Gold is currently trading above $ 1,780. However, Will Rhind, CEO and founder of Graniteshares, says that the current situation is one of the worst environments for gold. Goldsilver Senior Precious Madet Analyst Jeff Clark explains the relationship between stagnation and inflation with gold. Meanwhile, market analyst Pablo Piovano foresees a correction.
“As the competitors of gold, stocks and bond markets also fell”
FOMC raises interest rates faster than most of the developed economies in the world. Will Rhind records that the US dollar has risen. However, he says that gold performs well against other beings. Rhind makes the following statement:
Stock and bond markets fell in terms of being a valid competitor against the gold. The commodities became one of the best places this year. Crypto currencies disappeared from the competitive environment.
Will Rhind: This is a distraction tactic!
On July 21, the White House issued a statement claiming that the decline in two -quarters of GDP did not necessarily mean a recession. Rhind commented on the statement of the White House:
This is consistent with some things that the Biden administration says about inflation. There were various officials trying to explain why inflation was good for us. They say about recession, ‘This is not a official stagnation unless we say.’ This is a distraction tactic.
Biden administration pointed out that the US labor market is strong and unemployment is low. However, Rhind sees this as a delayed indicator. “If you could collect large amounts of capital last year, it may not be filtered in terms of larger layoffs or restructuring, Rh says Rhind.
Jeff Clark: Fed is a marketing machine!
Kriptokoin.comFED President Jerome Powell on which you’ve followed from the last week, the US economy was not recession, he said. Biden administration officials, including the National Economic Council Director Brian Deese and Treasury Minister Janet Yellen, appear in the same agreement. Powell also said that FOMC did not exclude the possibility of more interest rate hikes after increasing the indicator target by 75 basis points. Goldsilver Senior Precious Madet Analyst Jeff Clark makes the following assessment:
Fed is a marketing machine. It is not necessarily an accuracy machine. They will underestimate the bad news and try to keep the economy strong and encourage people. They won’t cause any panic.
“Gold has rose to six of the last eight recessions”
Clark says stagnation and inflation are historically good for gold. Analyst notes that the difference between 10 -year Treasury interest rates and the 2 -year treasury interests, also known as a return curve, is a ‘Bellwether’, which points to a recession.
“This figure went to a recession every time this figure went negatively. This indicator has foreseen every stagnation since 1980, Sür says Jeff Clark. Currently, St. Louis Fed reports that the difference between 10 -year and 2 -year returns is -0.22. One of Clark’s preferred investment assets as a safe harbor during stagnation is Gold. Analyst says:
I came back and looked at every stagnation in the last fifty years. In the United States, there were eight of them, and gold rose to six of the last eight recessions. In the two, the decreases were very light as single -digit figures.
Gold is a good inflation hedge?
US inflation has reached the highest level since 1981 with 9.1 percent in June. However, he cannot keep up with the golden speed. Dear metal decreased annually by 2.3 %. Clark says this is because gold is behind inflation. In this context, he makes the following comment:
The last time we had really high inflation, I returned to the time we had. Of course, it was the 1970s and I looked at the correlation between the movement of gold and the movement in CPI. The correlation is really high. But what I discovered in the second half of the seventies was that there was a delay from the rise of inflation to the movement of gold prices. He finally responded and of course he crossed the roof at the time.
However, Clark warns that there are factors beyond GDP and CPI, which affects gold prices. “In the big picture, I’m not just looking at inflation.
Pablo Piovano: A correction is approaching
Open interest rates to gold futures markets fell in the second session on Monday in a row. This time, according to the advanced prints of CME Group, it declined with more than 4,000 contracts. In the same line, the volume has fell in the third session in a row and now approximately 10.5 thousand contracts have decreased.
Market analyst Pablo Piovano records that the increase in gold prices on Monday is in the midst of decreasing open interest and volume. According to the analyst, this is an indication that a possible corrective down direction can be shaped in the very near term. Analyst says that so far, the price movement in the yellow metal has been limited to the $ 1,780 sign.
