Nice day for the dollar, non-ideal for us in gold longs. Gold took a steep dive today.
Why?
Some things to keep in mind here.
My thoughts on Gold
Why?
- Jobs report did not come out hot indicating the recovery is going to take longer potentially
- The dollar actually rose today, and I am assuming that this was driven a bit because of the jobs report.
- TIP also dropped today (iShares TIPS Bond ETF)
- People may be pulling out of gold into risky assets such as Bitcoin ... Tesla?
Some things to keep in mind here.
My thoughts on Gold
- Strong day for the dollar
- Still appears to be creating a mega bull flag
- Strong macro factors at play
- Rates low for years, and I commented earlier that the FOMC targeting 2% is not going to be an inflation expectation to cause a parabolic run in gold, but when viewing the yields on holding digital dollars like CircleVisa's USD Coin (USDC now has a market cap aiming at $4 billion) we see yields being offered for holding this dollar at 1-1 parity with US Dollar yielding rates of 7-10%. This I think is a good indicator of where real inflation somewhere is.
- Gold bugs have the gold salesman Peter Schiff converting Bitcoin bulls to get out of crypto & into gold ... /sarc :)
- In reality I wonder if we are seeing an exodus out of gold into the growing market cap of bitcoin. The utility of Gold is to preserve wealth against inflation, while bitcoin is literally in a state of being parabolic right now. (Love BTC and am also heavily long it)
- New administration will no doubt be providing added easing/stimulus
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