The trend is your friend so the old saying goes and the trend for Gold has been clear, UP.
Now at just blow $4400 the trend has reversed. Gold now sits at $4000.
You would have thought Gold had plummeted from the headlines. But with Gold plagued by FOMO the last buyers queuing in the streets to get in on the action probably feel as if the sky has fallen.
FOMO kills as I recently ranted on my youtube channel.
https://www.youtube.com/watch?v=xR0FQVwQJdM
For long term investors however this pull back is no big deal as a Gold position is not just an investment for appreciation but a hedge against bad times and inflation.
The potential for bad times are the cause for Gold appreciation in the last year or two and the trend is clear.
Increasing global tension is pushing the price and the price is being pushed by govenments laying in strategic reserves of Gold as Gold is the currency of war and as countries start to feel uneasy, they must lay in stocks as a financial rearmament. Rearmament is now real with the warpath clearly laid out with the Ukraine and Russia conflict threatening NATO and the 2027 date set in pencil for a China move on Taiwan setting the agenda.
This ratchet of geopolitical stress can be seen in the repricing and new equilibriums can be seen in this chart
While there is certainly a possibility of a fall back towards the long term trend as this chart indicates as below, that would suggest a lowering of global friction rather than a stabilization and certainly not an increase.
More likely is a sideways trend followed by a break on up as one party falls out with another w9ith there being no shortages of potential conflicts underway to generate a flare up.
While Trump has ‘declared victory and gone home,’ the China v US theme is still firmly in place and it seems likely it will have yet another flare up as the clock ticks down toward 2027 when the Taiwan issue is seen as coming to a head.
Another notch up in tension will se Gold go another jump in price with the following level looking like the sort of round number destination that assets love when they hit the mainstream consciousness.
As a holder of Gold my strategy is to sit tight and expect a sideways trading trend to emerge and if that pans out then it will be a case of watching the fight between bull and bear untill one wins.
For me the bulls have a far way to go pushing Gold.