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GOLD: Trump and geopolitics drive gold not just the coronavirus

Trump and geopolitics drive gold not just the coronavirus
By Arkadiusz Sieroń via FX Street

Syndicated by GEO´ PR Channel Team

Coronavirus, China's Economy and Gold Prices

The number of cases of coronavirus reported by the WHO have increased from 45,171 cases and 1,115 deaths by February 12 to 51,867 cases and 1,669 deaths by February 16, 2020. However, the number of new cases is slowing down, which suggests that the epidemic could reach a turning point within weeks. This is of key importance not only for the global health but also for the global economy, as the sooner the epidemic is over, the quicker China's economy will recover. As a reminder, the quarantines of the whole cities like Wuhan and other compulsory measures disrupted the supply chains and hampered the Chinese economy.

"... Coronavirus, the topic du jour. It is still the major threat for the global health and economy. But we should not forget about other geopolitical and economic developments. What do they imply for the gold market?"

However, gold bulls should not count on the coronavirus to dramatically hit the long-term economic potential of China. The epidemic will cause only a short-term slowdown, but it should not decrease the long-term economic growth. Investors should remember that the epidemic will be contained eventually and that geopolitical events and external shocks have only temporary impact the gold prices.

Industrial Production, Inflation, and Gold

In the last few editions of the Fundamental Gold Report, I focused on the coronavirus outbreak, the major threat for the global health and economy. But don't forget about other important developments!



First, the CPI rose 0.1 percent in January, after increasing 0.2 percent in December, marking the smallest increase in four months. The analysts expected stronger move. However, the annual inflation rate moved from 2.3 percent in December 2019 to 2.5% the highest level since October 2018. The core CPI, which excludes food and energy prices, rose 0.2 percent on a monthly basis and 2.3 percent on an annual basis, the same increase as reported in the previous 3 months, as the chart shows.

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About Author
Arkadiusz Sieroń is a certified Investment Adviser. He is a long-time precious metals market enthusiast, currently a Ph.D. candidate, dissertation on the redistributive effects of monetary inflation (Cantillon effects). Arkadiusz is a free market advocate who believes in the power of peaceful and voluntary cooperation of people. He is an economist and board member at the Polish Mises Institute think tank. He is also a Laureate of the 6th International Vernon Smith Prize. Arkadiusz is the author of Sunshine Profits’ monthly Market Overview report, in which he keeps subscribers up-to-date regarding key fundamental developments affecting the gold market and
helps them prepare for the major changes.

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