Perfect Storm Sends Gold Soaring
Gold has hit a six year high this week and could stay strong based on many market factors.
Gold has seen a major rally this month due to many global and economical concerns. China's currency, the yuan, has been pushed to its lowest levels since 2008 as retaliation for the most recent set of tariffs imposed by the U.S. A lower yuan makes Chinese exports cheaper in America, somewhat offsetting the cost of the extra tariffs. It also makes U.S. exports more expensive in China. Part of the reason gold is up is because no one knows if the dollar is going to follow suit.
Secondly, the Fed has reduced interest rates which typically weakens the dollar and boosts the price of gold. There's a very good chance of another one or two rate cuts coming which could push gold even higher.
Historically when gold is above its 200 day trading average it is a strong sign that gold will continue to run. Gold has been above its 200 day trading average since December and has remained there since. Naturally there are no guarantees that this will always be the case but, if you look at gold from the 70's until now, this strategy would have increased your profits and reduced your risks.
There is also concern with what will happen with the British pound and the euro as Britain continues to head towards its exit of the European Union. With a "no deal" exit on the table these concerns have only been elevated.
No one can predict the future but we can do our best to be informed and up to date on the markets and their conditions. If you have any questions about your coin and precious metals portfolio give my brokers and I a call at 800-221-7694 and we'd be happy to go over how your portfolio and answer any questions you may have.
- Nick Grovich