2020 vision: Five charts to contemplate as we prepare for the new year.
1. Gold’s annual returns 2000 to present
…Gold is up 15 of the last 19 years and still up 14.45% so far this year.
2. Gold’s seasonality
Chart courtesy of Gold ChartsRUs/Nick Laird
We are moving into the part of the seasonal cycle when historically gold regains price momentum. …[As you will notice in the chart above] gold tends to go up quite strongly and with relatively little choppiness in the first two months of the year…
3. The correlation between global negative-yield debt and the price of gold
Chart courtesy of the World Gold Council
The World Gold Council recently released a timely report tying gold’s sturdy performance this year to the rising tide of global negative-yielding debt and the demand it has already created among investors seeking safe haven. “Our research suggests,” says the Council, “that lower expected bond returns favor additional gold exposure in well-diversified portfolios.”…
4. The NEW correlation between money supply growth and the price of gold
…Gold has followed the money supply higher consistently since the early 1970s (what we often refer to as the fiat money era) and, of late, the money supply has surged dramatically and gold is moving in tandem with it….As long as central banks continue with their inflationary scheme, the savvy investor has good reason to consider keeping gold as part of his/her liquid means because the purchasing power of gold cannot be debased by central banks printing up ever greater amounts of currency.
5. Additions to the Fed’s balance sheet
Chart courtesy of the St. Louis Federal Reserve
The above chart shows the abrupt reversal of the quantitative tightening program begun in early 2018. Current repo rescue operations, or QE Lite as it has been dubbed, is likely to further boost the Fed’s stockpile of U.S. Treasuries. Says Tocqueville’s John Hathaway in a recent interview, “I think the expectation of tightening – the pretense that they were going to be a responsible central bank – is just totally out the window and they’re joining the crowd and creating more and more liquidity…so I think we’re back on a path towards monetary debasement and that is what we in the gold world have always expected would take place – and now it’s sort of out there for everyone else to see.”