A seven year high for gold and naturally the main driver is that people are protecting their wealth from the financial impact that the coronavirus or COVIC-19 virus could have on the global financial system. As supply chains start to freeze up and huge chains outlets like Wallmart, amazon and Alibaba are struggling to restock. The so called last minute logistics system the world has will play a huge role in bottlenecks and supply chain breaks.
There was also speculation that the US Federal Reserve will das monetary policy before the end of the year.
The rise of Bullion has happened at a time when US stocks are at an all-time high wich has raised speculation of huge market manipulation. Many asking how airlines can all be in the green as they cut thousands of flights and as traveler numbers dwindle especially to Asia. Supply chains are also having an effect on car manufacturing, pharmaceutical es and the list goes on yet the stockmarkets in these sectors keep surging. Many think there is a clear manipulation to keep the public from panicking but this seems far fetched. It is however very strange.
This is all happening in the shadows of two additional deaths reported in Iran and two people from the ill fated cruise ship quarantined ship in Japan also dying. These people are dying with full medical attention, Imagine when the what happens when hospitals get over run and patients can’t get full time care with the best equipment.
Gold being the traditional safe haven has shot up 6% this year due to the well founded concern people have over a full blown pandemic. Minutes from the last US fed meeting state that officials wanted to leave rates unchanged for a few months.
So how long could a pandemic last and how will it impact the global economy? These are the questions people should be and are asking them selves as they sit on huge gains from the stock markets.
The thing to look out for is that gold is not only performing well against the USD but is reaching all time highs among a range of currencies during 2019 and now 2020. This is a strong reflection on uncertainty as well as the belief that more stimulus (money printing and inflation) is coming to try to stabilize the economy during and after a global pandemic.
But this move is foolish, the fed seem to think that they can print themselves out of any problems. But you can not print your way out of no one going to work, out of supply chains breaking, out of butterfly effects larger than the world has ever seen.
In Shanghai, spot gold traded at $1,606.40 an ounce at 3pm today, down slightly from Wednesday’s high of $1,612.98. This was the highest we have seen since March 2013.
ETF holdings hopefully backed by bullion have risen to record highs and have been consistently expanding for the last 6 weeks as the news of COVIC-19 keeps on in exponential path.
Traders in the crypto space are also seeing yearly highs but it doesn’t come without the usual massive volatility. Vaultoro traders are taking advantage of this however and trading this volatility can be extremely lucrative if done well. Parking assets in gold over night when they sleep becomes the norm as the bullion is also gaining against most fiat and also gives the trader the piece of mind in case there is an overnight banking crises, the likes of what we saw in Cyprus.
Among other main precious metals, silver fell 0.7%, while platinum fell 1.3%. This may be because they are more of an industrial metal and supply chain shocks would effect their demand.