To say gold has had a rough start to the year would be a gross understatement. In a quarter where commodities across the board have been hit hard, gold has been a significant underperformer, posting its second consecutive quarterly loss; something that hasn't happened since 2001. But why? This week we will examine the factors that drive the price of gold.
Many market commentators say that central bank asset purchases, above all else, have been driving the gold price; in particular, the Federal Reserve's (Fed's) policy of 'quantitative easing' - expanding its balance sheet by effectively printing money.
We'd argue that the expansion of the Fed's balance sheet, which only really got underway in mid-2008 with 'QE 1', cannot wholly explain a +10 year gold bull market. The Fed's asset purchases do, however, conincide with an acceleration of the longer-term gold market rally in 2008. That begs the question, therefore, what was driving the gold price before 2008? And do these factors remain in place?
Click on the icon below to subscribe to our daily market update and/or weekly strategy note.
The Seismic Team
Daily Market Updates
White Label Daily Reports
Seismic Research is a research house that specialises in small-cap ASX-listed companies. Our goal is to find undervalued small-cap companies with near-term growth potential. We recommend companies based on their fundamental value, while keeping in mind the upcoming news flow.