The calm before the storm

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(Kitko News) – The gold market continues to grind as the book closes in another interesting week. Although the price of gold was not very high, but there is an understanding that something is going to happen soon.

Analysts say gold market volatility is falling as prices continue to fall; A classic “calm before the storm” is brewing. The only question is, does the price break up or down?

Despite balancing the knife tip in markets, market sentiment is still stable. Many analysts continue to hold the opposite stance and it is difficult to disagree. A new problem arises almost every day that makes gold more attractive as a safe-asset.

The current low interest rate environment, coupled with rising inflation risks, means that investors have little choice to hedge against risk. The old 60/40 portfolio balance – where 60% of your investment is in equity and 40% in bonds – is useful as a screen door on a submarine. In real terms, which includes inflation, the 10-year bond yield is -43 basis points.

In simplest terms, for every dollar that you invest in government bonds, you are losing about 50 cents. This is a heavy price to pay to protect your money. To close it, due to inflation, the purchasing power of the money you got back has fallen.

This is the reason why there has been a surge in investors’ leap to gold and silver. Yes, there are opportunity costs for the owner of gold, but the appreciation of the price of precious metal now surpasses them.

And the consensus among economists and market analysts is that the negative interest rates are going to be negative for a long time. Not only are bond yields falling, but investors are now facing the risks of market correction.

In just one week, the Nasdaq has fallen 10%.

In the end, I just wanted to accept that today is the 19th anniversary of 9/11 terrorist attacks. The world changed for a lot of people that day and they stayed in my thoughts all day.

The new meaning of this anniversary also means that we all deal with the unrelated COVID-19 epidemic. The universal truth is that we are all better than being together.

Disclaimer: The views expressed in this article are those of the author and may not reflect any of them. Kitco Metals Inc The author has made every effort to ensure the accuracy of the information provided; However, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an insistence on any exchange in goods, securities or other financial instruments. Kitco Metals Inc. and the authors of this article plead not guilty to damages and / or losses arising from the use of this publication.