Gold’s Groundhog Days – do not pass $1,300!

Gold’s Groundhog Days – do not pass $1,300! by Lawrie Williams – Sharps Pixley

Precious metals newsletter writer, Ed Steer, described the activity in the gold market on Thursday in the week past as ‘Groundhog Day’ a reference for those who do not know it to a comedy film where the main protagonist is doomed to repeat the same day over and over again.  All based in Punxsutawney, Pennsylvania where the actions of a groundhog brought out of hibernation on February 2nd (a genuine annual event) are said to predict the end of winter (or otherwise).  The expression has come to represent repeated activity and has to rank alongside former baseball catcher, manager and coach, Yogi Berra’s ‘its déjà vu all over again’, effectively covering similar territory, as one of the most quoted sayings on repetitive activity.

Ed Steer’s Groundhog Day quote could equally well have been applied to the activity of the gold price virtually every day in the past week or so where it has followed an almost identical daily pattern, always ending short of $1,300.  But it’s getting ever closer!

This all could be taken as  suggesting there does indeed seem to be a concerted effort to prevent the gold price from moving back above US$1,300 with the movement in the U.S. dollar up or down – which usually has an almost instantaneous effect on the price of the yellow metal –  almost irrelevant..

We don’t think this can last.  There are too many contentious geopolitical issues imminent, any one of which could trigger a substantial gold price rally – See: Gold in the Doldrums, but precarious geopolitical issues could counter.  The acrimonious G7 meeting in Quebec City, ongoing as I write, to be closely followed by the meeting in Singapore between Presidents Trump and Kim Jong Un are just the first two of such.  We suspect the Singapore summit is likely to end in stalemate without a denuclearisation deal as there are potentially unacceptable conditions being demanded from both sides, and thus has the potential to end in more acrimonious exchanges of rhetoric yet again given the propensity of both parties to ‘shoot from the hip’.  If this happens, we still can’t see the U.S. nuking North Korea, nor the latter attacking U.S. Territories or its allies.  The potential fallout is too extreme.  Nor do we think the U.S., for all its military might, would contemplate a ground war.  The North Korean army is too strong and the potential for unacceptable losses on the American side is too high.  So yet another contentious impasse will likely result but with a return to the escalation in tensions which could be the trigger to set the gold price alight.

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Lawrence Williams

Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. He is a qualified and experienced mining engineer having graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London – recently described as the World’s No. 2 University (after MIT). He has worked in mines in South Africa (gold, uranium and platinum), Canada (uranium), Zambia (copper) and U.K (coal) and holds a South African Mine Managers certificate. He also worked as a gold mining company analyst for one of the major South African mining houses. He left South Africa to join Mining Journal as Financial Editor and worked his way through that organisation to edit Mining Magazine, and then join the Board. He was Managing Director (CEO) of the company for 13 years up until it was sold in 2001. During part of this period he was also President of Nevada-based U.S. company Mining Media Inc which was publisher of North American Mining magazine.