Russia says a Siberian lab worker’s death wasn’t plague, and Fox News says it could be much worse than we had feared, but Gold isn’t reacting. It’s down about 7% in a month at roughly $4,100, pushed by a firm dollar and 5% yields. But the last health shock showed what actually moves gold. It wasn’t the virus. It was the response. Here’s what would move it, and when.
The Story Isn't Settled
Early reports said pneumonic plague. Russia’s health agency says pneumonia of unknown origin, and they say tests so far found no plague among her contacts. However, I would be in for a penny and in for a pound when trying to sleuth the truth from a Russian agent. A senior local official’s post said plague, then added “possibly.” About 200 people have already been isolated. In 1979, the Soviet Union blamed a lab outbreak on tainted meat for 13 years.
It’s why the questions persist. Today’s market reports blame the dollar and yields, not Siberia, though. This is all worth monitoring closely.
Last Time, the COVID Response Did Move Gold
In March 2020, gold fell about 12% in eight days, from roughly $1,680 to $1,470, as investors sold everything for cash. On March 23, the Fed announced unlimited bond buying. Gold jumped that same day. By August 6, it had climbed about 40% to a record near $2,067.
The lever pushing that price was real yields, what Treasuries pay after inflation. They fell to about -1%. Today they sit near 2.9%. That’s the weight that could hang around gold now.
The Two Most Glaring Numbers
Two specific numbers warn you before a response arrives. ISM’s Supplier Deliveries Index shows how slowly suppliers deliver goods worldwide. Census’s inventory-to-sales ratio shows how many months of cushion businesses can hold onto.
Deliveries read 59.0 in September, slowing for the 10th straight month. In June 2021, they read 75.1. That makes the Inventory-to-sales ratio 1.30, which is down from 1.37 a year ago. That means it was trending in the wrong direction all along. The question remains: What will a potential lockdown mean for this already downward trend in the supply-side ratio?
Next Time, The Friction Could Reach the Account
Consider this scenario: In a rushed response, the next step could be massive financial friction to the su Higher verification. Slower settlement. Lower limits. More “temporary” controls. It’s the fastest way to manage behavior without calling it rationing. Greece’s €60-a-day cap in 2015 grew into four years of capital controls.
Own What Doesn't Need Someone Else's Approval
Gold earns its place when nobody can price the shock, and access becomes conditional. That’s Empire Money: metal that works when the answer to “who has to approve this?” is nobody.
Central banks buy bars. Before buying anything, count how many entities sit between you and your money. A bank balance needs several. A bar in your own hands needs none except your own.
— U.S. Gold Bureau Team
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byUnited States Gold Bureau