The fact that gold is still trending higher in a consistent manner is a significant development. The “least techie” asset is performing admirably in a significant tech boom. That suggests a completely different theme is supporting the move, writes Eoin Treacy, editor of Fuller Treacy Money.
The willingness of the Trump Administration to drive fiscal stimulus at a time when the economy is attempting to exit an inflationary period is reckless. The loss of faith in the US as a reliable trading partner and geopolitical ally is also prompting a re-evaluation of trading relationships. Some countries have already decided to hold more gold. Others are thinking about how to reduce their reliance on the US dollar.
SPDR Gold Shares ETF (GLD)
China’s reaction to the tariff imposed in 2016 was to reduce exposure to the US economy and boost trade with the rest of the world. There is every reason to expect other countries will do the same thing. That is medium-term dollar bearish.
One of David Fuller’s most memorable sayings was that bull markets do not die of old age. They are assassinated by central banks. Right now, central bankers are cutting rates and easing credit conditions. That is fuel for bull markets. It is supporting the mature trend in tech, and the evolving bull markets in both financials and gold.
