Gold (again)

Our Chart of the Day is intended to be a standalone technical chart. We use them to highlight open positions, stocks on our watch list, or indicators that we believe are important, or just interesting at the time. It is not a directional market call. Feel free to share them with others who may be interested.

• Yesterday’s Chart of the Day was on gold. While I do not want to belabor it, things are moving fast. Major monetary policy outcomes related to the US sanctioning of Russia’s treasury holdings that I’ve touched on a number of times are starting to unfold.

• This action by the US was bound to result in some form of reaction. The most likely one was that the world would wake up to gold as a formal replacement/substitution of US Treasuries as the world’s Global reserve asset.

• With central banks buying over the last year at record levels, the next step appears underway.

• Reuters released a story implying that China may issue Gold Bonds, meaning gold may finally be formally launched as a reserve asset.

• “In a war with the U.S. over Taiwan, China would need to create a global network of companies under U.S. sanctions, seize American assets within its borders, and issue gold-denominated bonds, according to Chinese government-affiliated researchers.”

• This likely explains why Gold is rallying and why many countries continue to dump US treasuries. I'd say this is precisely why.

• Developments along these lines seemed inevitable, even if the timing was in question. Geopolitics and the Argentina Project (where developed nations turn into emerging market economies) seem likely to have other outcomes that are becoming increasingly clear as well. Opportunities in the quagmire. More to come.