Gold is Golden?

by JDH on June 1, 2019

I’m happy to finally get to talk about gold again, after spending weeks talking about Tesla (which is still a garbage stock, hitting $184.10 on Friday, the same price it traded at in September, 2013, so you are not a growth stock if the stock price hasn’t moved in almost six years, but enough about that).

Gold’s performance on Friday was stunning, up $18.70 or 1.45% to decisively close above $1,300 for the first time since April.  Even better, the down-trend line formed from the $1,350 level hit in February was also breached decisively, which is also good news.

Now, since a mere two paragraphs ago I trashed Tesla for trading at the same price it was trading at in 2013, full disclosure: gold is trading at the same price it was trading at in November, 2009, which begs the question: is this the end for the Lost Decade in gold, or is this just a temporary blip up?

I don’t know.

Presumably gold bounced because Trump is putting tariffs on China and Mexico, and that’s not good for free trade or the world economy, so gold’s increase may simply be safe haven buying.

That’s quite likely.

The other “safe haven” is Bitcoin (I don’t own any), which has more than doubled in price since April, going from $3,750 at the start of April to briefly touching $9,000 this week.

So does this mean that gold and bitcoin are starting a run?

Maybe.

If Trump gets his trade deals this week and the stock market resumes its ascent, will gold correct?

Probably.

So my strategy this week was to slightly lighten up some of my gold holdings.

My biggest gold holding is EQX.V – Equinox Gold Corp., a lousy performer over the last two years, but it had a nice bounce on Friday, so I sold about 5% of my holdings to raise cash.  For the rest, I’ll let it sit and see how this plays out.

The summer doldrums are upon us, so I’ll feel better having some extra cash on hand, ready to be deployed on further significant weakness.

For now, I watch and wait.

More next week.