Gold retreats. Speculators head to sidelines. Money Week offers perspective.

Gold retreats. Speculators head to sidelines. Money Week offers perspective. by Michael J Kosares for USA Gold

TDC Note – I don’t believe that it was speculators that drove gold to $1,610 – $1,611 on Tuesday night – I believe that was people attempting to protect their wealth with gold.

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Gold retreated further in overnight markets as Iran and the United States cooled prospects for a direct military confrontation and speculators headed for the sidelines – at least for now.  The net result is recorded on the charts as a wild swing between a high achieved early yesterday of $1610 and $1540, the overnight low.  It is now trading at $1548 – down $10 on the day after all is said and done. Silver is down another 24¢ at $17.90. If, as the Day-Traders Manual reads, volatility is good, we have enjoyed plenty of it over the past few days.

John Stepek, the executive editor of Money Week, offers some much-needed perspective for gold owners this morning.  “Gold,” he says, “has had one of its more excitable runs since the start of the year. It surged so much in the wake of the Iran airstrikes that it even drew the attention of the broadsheet financial press. So naturally, the price was bound to tank shortly afterwards. Which is precisely what happened this morning. If you’re a gold investor, you might be fretting that gold’s high point for 2020 has already come and gone. I wouldn’t worry.”

To supplement Mr. Stepek’s remarks, we recycle some perspective of our own from yesterday’s DMR: “While the [recent] volatility is worth logging for future reference (we are far from being out of the woods in the Mideast), we should not lose sight of gold’s sustained move to the upside based on the more mundane underlying economic issues like the eroding real rate of return on dollar-based investments and the abundant, ongoing central bank stimulus at work in the top global economies.”

Back to basics. . . .

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