At the beginning of the week, spot gold was trading at $1,813. Seven days later, it reached $1,988, up 9.65% against the US dollar. The rise of gold comes at a time when confidence in the global banking system is at an all-time low and five major banks are receiving bailouts. Analysts draw attention to three investment instruments.
Gold faithfully pursues the destruction of purchasing power!
As you follow on Kriptokoin.com, the price of gold is approaching $2,000 after multiple US and international banks showed signs of extreme weakness. By lending banks $164.8 billion in five days, the Federal Reserve erased almost 50% of the US central bank’s monetary tightening policy. As a result, the market is not expecting a dovish rate increase of around 25 basis points, or even no rate increase at all, this month after the financial disaster facing the banking sector. This is ‘good news for gold’, according to Bart Melek, head of global commodity strategy at TD Securities. In this context, Melek makes the following assessment:
Markets conclude that the Fed will raise another 25 basis points and then probably sit on it for a while and wait to see what happens. From a gold perspective, given the disruptions in the banking system and the willingness of the U.S. Treasury to help, we can adapt that allows inflation to stay at a higher level longer.
Gold is up 9.65% against the US dollar last week, and silver is up 12.61% in the past seven days. Meanwhile, the US Dollar Index (DXY) fell from 105.65 at the start of the week to its current level of 103,864. Statistics analyst and market action forecaster Northstar tweeted 21 days ago about gold’s performance over the years compared to DXY. Northstar said at the time, “DXY was 105 in 1974 and gold was $150. In 1981, DXY was $105 and gold was $450. Today DXY is 105, and gold is $1,810. Don’t be afraid of the rising US Dollar Index. Over time, gold faithfully follows the destruction of purchasing power,” he wrote.
Yellow metal, like a ‘resting bull’!
Mike McGlone, senior macro and commodity strategist at Bloomberg, referred to gold as a ‘resting bull’ on March 15, three days ago. In this regard, McGlone underlined the following:
Compared to most risky assets and commodities that have bounced back from overexpansion due to the excess liquidity associated with the epidemic, gold looks like a rare stagnant bull market. Falling crude could be part of the deflationary spark to push the metal past the $2,000 resistance. If history is any guide, then 300 rapidly falling commodities, a banking crisis and Fed tightening are in stark contrast. This could trigger a Fed pivot that pushes gold higher.
Three in one: Gold, silver and Bitcoin
Richard Mills, owner of forwardoftheherd.com, said on Friday that he believes silver’s rise is without exaggeration. “Current indicators show that silver is well below value,” Mills said. Based on this, Mills made the following statement:
Currently, on the morning of March 17, the gold-silver ratio is 88:1, so it takes 88 ounces of silver to buy one ounce of gold. This means that once gold reaches $2,000 per ounce, ‘silver will rise 147% to about $30 per ounce. The silver-gold ratio dropped from 100:1 to just over 64:1. A significant increase in the value of silver ‘could easily happen again.
Many gold and silver advocates have high hopes for precious metals going forward. In addition, McGlone believes that gold will be affected by current macroeconomic events, while the market strategist thinks that banking problems could be a decisive moment for Bitcoin (BTC). In this regard, McGlone shared the following:
Bitcoin may be moving forward to trade in US Treasury long-term bonds and gold as banks come under stress following the collapse in bond prices. Continuing above $25,000, Bitcoin is a clear sign of a different strength.
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