The Aussie dollar gold price is just a few dollars away from its all-time high.
And US dollar gold is currently sitting at $1,563. The gold price is up 4% from overnight trading.
Turns out investors flooded to gold overnight…
CNBC reported that the US central bank will ‘begin backstopping an unprecedented range of credit for households, small businesses and major employers in an effort to offset the “severe disruptions” caused by the coronarvirus outbreak’.
In short, the central bank is going for massive credit growth for the US.
Tai Wong, a precious metals derivative trader at BMO, said ‘[t]he Fed unveiled its biggest cannon seen to date – even bigger than in the great financial crisis.’
Golly gosh! What on Earth is going on here, and should you buy gold too?
Today, we’ll take a look…
These numbers are important
Yesterday there were around 304,000 confirmed cases of COVID-19.
The Chinese Wuhan virus has also killed around 13,000 people.
Today, there’s over 378,000 cases and around 16,500 deaths.
Cases in Australia are also ballooning right now.
But it’s not just a health issue. It’s inflating the federal reserve balance sheet.
It’s up 12% in the last month!
Take a look for yourself…
Source: St Louis Fed
Let me now introduce you to my colleague Tom Dyson.
Here’s how he explained it…
‘The economy has all but shut down, the markets are crashing, companies are going bankrupt, people are losing their jobs, and the credit markets are jammed up.
‘To soften the blow, the federal government is about to begin sending cash to every American, upping social benefits and cutting taxes.
‘Current estimates put the cost of this stimulus at $2 trillion. I reckon it’ll end up being far higher… especially when the Treasury begins bailing out corporations.’
Putting that into laymen’s terms…all these look like strong factors for a rising gold price.
But before you go out and load up on gold…I worry that we may be about to see another drop.
I have less conviction this time for a big pull back…but it could be buying potential ‘dip’ to take advantage of.
Take a look at the Aussie dollar gold chart below.
We’re in free fall!
What you’re looking at above is the Aussie gold chart [XAU:AUD].
I’ve been keeping track of tops and bottoms of gold over the last few weeks. But what I want you to focus on is the potential for a pullback in gold…in the next two days!
Right now, if you’re looking to add gold to your portfolio…it may pay to wait a few days to see how the market reacts here.
After all, the last two times I warned of a pull back. Aussie gold fell around 5% shortly after that.
On the surface a 5% fall may not seem like much. But in dollar terms that could save you around $150 per ounce.
And all you had to do was wait a few days for the market to do its thing.
Pretty cool, huh!
Anyway, the good news is that gold is still in a medium term up trend. That means you could consider adding to your gold holdings on each pull back.
And a decline in gold may just bring down the price of your favorite gold miner.
It seems to be a win/win really…
As always, this is not a recommendation to buy or sell gold. It is an update only. I hope you found it useful.
From my living room,
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