What could sustain a precious metals rally this time and force a break out to the upside from the sideways trading range? Simply a flight to safety as other asset markets breakdown. Whether you look at bonds or equities they have a definite sense of virtigo at these levels.
Yesterday investors dumped stocks as the Chinese authorities took steps to tighten lending. Meanwhile fears about Greece finally leaving the euro and defaulting on its debts resurfaced after Athens announced it would hold its presidential election two months ahead of schedule. Greek stocks plunged an eyewatering 13 per cent.
Prices going up
Gold and silver are cheap by comparison to stocks and bonds. The fear of higher interest rates to come is over done. The global economy can’t take it. More money printing is on the way to sustain low interest rates. They are already negative in the eurozone making gold a positive hold there by default.