Will gold shine brightly again this autumn as bitcoin crashes?

London (Sepot 17)  Gold’s been up more than $100 since I last wrote about the precious metal three months ago. It’s not been trading around current levels for almost four years and the recent $1,350 an ounce high was an important chart breakout ending a bear market.

In June I wrote about the many forces propelling gold prices to beat the S&P 500 so far this year, most critically a weakening US dollar and unpredictable new US president.

Those forces gathered strength over the summer with the euro rising to $1.20 and Donald Trump engaging in a furious war of words with North Korea, a crisis that could become a nuclear war.

For followers of the gold price it was the final break out above $1,300 last month that was most impressive and the quick sprint up in the price to $1,350 an ounce. At the very least gold now looks to have moved to trading in a higher price band.

Will it do more than that this autumn? What has changed under the hood of the global economy?

Dollar weakness is certainly a new factor. After 12 years of dollar strength we now have a declining global reserve currency. Gold and other commodities like oil are priced in dollars so tend to inflate in price as the dollar devalues.

At the same time the global credit cycle is finally turning down after a decade of expansion after the global financial crisis.

The US Federal Reserve has now raised interest rates three times. You might expect higher interest rates to boost the dollar but rather this is seen as a sign of slowing growth opportunities for US assets and a negative for investors.

Why then is the US stock market still so sky high? Well that’s now down to a concentration of speculation into a very limited number of stocks in the Nasdaq. Lesser company stocks have already fallen.

TheNational