GLDM - GLD: Gold To The Moon Is Bad News - Part 2

2024-04-15 07:48:41 ET

Summary

• Demand for US debt is falling, potentially leading to higher borrowing costs, reduced confidence in the US economy, and increased volatility in financial markets.
• The US market is facing shrinking markets for goods and services, particularly in China, Russia, and the Middle East, which may make it less attractive for foreign investors.
• Manufacturing in the US is declining, which could negatively impact the stock market and the demand for USD.
• A poorly performing stock market, dollar depreciation, inflation, and geopolitical stress are additional factors that may boost demand for gold as an investment.

Preamble

In April last year, I penned an article that covered several trends that would hoist the price of gold in a heavenly direction. Since the article, gold has indeed bounded to new highs. This may be a delight to see if you are comfortably seated on a large lump of the stuff. However, it’s a signal that something has gone awry, either economically or geopolitically, which is ominous news for everyone. This is the second article on a similar theme that outlines a number of other trends, that will again, I believe, light the blue touchpaper under the price of gold, and with it SPDR Gold Shares ETF ( GLD ).

Demand For Dollars

The capitalist laws of supply and demand apply to most tradable items, including the USD. If the Fed prints too many dollars, it can lead to a situation akin to a market flooded with some doodad or other. In these circumstances, each individual dollar becomes less valuable, that is to say it takes more dollars to purchase the same goods and services. A weak demand for USD can also have the same impact on the purchasing power of the USD....

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