In the latest episode of Money Metals Midweek Memo, host Mike Maharrey analyzes the economic forces shaping the gold market, the Federal Reserve's precarious balancing act with interest rates, and the long-term implications of inflation on precious metals.
From Newton's third law of motion to a potential breakout in gold prices, this episode analyzes crucial financial trends that investors need to be aware of.
Maharrey opens the episode by drawing a parallel between Newton's third law (which states that every action has an equal and opposite reaction) and the principles of economics. In monetary policy, every decision triggers consequences that often unfold over extended periods.
For example, artificially low interest rates have encouraged borrowing and inflated debt levels.
Now, with interest rates rising, the economy faces the inevitable reaction: financial stress.
Gold Market Summary: A Bull Market with Volatility
Last week saw dramatic movement in gold prices. After reaching a new all-time high of $2,953 per ounce, the price fell nearly 2 percent, testing the $2,900 support level before stabilizing around $2,925. Such volatility, according to Maharrey, is normal in a bull market and should not be confused with a collapse in gold's upward trajectory.
Gold exchange-traded funds in North America saw a significant inflow of 48.8 tons last week, the highest since April 2020.
Historically, Western investors have been slow to join the gold movement, with demand coming mainly from central banks and investors in Asia.