Gold big or Gold home?
Gold has now cooled off and retracted to Feb levels during the correction from the tightening of the leverage by comex.
With the war being dragged out and FED holding i/r as it is, what we expect is inflationary pressure in the economy. Higher spending on warfare strips budget for other sectors, a crunch on oil supply propagates to almost all downstream value chain since it forms the foundational layer needed to power our economies.
Gold prices go up for many reasons, one of which is the waning trust in the fiat dollar. The other is low i/r, when i/r is low, the opportunity cost of holding an asset that doesn't pay dividends is low. Now that the FED is holding of the rate cuts, investors will have to think twice because the potential capital gain on gold will be pitted against the "risk free rate".
Gold as a hedge is interesting because you just need the next guy to be willing to buy from you at a higher price to profit off it. While you could argue its industrial uses, gold is mainly used in jewelry and by sovereign states to back their currency. Although, there is an increasing demand from retail investors as it is now pitched as a good hedge in a portfolio. As long as these demand factors stay high, the price of gold will stay resilient.
My stance? Buying gold is like taking a bleak outlook in the economy. Think of it like a insurance. The more insurance you buy, the stronger the signal that you are worried about the risk materialising in the future. And i am of the opinion that the world looked a lot better in 2025, and might not look as good end 2026 🫠
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