Here We Go Again: Gold Ahead Of Jackson Hole
(Kitco News) - Well it’s good to be back! I joked on my Twitter feed that I could not possibly have chosen a worse week to go away on vacation – with gold breaking through $1,500 an ounce.
And here we are this Friday – after now three-straight weeks of gains, gold is taking a little breather. Some technicians I spoke to this week said not to be surprised if gold fell to $1,483- $1503 an ounce.
So are cracks starting to appear in gold's bullish veneer? Editor Neils Christenen raises this very question in his weekly survey. He wrote, “Although sentiment, especially among Wall Street analysts, remains clearly bullish, caution continues to creep into the marketplace.”
But with fears of a slowing global economy and lack of clarity on the U.S.-China trade war, bullion should manage to hold onto the $1,500 level. Gold has risen more than $100 since the beginning of the month amid falling global bond yields, heightened trade tensions and a slew of disappointing economic data globally.
This week, we had some pretty big guests on the show including former White House Communications director, Anthony Scaramucci. Gold is a near-term safe haven asset, he said, but the hedge fund manager sees potential in other assets on a longer-term basis.
“It’s a near-term safe haven but long-term it really doesn’t solve people’s problems,” Scaramucci told Kitco News. “I would prefer to put the money or the capital into assets that I think are actually going to return something as opposed to be waiting for other people to think it’s more valuable to me in terms of where my entry point is.”
Scaramucci noted Warren Buffett’s view on gold, which is that the yellow metal’s value is derived from its finite supply rather than contribution to productive economic growth.
“I just remind people that are investors of what Warren Buffett said about gold. All of the gold ever mined you can put it in a cube, it’s worth ten ExxonMobils and probably all of the farmland of the United States multiplied by ten. Would you rather have all of that productivity or this heavy cube of gold?” he said.
To each their own.
Earlier this week, 10-year Treasury yields dropped below the two-year yield for the first time in 12 years. Curve inversion is widely considered a warning that the economy is headed for recession. Watch the interview with Kitco Metal’s Peter Hug, where I ask him about this: the yield curve is indicating recession but economic data is not, so which is out of whack?
For now, investors turn their focus to the Federal Reserve’s annual symposium next week for further hints on monetary easing. Should be an interesting and exciting week and we will see if gold gets the Jackson Hole bounce!