Gold search data highest since 8/2011, 8/2012, 2/2014, 2/2015

[ratiman]

According to google trends data, interest in gold in the US reaches a peak in months when gold is advancing (August 2011 and August 2012 and February 2014) and/or has a wide range (February 2015).

 

https://www.google.com/trends/explore#q=gold&geo=US

 

However that trend was broken this month, which has high search interest (88% of the old peak) but a narrow range and a price decline. This high level of interest combined with soggy price action is an inauspicious combination. It suggests a lot of inexperienced investors are looking at the headlines from Greece and China and the low price of gold and looking for some "cheap" protection.

 

Gold has benefited from a multi-year run in commodities, including the industrial metals and oil. But that has come to an end. Copper, iron ore and oil are down big in the last twelve months, and the dollar is much stronger. Gold is the last man standing; even silver has recently put in a new bottom.

 

Right now gold is a very poor value investment. The cash cost is in the vicinity of $800 and nobody is really talking much about the premium in gold even as other commodities are in deep bear markets. As mentioned, gold is benefiting from negative headlines. As soon as the headlines disappear, gold could disappoint the speculators betting on calamity. They could be the ones who find themselves in a violent rout.

[original mungerville]

According to google trends data, interest in gold in the US reaches a peak in months when gold is advancing (August 2011 and August 2012 and February 2014) and/or has a wide range (February 2015).

 

https://www.google.com/trends/explore#q=gold&geo=US

 

However that trend was broken this month, which has high search interest (88% of the old peak) but a narrow range and a price decline. This high level of interest combined with soggy price action is an inauspicious combination. It suggests a lot of inexperienced investors are looking at the headlines from Greece and China and the low price of gold and looking for some "cheap" protection.

 

Gold has benefited from a multi-year run in commodities, including the industrial metals and oil. But that has come to an end. Copper, iron ore and oil are down big in the last twelve months, and the dollar is much stronger. Gold is the last man standing; even silver has recently put in a new bottom.

 

Right now gold is a very poor value investment. The cash cost is in the vicinity of $800 and nobody is really talking much about the premium in gold even as other commodities are in deep bear markets. As mentioned, gold is benefiting from negative headlines. As soon as the headlines disappear, gold could disappoint the speculators betting on calamity. They could be the ones who find themselves in a violent rout.

 

Gold has benefited from a multi-year run of low real interest rates and money printing. The latter is continuing with China, EU and Japan. In the US they are attempting to get off zero.

 

Not sure if you are aware, but gold has done well in the last year or so against most currencies except the $US. So Gold and the $US have been among the strongest currencies of late.  Gold is money, its not an industrial commodity.

[ratiman]

So you seem to be agreeing with me. As the regime of low interest rates comes to an end, gold speculators shift into assets that actually generate a yield. Gold is not an industrial commodity but countries that sell industrial commodities recycle their dollars in gold. So two sources of demand are drying up: commodity dollars and the speculators shifting into higher yielding assets. Once that shift accelerates, gold will not be seen as a stable currency by buyers looking to hedge their own currencies.

[ratiman]

So I pretty much nailed this one. You guys are lucky to have me here.