Gold has been one of the best performing assets in 2016. The price of gold has surged from $1061.00 to $1250.00 since the start of the year. Generally, most traders and investors will look for gold to do poorly when the U.S. Dollar is strong,
but recently gold has rallied higher despite the strength in the dollar.
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Gold topped out in September 2011 at 1923.70 an ounce. Ironically, gold peaked the week after J.P. Morgan Chase upgraded the equity to $2500.00 an ounce.
It is still amazing how these giant financial firms can still upgrade an equity at parabolic highs. As you all know, gold has declined steadily since the 2011 top. The precious metal has given back roughly 50 percent of its gain from the 1999 low to the 2011 peak.
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Maybe they knew that it would not rise much higher and made the comment to manipulate the market higher and short the medal.
It's not beneath their integrity.
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What is causing gold to rally in 2016?
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I think that it is because of the volatility in the oil markets and the stock markets.
If you watch the markets closely, when the DJI moves up or down 200 points etc...the price of gold moves up when the DOW drops on a bad day and goes down when the markets rise.
And several currencies have fallen against the dollar, especially those that are dependent on oil........Canada, Russia, the Middle Eastern nations, Venezuela had a 700 percent inflation rate last year.
Gold is a place they can hide their money while the problems in their home nation
are occurring. It may not make sense in the West or the States, but it does for many people.
Over the past few years most central banks around the world have followed the Federal Reserve in creating easy money policies. Recently, the People's Bank of China, the Bank of Japan, and the European Central Bank have all began new forms of easy monetary policy. Japan and Europe have now moved to negative interest rates and this is something new that many investors are trying to understand and figure out. Hoarding money is very likely since many people will have to pay the bank to hold their money. In fact, Japan is seeing a surge in the purchases of safes. People are simply going to keep their money at home instead of depositing it with the banks. Many people will also rather have precious metals instead of holding lots of paper capital. These are just a few reasons why gold is trading at a high for 2016.
The current pattern on the daily chart of gold is neutral. This is because the precious metal have risen so much recently. At this time, gold looks to be trading sideways on a weekly chart. This sideways consolidation pattern could lead to another break-out down the road. In fact, most of the recent sell offs in gold have resulted in reversal moves right back up to the highs. This is bullish action overall since the equity cannot pullback from its overbought condition. The price action in gold is telling us that there is something bigger going on globally regarding the financial system. Traders and investors should continue to keep a close eye on gold as an important asset class in 2016. Some ways to trade gold are by using the SPDR Gold Trust (ETF)(NYSEARCA:GLD), iShares Gold Trust(ETF)(NYSEARCA:IAU) and the Market Vectors Gold Miners ETF(NYSEARCA:GDX).
