REPO Madness

We're seeing massive injections of liquidity into the markets today. As a result, speculative stocks such as Tesla have shot up, while safe havens such as gold have tanked. This may seem to contradict the idea that extra liquidity always finds its way to gold. However, liquidity injections are directed and orchestrated. The intended targets are hit with precision. The immediate effect of liquidity injections are therefore always a rise in speculative assets, at the expense of safe havens. But once the money is in circulation, it will find its way into what makes sense. With money printing in overdrive and the economy in free fall due to mismanagement and virus outbreaks, the only sensible investment is gold. The current knock down in the gold price is therefore temporary. We will soon see gold prices move up again.

By Vauxford - Own work, CC BY-SA 4.0, Link