Frank Holmes

Many of you likely rubbed your sleepy eyes in disbelief when you saw gold prices breach $1,675 an ounce in early trading, but you weren’t dreaming. Gold danced above $1,675 into the wee hours of the night before settling in at $1,663.45 (at the time of this writing this afternoon).

Since pulling back to $1,487 an ounce on July 1, gold has surged nearly 12 percent. Over the past 10 years, gold’s normal volatility has been about 15 percent, so we’ve seen nearly a year’s worth of price movement in just 34 days!

Does this mean we’re due for a correction? Possibly. Gold could easily correct 5-10 percent, but given today’s current environment, I don’t think that’s what the crystal ball reflects.

Gold markets are clearly being affected by the Fear Trade. CNBC host Carl Quintanilla told me this morning that this run is “obvious to anyone who’s watched markets over the past few months.”

First, we were subjected to the antics on Capitol Hill surrounding the debt limit. Though the resolution wasn’t enough to knock America’s debt rating from its AAA pedestal, the market didn’t digest the news very well. Bloomberg screens are red with uncertainty.

Second, a slew of poor economic data is signaling the U.S. is weaker than many, including our team, originally thought. Our Ralph Aldis said yesterday, “We can’t grow our way out of this because there’s no growth.”

On CNBC and Mineweb, I provided my insight on recent gold developments today that I think you’ll find useful. The first is a podcast discussion on gold and the current opportunity in gold stocks with MineWeb’s Geoff Candy. You can listen here. We discuss gold’s key drivers and calculating value among gold miners.

I also appeared on CNBC’s “Squawk on the Street” to discuss what’s driving gold. You can watch below.

Regards,

Frank  Holmes,
for The  Daily Reckoning

P.S. For more updates on global investing from me and the U.S. Global Investors team, visit my investment blog, Frank Talk.

You May Also Like:


Marc Faber on the Massive Proliferation of Fraud in China

Rocky Vega

Based on his deep experience in Hong Kong, Marc Faber — investment analyst and publisher of the Gloom, Boom & Doom Report — is concerned about investing hype in China. In a recent Bloomberg interview, he indicates that fraud is widespread, and that foreigners and likely to take the brunt of the pending fallout. Three […]

Frank Holmes

Frank Holmes is chief executive officer and chief investment officer of U.S. Global Investors Inc. The company is a registered investment adviser that manages approximately $2.08 billion in 13 no-load mutual funds and for other advisory clients. A Toronto native, he bought a controlling interest in U.S. Global Investors in 1989, after an accomplished career in Canada's capital markets. His specialized knowledge gives him expertise in resource-based industries and money management. The Global Resources Fund was also Morningstar's top performer among all domestic stock funds in the five-year period ending Dec. 31, 2006.

Recent Articles

Peter Thiel Explains What Backs the U.S. Dollar

Chris Mayer

In a recent interview, Peter Thiel gave a simple and clear explanation of what gives the U.S. dollar its power. “It surprised me,” writes Chris Mayer, “because I had not heard anyone but fringe economists give it. And yet it is the key to understanding modern money.” Chris revisits the idea… including some radical ideas “that will change the way you think of money and the economy forever.”


Could Steak Really Cause Arthritis?

Stephen Petranek

Can you really eat more salt? Is arthritis caused by steak? Are artificial sweeteners really Satan’s sugar? Stephen Petranek comes clean about 2014’s wackiest health recommendations in his new series on “The Truth About MD Warnings.”


Now’s the Time to Buy Housing Stocks – While They’re Cheap

Greg Guenthner

So let me point out one of the new clues for you: construction hiring is actually on the mend after years of decline. Contractors added 48,000 jobs in December, according to the latest numbers. Full-year numbers were also better than expected, clocking in at 9-year highs. Why is no one talking about that?


The Currency Wars’ “Pearl Harbor”

James Rickards

The most dramatic battle yet in the currency wars took place last Thursday. It was the financial equivalent of a Pearl Harbor sneak attack. Jim Rickards has the full story... what it means moving forward... and a lesson for all gold investors...


Why Oil Can’t Stay Cheap

Byron King

As consumers, you want to see low prices at the pump. But for investors who've been riding the American fracking boom, are these low prices a death knell? Byron’s advice to you, as an investor with exposure to energy stocks, is to not panic in the face of short-term market turmoil. And Byron’s got two picks primed to rebound…