Gold briefly crested $1,900/oz on Thursday, as geopolitical tensions rose again in Ukraine.
“There is a lot of different angles to look at gold right now – from the macro, geopolitical, and hedge against inflation. Bitcoin and stocks are selling off, and people are looking for places to park their money. Gold is wearing a lot of different hats right now,” said Blue Line Futures chief market strategist Phillip Streible to Kitco News.
Shortly after the announcement that Russia was removing troops from the border, shelling and cyberattacks began in a separatist-controlled area. There is concern that this could be a false flag operation to give Russia an excuse to invade. Additionally, NATO noted that Putin failed to keep his promise and withdraw some of the 150,000 Russian troops on the border. Russia also has plans to test its nuclear weapons apparatus this weekend.
As a safe haven asset, gold shines in periods of calamity and unrest, often followed in tow by gold mining equities.
Aside from tensions in Russia, the economic data also shows several signs of concern. “The economic data are decelerating. [Officials] are trying to spin it as a great economy. But the reality is that economy is slowing while the Fed is extremely hawkish. That’s the biggest problem,” said Streible. “The economy will continue to slow well into the second quarter, and the Fed’s tightening will really hurt growth.” Streible added that gold is a hedge against declining growth and noted that “the yield curve is flat, and if you look, it is becoming inverted. That tends to lead to a recession or depression.”
Gold’s fundamentals are exceptionally solid at the moment, and a big run could be on the horizon. Investors looking for exposure to physical gold can look at the Sprott Physical Gold Trust (PHYS). Gold equities exposure can also benefit from a sudden surge in gold prices, and investors can get exposure through the Sprott Gold Miners ETF (SGDM) and the Sprott Junior Gold Miners ETF (SGDJ).
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