Loading ...Minsky Moment
BY Trey Reik | Tuesday, August 20, 2019
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After spending three years in a $250 trading range (between $1,121 and $1,375), spot gold has erupted since late May and is up 18.01% YTD as of last Friday’s (8/15) close at $1,523.34. At the same time, gold mining equities, as measured by Sprott Gold Miners ETF (SGDM) are up 39.52% YTD.
To us, the operative questions are:
1) What factors ignited gold’s breakout from a three-year consolidation?
2) Are these fundamentals likely to persist in future periods?
We offer the following answers. Gold is clearly responding to a global pivot by central bankers back towards concerted monetary easing, and the intractable nature of excessive global debt levels suggests we are in the very early innings of the developing easing cycle. In short, for gold this is the real deal and we suspect things are just getting started.