in our complex financial world, particularly as we face the challenges of inflated currencies and geopolitical instability.
Have you ever found yourself trying to answer the question ‘Why Gold?' then look no further than this quick summary of why gold tops all the other metals when it comes to the ideal money.
About the author
