Gold News

Gold Makes Like It's Like 1982

Worst start in 39 years. Buy...!
 
The PRICE of Bitcoin has more than doubled so far this year, cracking the $60,000 resistance level, writes Frank Holmes at US Global Investors.
 
Fellow crypto Ether is up more than 180% for the year after hitting a new record high last week.
 
But gold is having its worst start to the year since 1982, losing close to 12% for the three-month period, even as concerns over inflation are intensifying.
 
Since touching its all-time high of around $2070 per ounce at the beginning of last August, gold has been under pressure from steadily rising bond yields.
 
The yield on the 10-year Treasury is currently trading above 1.7% as investors dump bonds in favor of risk assets. Bond yields rise as prices fall.
 
The US Dollar Index meanwhile rose above 93, which also dampened the yellow metal's appeal.
 
I think it's important to point out that gold's investment case right now remains as strong as ever, and investors would be wise to consider using this price dip as a buying opportunity. Money-printing remains at a record clip, and the debt continues to be piled on.
 
President Joe Biden has outlined his $2 trillion package to rebuild US infrastructure, a plan that will reportedly be paid for over time with tax hikes on corporations and wealthy Americans. This legislation, if passed, would follow the $1.9 trillion coronavirus relief package, signed into law last month. 
 
More economic data was released suggesting that inflation is running a lot hotter than what the Bureau of Labor Statistics (BLS) is reporting. Home prices in the US rose 11.2% year-over-year in January, marking the fastest rate since February 2006. The median price for a new single-family home in the US increased to $336,000 in 2020, up from $321,500 a year earlier, according to Census Bureau data.
 
At issue is rising commodity prices, particularly lumber, which has stalled construction of new homes. According to the National Association of Home Builders (NAHB), soaring lumber costs have added more than $24,000 to the price of a new home.
 
As a result, only a little over 1 million new and existing homes were available for sale in the US in February, the lowest level ever in data going back to 1982, the National Association of Realtors (NAR) says.
 
Homeownership has historically been one of the key ways Americans build wealth. But with prices on the rise, buying a home may be out of reach for many families.
 
The good news is that Americans appear to be getting back to work. In March, the US economy added 916,000 jobs, the most since August. The industry with the biggest share of new jobs was leisure and hospitality, which might not seem positive at first glance since such positions tend to be low-paying. However, I see it as a further positive sign that the economy is opening back up and Americans are getting back to life before the pandemic.

Frank Holmes is chief executive officer and chief investment officer of US Global Investors Inc., a registered investment adviser managing approximately $4.8 billion in 13 no-load mutual funds and for other advisory clients. A Toronto native, he bought a controlling interest in US Global Investors in 1989, after an accomplished career in Canada's capital markets. His specialized knowledge gives him expertise in resource-based industries and money management.

See the full archive of Frank Holmes.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn

 

 

scri

Market Fundamentals