EDITOR NOTE: The underlying message of a gold rebound in this article is right on--yes, gold will likely see a resumption of its uptrend in the second half of 2021--but the commodities expert cited is going about it in the wrong way. Price trends don’t always follow annual or quarterly timelines. A price pullback can go as deep as 61.8% before resuming in its original direction. And those two swings--impulse trend and pullback--aren’t beholden to annual or quarterly timelines. The beginning of the most recent uptrend was in March of 2020. The beginning of the pullback was in August 2020 (go look at a gold chart). The end of the pullback--the 61.8% mark--took place in March/April of this year. Since then, gold has been moving upward, though in a drunken fashion (characteristic of all financial assets). So, think critically about everything you hear on financial news. Often, it’s half-truth and half entertainment. The price trend info I just gave you may be important, but it’s far from a compelling and “newsworthy” story. Remember, you can make a fortune being shrewd and calculated. But you can easily lose a fortune by following the hype.
Gold could see a resurgence in the second half, said one market analyst.
The metal has had a rough go of it in 2021, down nearly 5% year to date as investors rotate out of the safe haven trade into riskier assets. Gold prices hit a one-week low on Wednesday, though they’re up almost 2% in July.
The rotation also hit exchange-traded funds, with SPDR Gold Shares (GLD), the largest ETF in the world backed by physical gold, seeing $7 billion in redemptions so far this year, ETF Trends CEO Tom Lydon told CNBC on Monday.
The redemption process helps keep an ETF’s trading price in line with its underlying net asset value when it is trading at a discount to its NAV.
“Historically, when you look at inflationary times, gold tends to be a second-half player,” said Lydon, also CEO of ETF Database.
Over the past 12 months especially, gold prices have been flat to lower — down more than 2% as of Wednesday — while base metal, food and energy prices have rallied, he said.
“If we actually do see inflation tick up here, you can expect that gold will kick in and with that, it’ll be better for these companies as well,” Lydon said.
Original post from CNBC