Gold’s $8 Trillion Crash May Have Been a Trap: Is $9,000 Target Next?
Gold has suffered one of the worst sell-offs in decades, yet has since surged back above $4,600. However, the Fed’s shifting policy outlook and America’s debt burden are raising the prospect of lower real rates and currency debasement. Could all of this have been merely a setup for gold’s next major rally?
Since January, gold has suffered one of its most violent reversals in years. At one point, the precious metal had lost $8 trillion of market value – equivalent to wiping out the entire Japanese stock market. It also suffered its worst quarterly performance relative to the S&P 500 in more than four decades, at one point lagging U.S. equities by around 30%. And all of this happened as a major Middle East war escalated. The irony was hard to miss. The asset supposedly designed to protect against geopolitical chaos had become one of its biggest casualties. But gold has now staged a powerful rebound. On 21st August, gold surged to $4,600, its highest level in more than three months, after gaining more than 5% during the week. So perhaps the more interesting question isn’t: Why is gold falling? It is: Was the sell-off simply a rope-a-dope trick?