Gold Price Breaks All-time High, Enters Uncharted Waters

After passing US$1,900 per ounce on Friday (July 24), gold continued its rapid ascent over the weekend. It surged as high as US$1,945.96, breaking its previous all-time high of around US$1,920.

The long-term rally in gold has been attributed to the impact of COVID-19, the monetary response to the pandemic and the rush to safe havens amid the chaos.

However, the most recent growth is the result of a weakening in the US dollar, which is steadily becoming devalued, and renewed tensions between Washington and Beijing.

Speaking about the US dollar, Lobo Tiggre said gold’s 2.4 percent rise on Sunday (July 26), which took it past its previous record, is directly tied to the US dollar hitting a two year low.

Watch Tiggre discuss gold’s performance last week.

The founder and editor of Independent Speculator went on to list some of the other catalysts behind the yellow metal’s rise, commenting, “The recent US$2 trillion shot of more easy money from the EU is a big component, as is the US$1 trillion to US$3 trillion being haggled over in Congress.”

“The money printing and negative real rates are showing up as inflation in financial assets, including gold and silver. Most people can see this; it’s part of the narrative that’s driving generalist investors into this space,” he continued in an email.

The longer economic recovery takes increases the likelihood of more stimulus, especially as the US jobless rate increases. Last week, the jobless number climbed to 1.4 million, marking the 18th consecutive week in which new claims topped more than 1 million. It also broke a 15 week trend of declines in the rate.

The U.S. dollar just hit an all-time record low. You now need over $1,920 to buy a single ounce of #gold. But this record won’t last long as the dollar’s decline is only just getting started. It’s about to plunge to new depths taking the American standard of living down with it.

— Peter Schiff (@PeterSchiff) July 27, 2020

Outspoken US Federal Reserve critic Peter Schiff believes the V-shaped economic recovery many had hoped for is more of a pipe dream than a potential reality.

“The economic data just doesn’t support it,” Schiff wrote on his website. “We’ve reported on the rise in mortgages delinquencies, the rising number of permanent businesses shutdowns, the number of small business owners who don’t think they’ll survive, the increasing number of over-leveraged zombie companies, and the tsunami of defaults and bankruptcies on the horizon.”

As economies continue to deteriorate, gold’s bull run is likely to continue, as Tiggre pointed out.

“We are in uncharted waters on the gold price,” he said. “Nominally, it’s now reached a new all-time-high. There is literally no resistance above, so it’s hard to say where it will stop. But all of the forces that have brought it this far are still in play, so yes, my hunch is that it will go higher.”

That said, Tiggre didn’t rule out a correction period for both gold and silver that could lead to a rush to buy. He also acknowledged the significance of a new generation of investors realizing gold’s potential.

“Lots of folks have gone back out on margin since the stock market recovery went into overdrive. I think there’s a lot of leverage in finance that would need to be unwound in the next meltdown, which may not happen this year — but could start tomorrow,” he said.

“I do think this would take gold and silver prices down a level. If so, this might be the last really great buying opportunity before a full-blown mania for monetary metals takes gold and silver — and related stocks — much higher.”

At 1:30 p.m. EDT on Monday (July 27), an ounce of gold was selling for US$1,934.43.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.