September 30th Poised as Major Monetary Event

If you’ve been following gold recently, you’ve undoubtedly noticed, after a spectacular performance this year, the yellow metal had experienced a great deal of volatility. After a 24 percent rise in price through most of the first half of the year, gold has oscillated broadly between $1,307.00 and just over $1,367.00 per ounce between mid-July through September 15th.
A support level for gold now appears to hold firm at $1,300.00
What, one wonders, is going on here?
Well, it’s safe to point to two significant current events. Gold investors are anxiously anticipating two significant developments before they trade aggressively. The first of these, of course, was the next Fed Monetary policy meeting last week.
Despite some signs of improvement, the economy remains weak. With retail sales and industrial production figures down, the Fed, yet again, deferred any rate hike.
A second upcoming, and arguably more significant event, will take place on October 1. On that date, the International Monetary Fund (IMF) will officially grant what is known as special drawing rights (SDRs) to China’s currency, the renminbi or (less formally) the yuan.
The renminbi will now become the IMF’s fifth SDR currency. Currently, SDRs are granted solely to the U.S. dollar, the euro, the Japanese yen and the British pound sterling.
As an update to the Bretton Woods agreement, SDRs were created to provide wider international currency reserves than simply gold or the U.S. dollar. SDRs are not a form of currencies, but rather a pre-calculated claim against IMF assets enabling a member country to receive a preferred rate of interest on a loan.
Now that the renminbi is due to become the fifth SDR currency, some traders anticipate the dollar could slip in value. Some countries could opt to do business in the renminbi rather than the dollar.
If this happens, gold could very well break out of its current muted trading range.
Also, on the same day as the Fed meeting, Japan held its own monetary policy meeting. Since the Japanese have favored negative interest rates, it is clear they may progress further in this direction. If so, gold could profit from this move.
Meanwhile, it would benefit you invest in gold now before any spike in its price.
For more information, call 800-777-6177 now, and ask to speak to a Fortress Gold Group representative.

This entry was posted in Economy, Gold, IRA & 401-K Accounts, Money, Physical Gold, Precious Metals, Precious Metals News, World. Bookmark the permalink.

Comments are closed.