- March 6, 2020 (Gold Market Wire) - The morning belonged to Gold. Taking out resistance with decisiveness and sending the bears running for cover. Covid-19 is the culprit, but if economic slowdown is the real germ, then we have a proper epidemic brewing up. China and Hong Kong PMI is inferring a stand still economy with no expansion. For a country like China, where 7-10% p.a. got to be the norm – that's something of a change. … Japan also has problems with Ms. Watanabe firmly closing and locking the household spending budget.

Equities didn't have a good hangover. Yesterday's -3.4% crushing has been followed through on. The S+P 500 Index, which closed at 3023 Thursday is off another -1.5% this morning at 2978 – all before the Wall Street opening. That's a 5% drop in less than two full sessions!

Morning sees the US Dollar get hammered – down a .50% vs. the Euro and Swiss Franc.That's oxygen to Gold. The market believes the Fed has caved on easing and now the market is going to try and front-run them. If the market and the banks need endless liquidity because markets refuse to assess risk properly and function – its hard to see a happy ending. Every human event now, from the mildly worrying to the potentially life threatening, is met with a rate cut. One day, the music for that game will stop.

For now, the zero bound seems calling. Soon, it seems, saving money at 0% will become a task all its own. No wonder Gold is rising. If there is no yield from Money, a major reason for its preference over gold is nullified. When money goes negative – you may as well have gold. Gold works as a monetary “flotation device” when savings return negative.

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More later...

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GMW