Gold Bouncing Back – Mainstream Media Talking Actively, Nervousness Abounds
Though oil is still soft, other commodities have been stronger as late, including gold and silver, which is piquing the interest of investors and media personalities.
Gold futures increased markedly as they have for a few days in a row and approached $1,300 per ounce, posting the longest rally in 11 months on speculation that the European Central Bank will boost economics stimulus, increasing demand for the precious metal as a haven.
Assets in the SPDR Gold Trust, the biggest exchange-traded product backed by the metal, last week increased 3.3 percent. The most increase since May 2010. Futures posted the biggest weekly gain in 18 months after the Swiss central bank abandoned its currency peg against the euro.
Talk is on gold and has been in recent weeks as people worry about quantitative easing, and more pressing, the State of the Union address which will take place tonight. It could be that Obama’s speech downplays the terror threat while talking about the economy.
According to CNBC:
In his State of the Union speech Tuesday night, President Barack Obama plans to put forth a plan to try to slow the widening gap between the richest and poorest Americans.
Widely seen as a nonstarter among the Republicans who now control Congress, the proposal targets the lingering financial setbacks inflicted by the Great Recession on all but the wealthiest American households. Even as the unemployment rate has fallen and the overall economy picked up steam, the wage gap between the richest and poorest continues to widen.
That disparity in wealth distribution was underway long before the financial crisis of 2008 sparked a global downturn. Between 1979 and 2011, the average after-tax income for the bottom 20 percent of U.S. households rose by 48 percent, according to Congressional Budget Office data. The top 1 percent saw their incomes rise by 200 percent during the same period.
The White House is proposing to use changes in the U.S. tax code to slow or reverse that trend. A key provision would close an inheritance tax loophole that benefits the wealthiest Americans the most. After raising those taxes, the plan would use the money to give middle-class families a tax break for expenses such as education and child care.
It will be interesting to see how this all plays out, but depending on how Europe moves forward, QE or not, gold is either looking at a breakaway or a short breather.
People are worried about their money, and gold is a currency, which means it won’t lose any value over time. People have been worried as late because of the correction over the last several years, but this seems to be flushing things out and all weak hands have potentially sold out.