Gold Price: An Unexpectedly Big Week in Gold News

Thursday, November 2, 2017

everything gold

Heard about gold in the news recently? Chances are you haven’t heard much. Between terrorist attacks in New York City and big movement in the Russia investigation, the headlines are (rightly) focused elsewhere. But gold investors shouldn’t lose sight of the important headlines in the financial world that go on whether or not people choose to read them. Two such headlines occurred this week that could have a major impact on the future of gold prices.

A “Slowdown in New Gold Discoveries” and What It Means for Investors

According to Business Insider, the “massive gold deposits of the last 130 years or so” have been a long streak that might have some investors resting on their laurels. But what if the discovery of new gold mines were to slow down? Pierre Lassonde of Franco-Nevada recently articulated just that—that gold discoveries are slowing down and that some of the larger deposits are nearing the end of their dependable lifecycles.

The most obvious change: a slowdown in supply. Gold is seen as a stable supply because there’s only a finite amount of it on Earth, and mining new gold requires investment and labor. Gold can’t simply be printed off like fiat currency—it’s an asset that is both expensive and difficult to get from the ground, which means there aren’t any sudden spikes in supply that could push it down. And with lower supply in long-term trends, that puts upward pressure on the price of gold, even independent of the status of the U.S. dollar.

A New Federal Reserve Chairman

The Wall Street Journal reports that President Trump is set to name Jerome Powell for the next Federal Reserve chair. This ends months—perhaps years—of speculation as to the heir for Janet Yellen, the current leader at the Fed, and has started investors to wondering what the Federal Reserve policies are going to be in the future.

The Washington Post calls Powell a “safe pick,” which explains why the circulating rumors haven’t disturbed the markets. And Powell has been a supporter of Yellen’s slow uptick of interest rates, which suggest that it might be more of the same with Powell in charge. This position might not get major headlines in a world with turbulent news all over the front page, but it could be one of the most important stories of the quarter.

The Gold Price in the Wake of Recent News

The Dow Jones Industrial Average remains strong, and the price of gold remains in the upper $1,200 range—nothing out of character for either. But if it’s true there’s a looming supply trend in gold that could push it upward, there’s a good chance that the current price might represent a bargain over the long-term haul…especially if the Dow Jones sees a major correction anytime soon. It’s important to sift through the news to find these headlines pertaining to the yellow metal, even with all that’s going on in the world—because sometimes, the long-term stories and trends are buried by other news.

Darren Capriotti

Darren Capriotti has been a market analyst for the past decade and is an expert in precious metals. He prides himself on his ability to analyze the market and offer true value to investors with questions about gold, silver, and other precious metals. Highly educated, incredibly passionate, and more accurate than most, Darren offers a true, unbiased look into what investors can expect in the precious metals market. You can reach Darren at dcapriotti@gold-eagle.com.