Gold is viewed as both an investment and a tool to protect yourself from inflation.
Today, gold is trading at around a key $1,300 threshold, and the yellow metal has been trading above that level on more days in 2018 than all the days of 2016 and 2017 combined.
Unfortunately, it looks like gold bugs are getting impatient or the gold market isn’t attracting new buyers.
According to Forbes magazine, the number of gold sellers rose 22 percent, a four-month high, and the number of people increasing their gold holdings climbed 12 percent.
Moreover, “buy gold” Google searches tumbled to their lowest levels since July 2007.
So, what is driving this trend?
From the website:
Boredom plays a part. On a 3-month basis, gold prices this spring have moved in a narrower range than any time since the doldrums of the mid-1990s, a mere 3.6% high-to-low. Only the early 1990s and 1986 saw less action in gold since early 1971, back before the US abandoned the Gold Standard and its $35 per ounce peg per ounce.
Profit-taking weighs more heavily, most especially among non-US and more recent buyers. Priced in the Euro, gold last week hit 11-month highs amid the turmoil in Italy’s bond market. Gold has also reached 8-month highs against the British pound, which remains highly vulnerable to the UK government’s failure to make any progress in its Brexit negotiations with the European Union.
Such two-way action is common on our platform, where investors can sell as easily as they buy. But the more traditional coin and small-bar market is also now seeing selling by longer-term owners, despite the heavier dealing costs.
Whether these sellers are switching into equities or perhaps crypto-currencies, their turn away from gold might suggest complacency if not ignorance of 2018’s growing financial and political risks.
Contrarian investors considering an allocation to gold as financial insurance take note.
With the Federal Reserve unwinding its $4.5 trillion balance sheet, and other central banks beginning to sell off their holdings, new money will seep into the market, unleashing a tidal wave of inflation. In addition to the geopolitical tensions and rising debt levels, gold is your only protection.
Gold may look like it has stagnated since hitting an all-time high of $1,800, but it is still a great investment.
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