Gold News & Info

Source:Bill Musgrave, American Gold Exchange

AustinGold leapt another 6% to close above $1,660 as the Fed's new easing programs and hopes for a stimulus package from Congress stoked demand for the metal as a hedge against currency debasement. Coming a day after jumping 5.6%, it was the metal's biggest one-day percentage gain since March 2009.

The Federal Reserve stunned markets yesterday by announcing an unprecedented program of monetary easing, including unlimited purchases of government and corporate bonds, known as quantitative easing. Their goal is to prevent markets from seizing under the strain of the coronavirus pandemic, thereby limiting damage to the economy.

Tantamount to printing money, QE effectively floods the US and global financial systems with cheap cash, enabling banks to loan money and exchange markets to function smoothly.

Separately, Congress is reportedly nearing agreement on a $2 trillion stimulus package that will provide aid to workers and companies. This plan will add even more liquidity to the markets through loans, tax breaks, and outright gifts of cash.

Equity markets rallied sharply on the hope that the stimulus package will lift the economy. The Dow jumped more than 10% while the Global Dow added 8%.

The dollar fell for a second session, dropping another 0.3% against major rivals, supporting gold and other commodities priced in it for global trade.

Gold's stunning, two-day surge of $175 brings it close to levels before US stock markets crashed two weeks ago. Margin calls on plunging stocks had forced desperate traders to find cash wherever they could. Gold, being one of the most liquid assets, was an easy target.

Now with QE and stimulus packages in the pipeline, those liquidity crunches are vastly reduced, allowing gold to trade more naturally as a safe-haven asset.

In addition, the Fed's extreme easing plans are creating additional demand for gold as a hedge against currency devaluation. In 2011, following three waves of limited QE, gold rose to its all- time high above $1,900 as the dollar weakened and concerns about inflation increased.

Goldman Sachs is now recommending gold for just this reason, telling clients gold "is the currency of last resort, acting as a hedge against currency debasement." The investment giant expects the metal to trade well above $1,800 in the next 12 months, according to MarketWatch.

The other precious metals were also sharply higher. Silver rose another 7.5%, extending yesterday's 7.1% jump. Platinum and palladium climbed 11.8% and 14.8%, respectively, after major supplier South Africa locked down because of the coronavirus.

At the Comex close: April gained $93.20 to $1,660.80; May silver rose $1 $14.26; April platinum climbed $74.20 to $701.70; and June palladium soared $230 to $1,786.90 an ounce.