#233: Preciously Rising

Massive thank you & welcome to 38 new wise apes joining the community since our last post!

In this email:

• How have gold prices moved this year so far?

• What’s driving the rally?

• Looking 6~12 months ahead

Gold Price YTD

SPY 0.00%↑ is up ~23% year-to-date, which is an impressive 10-month rally, but IAU 0.00%↑ has shown a stronger rally

• Notably, March is when the Gold rally really picked up

• Gold does not always outperform the S&P 500, the broader stock market

  • In fact, according to data from Curvo, Gold has outperform the S&P 500 14 of the last 31 years, just about half of the years

So, what’s driving the rally?

A few factors — fear, rates, China

• Concerns over escalating conflicts in the Middle East

  • Yes, Israel hit back recently has shown that it may be limited, but fear driven short term rallies in gold may continue to be seen

• Rate-cut optimism

  • This may be a sign of a weakening dollar (not weak; just weaker), which usually can be fuel for successive rallies (aka “safe haven” buying)

• PBOC (Central Bank of China) had bought gold for 18 consecutive months and was the world's largest single buyer of gold in 2023

  • Strong, healthy demand for gold from the broader central bank community

Looking 6~12 months ahead

• Political unrest?

  • Global tensions could sustain demand for gold, but that is never a for-sure factor

  • US election is a big one - at least the first year of the new oval office, we will see uncertainty and heightened market volatility in general. How much of that will flow into "flight to safety/gold" movement is uncertain for now...

• Massive cutting?

  • The Fed may not be as fast-pace cutting as they (and the market) originally broadcasted, but rate cuts are indeed coming and could suggest economic softness, an additive factor to gold as a non-yielding, but stable asset

• More central bank activity?

  • It is unclear if central bank gold-buying spree will continue across the globe - after all, there’s only so much gold reserve available. However, what follows central bank activity is, potentially, retail flow into physical gold and ETFs

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It’s a crazy world - we Apes will keep you informed. (As always, I’m no financial advisor! I’m no substitute for professional financial services)