It certainly seems like Oktoberfest with bullion. Gold is up a firm $50 since last week. Silver is up $1.20 and platinum $55. What is going on?
Last year’s federal deficit was 2.5 times the previous record and there are an estimated $3 trillion in new Federal Reserve Notes floating out there. These are backed by the good faith of the U.S. Treasury, so not to worry. But there are those who doubt that good faith.
What do I think is going on? I have seen a lot of both buying and selling. Both sides are convinced that it is time to dump or time to buy. However, many sellers simply need the dough and many buyers need the comfort of hard assets.
Market fundamentals don’t indicate strength. Mining supplies are up. Scrap redemption/recycling are up. Jewelry sales are down. Hoarding in India is off.
If you look a little deeper it may be those hedge funds that have apparently accumulated nearly 800 tonnes of gold. Hedge funds are now a big factor making it very difficult to determine short-term markets. Be careful. Do not invest your last dollar here. I am heavily invested, favoring silver, but I can be out quicker than you can read this paragraph, and am very nervous. Could we see $1,500 gold? You bet. Could we see $800? Ditto.