Yes @calmbeforestorm I think the key question for those investing in the gold miners is: “is this higher gold price sustainable?”. I don’t think the institutions (i.e. the fund managers, banks etc - the ones who move markets) quite believe that this higher price will hold - not yet anyway. They’ll most likely be forced into that realisation in due course as the POG continues its rally. They’ll be late to the party, which is commonly the case. Everyone else will jump in behind their updated research and price targets, and that would be the time to cash in significant chips.
@Superchicken said it best the other day. Inflation is still here, a second wave if you will. Driven by higher oil and energy prices, but also you have wages catching up and continued de-globalisation and protectionism. The central banks aren’t so keen to raise rates any longer. Maybe they have turned dovish because of political reasons, or because of the damage already done to economies, or maybe they just don’t want to look stupid after telling everyone we will have plentiful rate drops this year. Whatever is happening we have a situation of prolonged inflation and interest rates no longer rising. I have read countless times that the sort of inflation we had post covid and Russia-Ukraine, that level of inflation, has historically never been resolved without a recession.
All up, we can envisage a world of continued higher than normal inflation, coupled with stagnant or lower interest rates. That is the goldilocks zone for gold.
Either that or get ready for WWIII.
Happy Eater to all, looking forward to next Tuesday’s trading.
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