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Gold is down over 8% for the year and on target for its worst month since late 2016. This is despite traditional safe haven buy cues such as inflation scares, a weak US dollar, and an uncertain world, Gold bugs climbed into the precious metal after the Fed's massive new stimulus package and talks of Fiat currency collapse. What happened? One thing, Bitcoin took much of that Gold bug clientelle and yields have tracked higher.

Greed

There is one view that gold is simply down because of the potential of an economic recovery from the Covid-19 pandemic making stocks and other investments more attractive. There is also higher yields in treasuries making gold less competitive because of the carrying cost. This cost and dissappointment explains fast money leaving as we see with the holdings in bullion-backed exchange-traded funds at their lowest in seven months.

However we read of soaring inflation, even hyper inflation. Is there no inflation around the corner or has gold simply lost it's traditional "end of the world" investor, or gold bugs. One tell is the rush to Bitcoin and othe crypto curencies. These prices have accelerated since US new President Biden beat Trump. Many shrewd investors are concerned about a Biden presidency and the uncertainty after a massive bull run in stocks and what that could mean risk wise. Yet Bitcoin has taken off rathet than the more 'stable' gold.

There is also the younger investor looking elsewhere, yes there is more than DOGE coins and GME to them.

Here are two charts for you to look at in tandem, Bitcoin and Gold:

Gold 2 26 21 Fail

The rise of Bitcoin 2 26 2021

Copper and Oil v Gold

Another case is the change in metal and commodity allocations, note the price action in two recovery commodities, copper and oil.  Of interese is their recovery in 2020-21 versus gold.

Copper Rebirth 2021

Oil 2014 2021

What are your thoughts?

  • A changing of the guard for safe havens or something else?
  • Is this a temporary situation?
  • What happens if the USD resumes it's sell off?
  • After Biden's bombing of Iranian assets in Syria less than a month in office is that a reason to buy gold after Trump was the first US President in a long time not to start a new war for the US?

From the TradersCommunity News Desk

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