Euro gold prices have soared to a new record high, eclipsing the previous closing price of €2,599.9. The precious metal has demonstrated resilience, trading above both the 100 and 50-day moving averages, with what was once resistance now serving as support. This surge is happening even as the U.S. dollar attempts to cap gold’s ascent, suggesting that any dip in the USD could propel gold prices to even greater heights.
This development is not isolated but part of a broader narrative where gold’s value against fiat currencies like the euro, dollar, and yen is increasingly evident. The reason is simple yet profound: the global money supply has expanded by approximately 7% annually over the past two decades, significantly outpacing gold’s supply growth. This discrepancy underscores the inherent flaw in fiat currencies, which are meant to act as a ‘store of value’ but instead suffer from inflation due to their ever-increasing supply.
The current economic environment, characterized by loose monetary policies, is further fueling this trend. Commodity prices are on the rise, with oil jumping by 3.5%, driven by factors like the reconstruction efforts following the California wildfires and the shift towards service sector jobs, which inherently demand more commodities. This situation is compounded by rising prices in metals like silver, copper, platinum, and palladium, alongside natural gas hitting a two-year high and agricultural commodities gaining ground.
The inflationary pressures are unmistakable, with breakeven rates climbing as consumer prices increase. Despite this, the Federal Reserve seems poised for further rate cuts, creating a financially repressed environment that bolsters the case for hard assets. This scenario is ideal for investments like gold, which historically have thrived under such conditions.
The Dow to gold ratio provides a telling visual of capital rotation, where the allure of hard assets becomes increasingly apparent. Commodities are surging, a trend that’s particularly alarming given the simultaneous strengthening of the dollar. This paradox where essential goods and commodities are rising in price despite currency strength indicates a deeper malaise in the value of fiat currencies.
The narrative here is clear: in an era where inflation is picking up speed and financial repression is the norm, the traditional ‘safe havens’ like gold are not just surviving but thriving. This is a stark reminder that the real things necessary for survival are increasing in price, signaling a potential shift in investment strategies towards tangible assets over paper currency.
Sources:
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https://t.co/Xvpghj2oVq
https://t.co/YQStSsxQ3G
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