The Golden Age Of Gold – by Andrew Hecht (Seeking – June 20, 2016)

These days, no currency around the world is as stable as gold. The lustrous yellow metal has performed like no other asset over recent months. Gold moved from $1046 per ounce last December to over $1300 last week. It traded to $1306 in early May, but what amounted to a spoof by the U.S. Federal Reserve in the hawkish April minutes sent the price down to the $1200 level and caused many longs to exit positions.

A weak employment shed doubt on the central bank’s intention to hike interest rates in June, but this week’s Brexit vote and a horrible terrorist attack in Orlando, Florida last weekend sealed the deal for any such rate increase. When the Fed announced that it would leave interest rate policy unchanged last week at the June meeting, the only surprise was just how dovish the central bank became.

They lower projected rate hikes for 2016 and 2017, and in her comments after the rate announcement, Chairperson Janet Yellen told reporters and economists that it is possible that the Fed could choose to lower rates back to zero if events warrant such an action.

The result of the latest gathering of the FOMC was welcome news for the gold bulls who took the price back above the $1300 level at the end of last week before wild volatility caused it to drop from new highs.

The thing about gold these days is that it is looking and acting a lot more like a currency than paper currencies as it is revealing the real weakness of central banks and their addiction to free money policies. Gold looks a lot more like money these days than traditional money does, and we could be entering the golden age of gold.

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