“It was the best of times, it was the worst of times…” Dickens’ famous opening to A Tale of Two Cities holds true even today. Right now, we are looking at Gold: A Tale of Two Markets.
Our last update noted that the US retail demand for physical gold had dropped to its lowest point in almost a full decade. As the main investor in the largest worldwide economy, it has taken a big step back from the market in the last two quarters. However, we are also seeing evidence of high-powered money entering the folding market at a fast rate.
On the COMEX exchange, we’ve seen the highest quarterly figure ever reached. Furthermore, Ray Dalio, who you may know as the founder of Bridgewater Associates, has entered the market in a big way. Bridgewater Associates is the largest hedge fund in the world, and Dalio has just raised his investment in gold at an impressive 400% in just this last quarter.
So, to any investor feeling concerned about gold’s latest movement on the market- if the largest global hedge fund is raising their investment in gold, we should take note. Often we are privy to the events likely to occur in the market ahead of time because of our technical data, but this latest information has also provided us with the characters in a play.
Dalio recently had this to say in reference to gold:
“We can also say that if… things go badly, it would seem that gold (more than other safe haven assets like the dollar, yen, and treasuries) would benefit, so if you don’t have 5% - 10% of your assets in gold as a hedge, we’d suggest that you relook at this.”
Taking all of this into account, we can say this: if only 10% of the global population took Dalio’s advice and moved that small portion of their assets into gold, the metals market would subsequently increase, without any hyperinflation or Armageddon situations involved.
The metals market is seeing hints of smart money possibilities, but the majority of investors are still hesitating. As we said last week, the contrarian-minded few are in the perfect position in relation to where gold is finding itself right now.
Christopher Aaron,
Bullion Exchanges Market Analyst
Christopher Aaron has been trading in the commodity and financial markets since the early 2000's. He began his career as an intelligence analyst for the Central Intelligence Agency, where he specialized in the creation and interpretation of pattern-of-life mapping in Afghanistan and Iraq.
Technical analysis shares many similarities with mapping: both are based on the observations of repeating and imbedded patterns in human nature.
His strategy of blending behavioral and technical analysis has helped him and his clients to identify both long-term market cycles and short-term opportunities for profit.
This article is provided as a third party analysis and does not necessarily matches views of Bullion Exchanges and should not be considered as financial advice in any way.
