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Top Stories This Week: Gold Price Bounces Back, US Debt Hits US$31 Trillion
Oct. 07, 2022 02:00PM PST
After last week's drop to US$1,622 per ounce, gold rebounded this week. Meanwhile, US debt passed US$31 trillion for the first time.
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The first week of the third quarter treated gold relatively well — after falling to US$1,622 per ounce on September 28, the yellow metal bounced back, rising to around US$1,725 on Tuesday (October 4).
Gold finished the five day period lower, coming in at US$1,695, but its uptick has soothed worried investors.
I heard this week from David Erfle of Junior Miner Junky, who shed some light on gold's interesting recent price activity. He said that last week was filled with bearish sentiment, and he was prepared to see the precious metal drop to US$1,550. That would have been a 50 percent retracement after gold's doubling from late 2015 to August 2020.
Of course, we now know that didn't happen — according to David, gold was buoyed by turmoil in Europe, and this allowed it to get back over the crucial US$1,675 level. Here's why he thinks that price point is important:
"(Gold) had tested (US$1,675) four, five times, and when it finally broke, it put a lot of people into the bear camp, which overloaded the boat even farther. That's what happens with the gold sector — it does this every single time there's a major bottom. You have a false move first to get everybody out of the boat, and then when most everybody's out that's when it reverses."
Click here to watch the full interview with David; he also shares how he's approaching gold stocks right now.
Silver price breaks US$21 for first time since June
Aside from gold, I also want to touch briefly on silver, which got back above the US$21 per ounce mark this week.
The speed of the white metal's rise in particular has attracted attention — it jumped from US$18.13 on September 28 to a high point of US$21.14 on Tuesday, although it closed the week lower, at US$20.16.
The move has brought renewed focus on the #SilverSqueeze hashtag on Twitter (NASDAQ:TWTR), and it's a topic we'll definitely be talking about next week when the INN team attends the New Orleans Investment Conference.
US debt blows past US$31 trillion
As a final comment, it's worth noting that according to the US Department of Treasury, the country's debt reached US$31 trillion this week, which is a new high. Putting that into perspective, a report from the Peter G. Peterson Foundation shows that this amounts to US$236,000 per American household, or US$93,000 per person.
If you've been following along on our channel, you'll know that many commentators have pointed to ballooning US debt as a major problem that rising interest rates are only exacerbating — this is one of the reasons some experts believe that sooner or later the US Federal Reserve will have to stop hiking or risk creating an untenable situation.
The Fed's next move remains to be seen, but debt will no doubt stay in the spotlight in the lead-up to its November meeting.
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Securities Disclosure: I, Charlotte McLeod, 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.
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