GOLD

The chart of the gold price is a thing of beauty. Pick your currency, but up it goes. Up almost 30% this year alone in USD, a move not many commentators were calling for over the Christmas turkey. Any yet, according to the strategists at BAML, private client allocations to gold via physical bullion or a shiny ETF, are just 0.2% of AUM. Basically nothing. And this scrap of exposure is set against an allocation to equities that is right at the top of a 20-year range. The relentless bid to the gold price has come from somewhere else. Western Investors are largely absent. The bid has come from the East, where Central Banks have been voracious, sucking the bullion out of Western vaults at an alarming rate. Friday’s ‘blockbuster’ payrolls print should have doused the gold pit, given the likely path of more measured rate cuts, and yet the price on the screen barely flickered. Perhaps buyers were not impressed by the headline print, and choose instead to point to the fact that the ‘blockbuster’ beat was courtesy of the government hiring like a cashed up tech-bro. The 785k of government workers added was the biggest monthly surge on record. That an election is turning down the home straight is not lost to those cat-calling the current administration. And all these jobs were funded by the remorseless piling up of ever more debt. By the end of the year, it is estimated that nigh on $1.2 trillion will be going to service the debt alone. Alone. Nothing else. No new schools, no new hospitals, no new roads. No wonder there is a bid to gold. So too, silver. Having broken a key $26 resistance line, the summer was spent ‘consolidating’ or, in the words of some technical analysts, ‘building energy’. Come Friday, and the ‘final’ resistance line in the $32 zone was feeling some heat, and may be finally broken this week should reports that it is now being eyed up as a strategic asset by the likes of Russia prove to be on the money. Platinum and palladium are also stirring. There are many reasons that precious metals are on a tear, some true, some less true. All told, with faith in many fiat currencies compromised by unstainable fiscal policies, the bid is likely to persist.