Gold storms

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Gold prices push upwards to over $ 1,800 the first time since 2011, Investors amass assets, and expect stable value as the economy goes haywire. Spot gold prices have risen 40% in the past 14 months, the historic highs are at 1,920.30 an ounce.

We are in a phase of double maximum almost according to an analysis model adopted, perhaps it is the simplest and this must alarm us.

The rally stemmed from the economic and political uncertainty caused by the COVID-19 pandemic and the action of central banks, which reacted to the slowdown in growth and the virus by cutting interest rates and flooding the liquidity markets. So you buy everything.

This fueled fears of inflation, which generally devalued other assets and also reduced government bond yields, making gold more attractive. The rise in gold was mirrored by a fall in real yields on 10-year US bonds, which at around minus 0.8% are near historic lows.

• Financial investors, mainly in Europe and the United States, have had an unprecedented wave of purchases.

Exchange-traded funds that store gold on behalf of these investors added 734 tons of gold worth $ 39.5 billion to their stock in the first half of the year – more than in any previous full year and nearly half of all the gold mined during the period, according to the World Gold Council.
This wave of purchases has compensated for a slump in gold demand in China and India, traditionally the largest buyers, where most of the gold is sold as jewelry. A recovery in economic growth could lift jewelry sales, but also induce investors to buy less, pushing prices down.


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