Gold price reached 1400 USD on Thursday, price not seen since 2013, almost six years. That is very good news for me because I’m invested in gold mines since August the 16, 2018. That day, among others, I wrote:
Growing interests rates are reducing the demand for gold, but increasing inflation is generating more buying interest. The difference of interest and inflation, the real interests can be important here. The Fed rate hikes in the US can stop next year, but the US inflation is moving on an upward path. The 10 years treasury bills yield seems to be unable to stay above 3.0 p. a.
(Chart courtesy of Stockcharts)
I had other arguments like a possible turn in the strengthening of the dollar, the end of the stock market bull, possible political turmoils. This year, the Fed rate hikes not only stopped, but rate cuts are also forecasted for this July. The dollar is falling since Wednesday, the Fed session. The bond yields fell, the 10y US yield was shortly below 2.0 p. a.
August 16, 2018 gold was by 1201 USD, and the Arca Gold Bugs (HUI) mining index by 139. Gold jumped approximately 16.67 percent, to 1400, the HUI index, 36.7 percent, to 190. I sold the half of my HUI certificates yesterday, by 190. (As I mostly use some slight leverage (only 2x-4x), my yield is much higher.)
(Chart courtesy of Stockcharts)
And the bad news is: since I sold palladium and bought platinum, on May 16, both legs of this trade are in negative. But I’m patient, I’m not a short term investor (rather a middle term one).
How will gold and gold mines trade in the future? I don’t know it really. I can only hope that the trend is just in an early stage and will be a long one. Gold was trading years in a range. But if it breaks out from that territory, depends on the interests, dollar price, inflation, stock market rally, and the expectations about all this. Maybe I should put a stop loss-order for the remaining HUI stake soon.
(Photo: Pixabay.com)
