We’ve had various discussions here, the consensus of which seems to fall either on 1) it’s silly to own gold, it has no intrinsic value, the gold market is a bubble waiting to burst; or 2) every sensible investor should have gold in some form in their portfolio.
I don’t care about that debate. I am, however, curious about the market forces.
In late-ish May of this year, the troy-ounce price of gold started to rise. It had been fairly steady in the 1250-1300 range, with variations up and down, for several years. By the recent peak (not an all-time peak but the highest in the past 6 years) it had risen to around 1550; since then it has settled down and stayed in the 1450-1500 range. That’s a rise of around 15%, depending on which numbers you choose to compare.
I’m not surprised that the price of gold goes up and down; however, I am curious what might drive the price to rise a moderate but noticeable amount, and to stay up (for over 3 months so far). What do the gold bugs think they know? Do they see stocks as overvalued and vulnerable to a selloff?
Anyone have any insights to satisfy my idle curiosity?
Endless talk about a recession? Fed interest rate cuts and Presidential meddling with the Fed? Brexit uncertainty with a parliament that couldn’t do anything until the election? Trump running his mouth on Twitter with talk of more tariffs and trade wars?
I despise gold but I’m well aware that the so-called flight to safety motivates some gold investors.
Both are true. That’s why I have a small part of my portfolio in a mutual fund that invests in gold mining companies. I have exposure to the price of gold, and also have an interest in economically productive assets as opposed to lumps of metal.