In my speculative view, gold prices represent one of the biggest scams perpetuated on the American public. With society distracted with multiple news items, the precious metals sector has quietly eroded substantial value. Most notably, gold prices are down nearly 4% since the middle of June, with further losses appearing likely.
But what gives? It’s not as if the commodities market is suffering a decline. If anything, they’re buoyed by the fact that President Trump has locked-in his foreign policy objectives, especially in the Middle East. As I mentioned in a previous article for Crush The Street, Trump consistently sided with Saudi Arabia throughout his administration.
Naturally, that puts a sharp wedge between the U.S. and Iran, which is the third-biggest oil supplier in the world. Therefore, the natural assumption is that current events should boost commodities market, and yes, even gold prices.
Moreover, the dollar index hit a snag over the past few weeks. While sharply up since mid-May, the greenback recently encountered strong upside resistance.
Under logical market dynamics, this should be net positive for gold prices. The dollar index lost positive momentum due to rising geopolitical uncertainties, not only because of the Middle East situation but also the ongoing China tariffs. Present indications tell us that the conflict between the U.S. and China is deepening, which sets obvious concerns for a fragile economic recovery.
Yet gold prices remain stubbornly weak, and incongruent with several rising assets within the commodities market. On a year-to-date basis, the yellow metal is down 3.9%. Since the opening session this past April, it’s down more than 5.7%.
This makes little sense, other than that investment assets are competing for investor dollars in the wake of bitcoin and the blockchain economy. With cryptocurrencies, we have a new means of either speculating on the broader financial sector, or, in some cases, hedging against it. Since bitcoin is the Millennial’s asset of choice, I can see why gold bullion would take a backseat.
But it still doesn’t explain the wholesale decline of gold prices, as well as the other precious metals. While cryptocurrencies present viable alternatives, they’re not the greatest “SHTF” sector. Should things really get dire, internet-dependent money is extremely limited in scope and practicality.
Furthermore, mainstream investors generally take a dim view on cryptocurrencies. Due to tremendous geopolitical uncertainties, gold is the ultimate safe-haven asset right now. However, its performance is disappointing, to say the least.
This leads me to suspect that we’re facing a calm before the storm moment. As I’ve said several times before, remain vigilant: something major is creeping around the corner.