Perth Mint Flying Gold to the US? Gold Price Poised for Lift Off
It sounds absolutely nuts, but yes Aussie gold refinery Perth Mint is now shipping a significant amount of physical gold to the US to address shortages. Also, today we look at the gold price in AUD terms for hints as to where the gold price will go from here.
This from Bloomberg:
‘Australia’s largest gold refinery has ramped up production of one kilogram bars to ease the supply squeeze in the U.S. that helped propel a surge in the premium for New York futures.’
‘In a chaotic couple of days in late March, the premium for New York futures over the London spot price rose above $70 — the highest in four decades. The spread has narrowed to about $21, yet that still compares with just a few dollars in normal times.’
The article goes on to quote Perth Mint CEO Richard Hayes as saying: ‘For every coin we make, be it gold or silver, we could probably sell five or six of them.’
What to make of this?
Well, if it’s on Bloomberg you know that the panic buying of gold has hit the mainstream.
If it’s in the headlines, it’s in the price.
Psychology is critical here too, and this is why momentum is such a powerful feature of market moves.
If there’s a queue for something, people instinctively line up.
And let’s not get started on Australia’s toilet paper debacle…
But what’s happening with the gold price in AUD terms right now?
AUD gold price quadruple top?
Let’s look at the daily chart from when the gold price in AUD terms [XAUAUD] broke out at the start of 2020:
You can see a rare ‘quadruple top’ pattern formed after the gold price tested $2,720 a remarkable four times.
A stronger move down, followed by three weaker moves.
This is thought by some to be a bullish signal.
If $2,720 was the level that stopped it in its tracks, and the 20- and 50-day moving averages are still pointing up, then psychologically, people are still queuing up to buy toilet paper/gold.
If you don’t put much stock in technical analysis though, think of it this way.
The same narrative about central banks slashing rates is still in place, supported by a wave of anecdotal evidence that physical own is getting harder to come by.
And if it’s on Bloomberg, it’s not even anecdotal evidence, really.
This reminds me of the heady days of late 2017 for bitcoin prices.
The BTC hype hit the headlines and a horde of people flooded into the market.
To me, all of this points to a rise in the gold price in AUD terms at least, and it could push strongly past $2,720 should the current dip reverse.
For The Daily Reckoning Australia