Image Source: Unsplash

That leads, of course, to the talking heads trying to explain it. And, true to form, they’re taking their shots and badly missing. Many are crediting the jump in gold to the drop in the US dollar, and given the recent slide in the greenback, that’s not surprising.

Others are blaming the $100 jump on an escalation in President Trump’s rhetorical war on Federal Reserve Chairman Jerome Powell. I’m sure this is a factor for some, but you would think it’s obvious that the strategy behind getting Powell gone would be to get interest rates lower. So if that’s what the market is thinking, then why did stocks sell off and the 10-year yield rise?

Then others are saying that Monday’s jump in gold — and the coincident nosedives in stocks, the dollar, and bonds — are due to a continuation of the “selling America” theme that I wrote you about early last week.

Give them credit, because that’s closer to the mark in explaining not only the latest big jump in gold, but its astounding run so far this year. Yet in my opinion, anyone who focuses on any single factor behind gold’s surge is missing the big picture. As I also wrote last week:

“Gold has been telling us that it’s not one thing. It’s everything.”

As I’ve written for decades, one of the hallmarks of a bull market in any asset is when every new data point is interpreted bullishly. By this measure alone, gold is in an historic bull market...because even if a development sends Treasury yields rising or the dollar strengthening, it has almost always sent gold rising.

And it’s not just a matter of interpretation — it’s cold, hard facts. It’s a fact that 45 years of ever-easier money and ever-greater debts has built a debt trap that cannot be escaped without a major devaluation of fiat currencies around the globe.

Smart investors know this. Gold knows this. And gold’s tremendous run over the last 14 months is not so much a prediction of what is to come as it is a recognition of the current situation.

More By This Author: