Gold’s Touchdowns and Fumbles Reported on My New Kitco Show
This is a wonderful opportunity to educate investors on not only the strengths and weaknesses in the gold market, but more importantly, the opportunities and threats that are surrounding the precious metal at that particular moment in time, including political, environmental and cultural factors.
In this week’s edition of Gold Game Film, I shared with Kitco viewers the importance of China’s purchasing managers’ index (PMI) numbers on gold. I believe it is crucial to remember that the trend is your friend, and when it comes to global PMIs, there is evidence that these readings have a direct effect on commodities.
Watch the PMI numbers closely for a positive trend; when 1-month crosses above the 3-month mark, our internal research suggests that commodities tend to rise during the following months. This high probability of subsequent positivity has been seen in moves from commodities like copper and iron ore bouncing from their lows.
Another headline topic I mentioned for investors to watch is Janet Yellen’s recent comments on maintaining negative real interest rates. As I discussed recently on my blog, movements in real interest rates are the fuel that really fires gold, and these numbers are determined by what inflation and treasury yields are doing. When real interest rates are negative, we have historically seen the gold price move up.
The U.S. jobs report also comes out this Friday, which I mentioned to Daniela would have a rippling effect on real interest rates as well. The expectation for jobs growth is 200,000 for March.
I encourage investors interested in the yellow metal, and even those who just want a taste for what is happening in the broader commodity space, to tune in each Monday to Kitco News’ Gold Game Film to see the play for the week, and to find out who is catching some wins – the bulls or the bears.
Additionally, for a SWOT-type of analysis of all areas of the market, be sure to subscribe to our weekly Investor Alert newsletter. Our portfolio management team provides concise and comprehensive analysis on the week’s market movements to readers for free. Be sure to tune in and sign up!
All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.