Gold jumped up on the eve of the election. It seemed to be looking beyond… and indeed it was. Gold continued rising after the Obama win as the attention turned to the fiscal cliff.
The markets have been focusing on the next major problem. The fiscal cliff will surely help keep the markets volatile. But the ongoing uncertainty and the historical money pumping will continue to be dominant factors affecting the markets.
Gold sees inflation coming. With the Fed’s ongoing record stimulus, for example, it sees uncertainty as the only real certainty. It sees a debasing of the currencies while the soaring monetary base in the U.S. and around the world mounts.
HSBC says central banks created $9 trillion during the crisis, which is the equivalent to the value of all the gold that has ever been mined. Plus, the Fed reaffirmed its pledge to keep interest rates low for a few more years, which means ongoing low rates.
Currently, inflation is higher than interest rates and it looks like this will continue going forward. Negative rates are very bullish for gold.
So it’s not surprising that gold is poised to head higher in a powerful intermediate rise. A clear gold rise above $1,800 would see it heating up.
Pamela Aden will present a keynote on Saturday during the San Francisco Hard Assets Investment Conference.