Gold hit a six-month low this week despite inflation fears rising. Makes perfect sense. Nothing screams "buy hard assets" like watching your hard asset eat shit.
The article blames potential interest rate increases. Not actual rate increases. Potential ones. Gold traders are now pricing in hypothetical future decisions that may or may not happen based on economic data that hasn't been released yet. This is called forward-looking analysis. It's also called making things up.
But the real culprit is faltering technical signals. The charts broke down. A metal that's been a store of value for 5,000 years is now out of favor because a line crossed another line on a screen in the wrong direction. Some guy in Connecticut drew a trendline connecting two arbitrary price points from March and November, gold dropped below it, and now the entire asset class is fucked.
Retail traders who bought gold at $2,400 because Peter Schiff told them the dollar was collapsing are now underwater while inflation actually picks up. They hedged against the exact scenario that's happening and still lost money. That takes skill.
The yellow metal is at its lowest level of the year. Not because supply increased. Not because demand collapsed. Not because someone discovered a gold asteroid. Because the 50-day moving average crossed below the 200-day moving average and a bunch of algorithms decided that meant something.
Inflation fears are rising but bullion is falling. The one thing gold is supposed to do during inflation is go up. It's the only job it has. Gold had one job and it called in sick.
Meanwhile some guy with $8,000 in a Robinhood account just panic-sold his GLD shares at a loss to buy Treasury bonds yielding 3%, which will definitely protect him from the inflation he's so worried about.
Photo by Anne Nygård on Unsplash
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