July 9, 2020 by SchiffGold 0 0
Gold has pierced another substantial level, pushing above $1,800 an ounce on Wednesday. That’s the highest area price for gold since 2011.
Breaking through $1,800 was a substantial relocation for the yellow metal, but during his podcast earlier this week– prior to gold breached that level– Peter Schiff said he believes gold has a long method to run up, and he discussed why the characteristics are different now than the last time gold was above $1,800
The revival of coronavirus has led lots of locations of the country to shut down once again– a worst-case circumstance for those expecting the mythical v-shaped healing. This is spurring safe-haven need. As Michael Hewson, primary market expert at CMC Markets UK, put it, “Investors are hedging their direct exposure to riskier possessions merely because there’s a growing and broadening belief that any healing is unlikely to be v-shaped. Markets usually tend to operate through a prism of optimism and that optimism is being evaluated at the moment and gold is benefiting from that.”
But it’s not simply safe-haven purchasing. Reserve banks have actually pumped trillions of dollars into the economy, driving real yields below zero. Peter has called the Federal Reserve’s response to the economic disaster “ a financial Hail Mary” And there is speculation that they will have to do a lot more as the healing lags. As Ron Paul put it in a current post, the Fed is getting desperate
Meanwhile, stock markets have continued to generally go up, led by the NASDAQ and tech stocks. As Peter put it in his podcast, no one is taking notice of these stock valuations.
Individuals are buying these stocks merely because they’re going up. They’re overlooking everything else. And where is the money coming from? The money’s originating from the Fed. We have actually got all this low-cost cash. We have actually got zero rates. We have actually got quantitative easing. We’ve got the Federal Reserve buying scrap bonds. And so it’s all that liquidity sustaining the bubble and permitting people to neglect any of the essential issues due to the fact that they simply have to invest. They need to be long. What happens is as the number of stocks going up continues to get smaller and smaller sized and smaller since the fundamentals keep squashing a larger and larger percentage of the market, then all of the money has to be funneled into a smaller swimming pool of stock.”
In a nutshell, the entire market is being driven by a small number of stocks. Peter called this “extremely unsustainable.”
It doesn’t take much to break this.”
When Peter taped his podcast on Tuesday, gold was still knocking on the door of $1,800 He called it a coiled spring. He predicted that the market would ultimately tire all the sell orders around $1,800 and it appears that’s precisely what happened on Wednesday.
But can the gold market maintain this momentum? We’re nearing record territory that the yellow metal couldn’t hold nine years ago. Peter pointed out that back in 2011, gold really only traded about $1,800 for a couple of weeks.
A great deal of people hesitate to simply buy these gold stocks, or perhaps buy silver, which continues to just lag. … But I believe a lot of investors still don’t think gold’s going to get through $1,800 They just presume that was resistance in 2011, that it’s still resistance in2020 Well, a lot has occurred in nine years, Particularly, a lot of money has actually been printed in the last nine years.”
Although there still seems to be a great deal of mainstream apprehension of the yellow metal, with gold knocking on the door of $1,800, we’ve started to see the mainstream stay up and take notice. As we reported over the last number of weeks, a number of big gamers are requiring $2,000 gold in the next 12 months. As a Bloomberg report put it today, “ Record-high gold costs remain in sight“
Peter said the dynamics are much various now than they were in2011 Gold has actually constructed a strong base since about 2013.
And we’ve got significant support now in the market that has been developed off of that base. And I would say the real assistance right now in gold is probably about $1,500 Even though the bottom of that huge saucer is around one thousand, we’re not returning down there. We have actually constructed such a massive amount of assistance that I would state there’s really not much room for the rate of gold to go listed below $1,500 from where it is now. At $1,800, we’re just about $300 above that huge 7-year support that’s been developing in the market, whereas we didn’t have that in 2011.”
In a nutshell, we are barely above huge support.
We have actually developed an incredibly strong structure from which an enormous booming market is going to be built– on this structure.”
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