Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
An account already exists for this email address, please log in.
The charts that matter: gold finally sets a new record high
As gold surges past its previous high, John Stepek looks at how it's affected the charts that matter most to the global economy.
Exciting new feature to point out to you – we are now doing weekly videos, explaining financial topics in plain English. Our first “Too Embarrassed To Ask” video covers “tax wrappers” in an effort to demonstrate, once and for all, that the question “property or pension?” is a daft one. Watch it here and let me know what you think, at editor@moneyweek.com.
There’s a new podcast from Merryn and me this week too – unsurprisingly our main topic is the new record high for gold. How much further could it go? Where are we in terms of sentiment? And how have the gold miners done so far this year? We also talk V-shaped recoveries and the run on paddleboards. Have a listen here.
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
And of course, in this week’s issue of MoneyWeek, we also wrote about gold. (And silver). if you haven’t yet subscribed, I’d suggest getting in now before the rush.
If you missed our webinar earlier in the week, don’t worry – you can sign up to watch it here for free. Merryn interviewing James Dow, co-manager of Baillie Gifford’s Scottish American Investment Company, all about where to find sustainable dividend income in a post-coronavirus world.
Another factor behind the gold surge is that the US dollar index (DXY – a measure of the strength of the dollar against a basket of the currencies of its major trading partners) continued to tumble this week. Again, Dominic covered the state of the US currency in his most recent Money Morning.
(DXY: three months)
The Chinese yuan (or renminbi) was little changed this week, meandering around the €1/¥7 mark.
(Chinese yuan to the US dollar: since 25 Jun 2019)
The yield on the ten-year US government bond continued to fall too, which helped push the US dollar lower (the lower the interest rate gap between the US and other countries, the less tempting it is to move money there). It also drove the aforementioned “real” yields lower, which in turn is a boost for gold.
(Ten-year US Treasury bond yield: three months)
The yield on the Japanese ten-year slipped a little too, but is still basically static due to central bank yield curve control.
(Ten-year Japanese government bond yield: three months)
The yield on the ten-year German Bund slid deeper into negative territory. It’s edging closer to a three-month low, although still well above the lows set in March.
(Ten-year Bund yield: three months)
Copper took a bit of a breather this week after its strong run but it still managed to end the week a little higher.
(Copper: nine months)
The Aussie dollar continued to climb, which is mostly driven by the weak US dollar.
(Aussie dollar vs US dollar exchange rate: three months)
Cryptocurrency bitcoin finally broke out of the tight range it’s been wobbling around in for the past three months or so. While I don’t claim to understand what drives bitcoin, I feel fairly confident that the current surge is mostly about it being seen as a “catch-up” trade for gold, alongside silver. It’s an asset I’m essentially agnostic on but I’m certainly not against owning a little bit, just in case it decides to go on another of its wild runs.
(Bitcoin: three months)
This week’s US weekly jobless claims figure rose again this week. The number of new claims came in at 1.43 million (from 1.42 million last time). The four-week moving average edged higher to 1.37 million from last week’s 1.36 million. US politicians are still trying to agree a deal to extend unemployment benefits.
(US jobless claims, four-week moving average: since Jan 2020)
The oil price (as measured by Brent crude) didn’t change much this week. It looks to me as though the mood music around oil cartel Opec is getting a bit fractured, while there’s more and more clear distress in the fracking sector. I suspect that this adds up to the risk of more supply hitting the market in the shorter run, but in the longer run, a surprise shortage. We’ll see what happens.
(Brent crude oil: three months)
Amazon soared at the end of the week as it turned out that the lockdown – surprise, surprise – really has been very good for a company that dominates internet retail. In the same week, CEO and founder Jeff Bezos appeared in front of US politicians alongside his fellow technology company Masters of the Universe, to try to present the argument that they’re not monopolies or near-monopolies. From that point of view, having an extraordinarily profitable quarter probably doesn’t help things, but shareholders aren’t complaining right now.
(Amazon: three months)
Electric car group Tesla had a relatively tame week by its volatile standards, ending up a little higher.
(Tesla: three months)
Have a good weekend – hopefully we’ll get to enjoy some sunshine.
Explore More
Sign up for MoneyWeek's newsletters
Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
