Gold Bullion Closes Above $1400 After an Impressive Month - Nathan McDonald (02/07/2019)

July 02, 2019

After talking about the wild week that bitcoin just had, which was one for the history books, catapulting higher, then rapidly crashing to the ground, it seems rather boring to talk about the action seen in gold bullion as of lately.

However, boring in this case is only relative to the action seen in bitcoin, as in any other period of time the positive gains that the precious metals markets have seen as of lately, would only be classified as exhilarating.

For those of us who have had to go through the long, hard slog that it has been to be invested in the hard money space over the last few years, the recent action seen from the king of metals has been a breath of fresh year, resulting in numerous calls from precious metals experts that the time has finally come for gold to break out of its chains and begin its long overdue march higher.

Closing out last month at $1409.70 per oz, gold bullion put on an impressive display over the last 30 days of trading action, holding strong, even after the recent jawboning from the FED put a short term damper on the possibility of decreasing interest rates.

The FED fund rates remain at 2.5%, which is where it has remained since the last hike in 2018 that sent the markets into a short term tailspin and throwing a tantrum.

However, the markets are not buying these recent hawkish moves from the FED and are still predicting a rate decrease by the end of this year, perhaps even multiple if the economy begins to deteriorate.

Gold bullion also seems to be following this train of thought as well, as indicated by the lack of concern by this announcement from the FED, trading strongly throughout last week, with only a minor dip lower from its $1440 .40 high, which was accredited to short term profit taking over anything else.

However, one person that was not pleased at all about the FED's decision was President Trump, who took to Twitter to vent his concerns about the FED's hands off approach to market concerns;

“Despite a Federal Reserve that doesn’t know what it is doing - raised rates far to fast (very low inflation, other parts of world slowing, lowering & easing) & did large scale tightening, $50 Billion/month, we are on course to have one of the best Months of June in U.S. history.”

He then went further;

“Think of what it could have been if the Fed had gotten it right. Thousands of points higher on the Dow, and GDP in the 4’s or even 5’s. Now they stick, like a stubborn child, when we need rates cuts, & easing, to make up for what other countries are doing against us. Blew it!”

This marks a renewal in the open feud that we witnessed last year between the President and the Federal Reserve, the latter of whom after much pressure changed their stance on ratcheting rates higher.

The President is correct in the fact that the FED rarely gets anything right, as the historic 2008 crash proved, however, cutting rates simply to raise the price of stocks to make the sitting government look better is never a good idea.

I believe that, as predicted at the start of the year we are going to only see gold bullion move higher throughout the remainder of 2019. The fundamentals underpinning these price gains are simply too strong and show no sign of abating anytime soon.

The smart money knows this as well, as seen from the recent massive move by billionaire investor George Soros, who has moved heavily into precious metals as of lately, taking a $264 million stake in the worlds largest gold miner.

Also, the geopolitical situation continues to erode across the globe, as tensions with Iran and the United States remain at heightened levels and as trade wars continue to flare all around the world as President Trump continues to take a hard line stance with his "America First" approach.

The accumulation of precious metals as a long term strategic asset class by Central banks, most notably Russia and China is also continuing on month after month, with China adding another 200,000 ounces of gold just before it surged higher in price.

Now is the time for institutional and individual investors to wake up and smell the roses, pushing precious metals to new heights.

The trend is your friend until the end and the trend towards higher gold prices looks bright indeed.

Keep stacking my friends.