Gold Set to Join the “All-Time Highs Club” — Bloomberg Intelligence

Gold is poised to join the “all-time-highs” club in the upcoming decade.

No, this isn’t the musing of some gold-bug. It’s analysis from a pretty mainstream source — Bloomberg Intelligence.

Stocks have set new records over the last several weeks and the dollar hit 2-year highs this fall. But writing in the commodity outlook, Bloomberg Intelligence senior commodities strategist Mike McGlone made the obvious point that stocks and the dollar can’t go up forever. When the tide turns, the reversal could boost gold to all-time highs.

It’s a new year and decade and gold is poised to follow the dollar and equities to new highs, in our view. When, should be the primary question, particularly when the stock market and greenback succumb to some normal mean reversion.”

McGlone noted that gold has been strong even with significant headwinds. Despite the strong dollar and records in the equities markets, gold is up significantly this year — in stark contrast to many other commodities.

Gold is the divergent strength standout. Up almost 15% in 2019 despite the 2% gain in the trade-weighted broad dollar indicates the metal is on solid footing for further advancement.”

McGlone said gold will remain “a stalwart” unless dollar and equity strength is sustained, something he doesn’t think will happen.

That’s unlikely, particularly as we approach a contentious U.S. presidential election. Divergent strength in the gold price, despite greenback and equity market record highs, indicate anticipation of a more favorable end-game for the quasi-currency.”

During an interview on RT Boom Bust last week, Peter Schiff said there are a  lot of things that should be causing US stock markets to go down, but only one thing causing them to go up — the Federal Reserve.

For a while, people were worried about rate hikes. Nobody is worried about rate hikes. The Fed has taken all rate hikes off the table. The Fed has made it clear that the only direction rates can go is down. They’re either going to stay the same, or they’re going to go down. And QE4 is now on autopilot into perpetuity. So, that’s what the markets want. They know they’re never going to have another rate hike and they’re going to have money printing as far as the eye can see, and so that’s what’s driving stocks. And I guess that’s going to continue to drive stocks until something causes that to change. And something is going to happen because the US is headed for a worse economic disaster than the one we had in 2008 and there’s no way this is good for stocks.”

McGlone pointed out that gold began to recover with the first Fed rate hike back in 2015. We are now at about the halfway mark of the 2011-15 decline. The gold market really heated up around this time last year with the “Powell Pause” and has been sustained despite the strong greenback and surging stocks by three rate cuts and the launch of QE4 this year.

McGlone said things will really ramp up when the dollar-denominated price exceeds $1,900 an ounce. “About $1,400 is a good initial support,” McGlone wrote, adding that five years of consolidation have formed a solid base for appreciating gold prices.

Absent a new higher dollar and stock-price plateau, gold is set to join the all-time-highs club.”