Gold responds to the trade and currency war -- At all-time highs in six of the world’s top currencies

“For years, gold’s corrections have been brutal, and that is why many erstwhile bulls have not rushed to buy this rally. They have instead been waiting for a nasty pullback in order to load up at bargain prices. But Mr. Market has not obliged. Instead, retracements have been shallow and rallies steep. The latter have often occurred after-hours, but in one recent instance via a trampoline bottom that came early in the day. By playing hard-to-get, gold is displaying the most encouraging signs we have seen in a long, long while.” – Rick Ackerman, FXStreet

“In terms of grand strategy, the relevance of gold is often underestimated. To a certain extent, this misperception is a consequence of the disdain publicly expressed by some prominent economists. For instance, Lord John Maynard Keynes held that gold was a ‘barbaric relic,’ whereas former Federal Reserve Chairman Ben Bernanke claimed the yellow metal is stockpiled in vaults all over the world merely because of ‘tradition.’ The view that gold is like any other ordinary commodity is utterly reductionist . . .” – Jose Miguel Alonso Trabanco, Eurasia Review

“Markets may have rallied on Donald Trump’s potential trade ‘deal’ with China, but the corporate world isn’t buying it. That’s one of the key points I took away from several days spent last week at a summit for global chief executives. They were busy preparing for a new world order that many believe will involve a stand-off not between two countries (the US and China) but between three systems — liberal democracy and free markets, state-run capitalism and cyber-libertarianism.” – Rana Foroohar, Financial Times

“Bridgewater Associates didn’t have any major positions in gold ETFs until the second quarter of 2017. By the end of the third quarter of 2017, GLD formed 3.18% of the fund’s portfolio. Dalio likes gold due to its diversification and hedging properties. In a LinkedIn post last August, Dalio wrote, ‘If you don’t have 5–10% of your assets in gold as a hedge, we’d suggest that you relook at this. Don’t let traditional biases, rather than an excellent analysis, stand in the way of you doing this.’” – Annie Gilroy, Market Realist

“Cash over the long run is the worst-performing asset class and therefore the riskiest asset class. So where do you go? To me, going to any one asset increases risk. So the best way to deal with the challenging environment I foresee is by diversifying well. . . [G]old is just an alternative currency to fiat paper currencies. If your portfolio is likely to perform poorly in the adverse environment I’ve been describing—less effective monetary policy, the need to run larger fiscal deficits and monetize them, and challenging politics—the behavior of gold as alternative cash has some diversifying merit.” – Ray Dalio, Bridgewater Associates

“Most of these people don’t really understand what is happening outside their boundaries, so they have no option but to buy gold, silver, and currencies of Western countries. And that is why I think support for precious metals will continue to increase going forward. I don’t know what influence it will have in pricing, but really, if I had to suggest to someone on how to preserve his wealth, my suggestion would primarily be focused on gold and silver.” – Jayant Bhandari, StreetwiseReports interview

“Rome fell because the dictators ruined the Roman economy and the institutions that had made it prosperous. Rome was falling apart before the barbarian invasions. How did the Caesars do that? They were profligate spenders. As emperors with absolute power usually do, they thought big: infrastructure (roads, temples, palaces), a huge bureaucracy, and, as the key to maintaining their power they had a very large, loyal, and well-paid army. As a consequence, massive government spending far outstripped revenue. They had what today we call a deficit problem.” – Jeffrey Harding, Mises Institute

“Gold can be best viewed as financial insurance. If you believe that you should own insurance, then you should also own gold. In terms of investment performance, gold will do best during times of international financial stress. In the past, the price of gold has moved exponentially higher during these periods as demand for the ultimate safe haven goes viral.” – Eric Lytikainen, Real Investment Advice

“In their conspiracy theories, frustrated silver bulls were missing the one obvious conclusion confirmed by the Blythe Masters interview, that JPMorgan was, and probably still is, working for the Chinese central bank as their client. China is the whale in the market, which explains why we see the lack of correlation between the largest four traders and the second four going back over a decade. Bear in mind also that the commitment of trader’s reports covering Comex are not the whole story. Forward trades in London on the LBMA are a significantly larger market and JPMorgan operates its own vaults in London as well.” – Alasdair Macleod, GoldMoney, A whale is accumulating silver futures

“More importantly, a new multi-year bull market has now emerged. Turning points from bear to bull markets (and vice versa) are not always recognized in real-time because investors and analysts are too wedded to the old story to see that the new story has already started. But, looking back it’s clear that the bear market ended in December 2015 at the $1,050 per ounce level and a new bull market, now in its fourth year, is solidly intact. The recent break-out to the $1,440 per ounce level is a strong 37% gain for the new bull market. This price break-out has far to run. (The 1971 – 1980 bull market gained over 2,100%, and the 1999 – 2011 bull market gained over 650%).” – James Rickards, Daily Reckoning

“Gold has always been seen as an important diversifier in an investor’s portfolio, both as a hedge against inflation and equity fluctuations. However, investors should start thinking of gold as an Alpha generator in their portfolios. Gold’s technical picture has changed this year, and I strongly believe it is set to embark on a multi-year uptrend.” – Greenwood Investments, Seeking Alpha

“One of the most important warnings offered by firefighters is simple: get out early. In the face of wildfires, some homeowners get the idea of staying in their homes and riding it out. As one firefighter warned, “The point is to go.” But if you don’t, it’s better to stay than to panic and run in the midst of a firestorm of smoke and embers. It’s not the fire that gets you. It’s the heat. Even before the flames reach the house, it can be fatal to stand outside trying to protect what you have (h/t John Galvin). Similarly, our ‘Exit Rule for Bubbles’ is straightforward: You only get out if you panic before everyone else does. You have to decide whether to look like an idiot before the crash, or look like an idiot after it.” – John Hussman, Hussman Funds


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