Top Stories This Week: Gold Breaks US$1,900, Russia/Ukraine Turmoil Continues
The gold price rose this week, breaking through the US$1,900 per ounce mark on Thursday (February 17).
After starting the five day period around US$1,850, the yellow metal rose to just below US$1,880 on Monday (February 14); it dipped back down to the US$1,850 level the next day before beginning a fairly steady ascent.
Gold remained just below US$1,900 at the time of this writing on Friday (February 18) afternoon.
Experts have identified a slew of factors that are moving the gold price right now, but perhaps the most obvious is tensions between Russia and Ukraine. The situation is developing quickly, but it’s clear gold is benefiting from its safe-haven status — it’s no secret that market participants tend to turn to precious metals during times of turmoil.
I heard from Jeffrey Christian of CPM Group this week, who said he expects to see continued volatility and uncertainty, not only in gold, but in the larger financial markets as well.
When asked what approach investors should take, he said while it’s possible to trade gold price fluctuations, everyone needs to consider their own goals and limitations — a long-term approach is better for many people, and given the issues beyond Russia and Ukraine, it’s probably a good idea to own more gold than less right now.
“There are a host of other issues, all of which sort of say you probably want to own more gold rather than less gold right now” — Jeffrey Christian, CPM Group
With this week’s gold price move in mind, we asked our Twitter followers a simple question: What will the precious metal do next — go up, go down or consolidate? By the time the poll closed, most respondents said they think it will keep rising, with consolidation being the second most popular choice.
While geopolitical tensions can cause gold price spikes, it’s worth noting that they are often just that — relatively short-lived jumps. I also heard recently from Andy Schectman of Miles Franklin, who shared his thoughts on other underlying factors that should push the yellow metal higher in the long run.
Andy has major concerns about inflation and the US Federal Reserve’s path forward — he believes the central bank will raise interest rates a little in an effort to tame inflation, but will then go back to lower rates and stimulus.
“They have chosen an inflationary path over austerity, over the tough decisions. And I have a really hard time believing that they will blow up the economy by letting rates rise” — Andy Schectman, Miles Franklin
Andy sees gold as a source of protection, but thinks silver is a generational opportunity. He referred to the white metal as the “most undervalued asset on the planet” due to growing demand and a lackluster supply picture, and warned investors that it’s becoming more and more challenging to source.
His concluding advice? Look at precious metals as wealth and start to de-dollarize.
“There’s no place safe to hide with the exception of precious metals in my opinion. So look at it as wealth, not as an investment, and start to de-dollarize” — Andy Schectman, Miles Franklin
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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