Gold had been in a funk for the past week because the U.S. dollar had been the currency of choice. However, Thursday was what I consider a turnaround day as Draghi dropped European rates to negative territory.
And we know that when interest rates are negative it is not only inflationary but it’s also good for gold. Gold jumped after being inside of a trading range the past couple of weeks. The stock markets have also continued showing strength, but it seems to be a bull market that no one is enjoying.
There now seems to be an ingrained belief in the invincibility of the global stock markets. Investors now see this as a risk-less market. We believe that the move in the markets has been Fed-induced. But the negative interest rates in Europe are an indication that we will see more money printing and that will be good for gold.
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