Gold Price News: How Will Hurricane Irma Affect It?

Hurricane Irma

Hurricane Irma is now among the top 4 strongest hurricanes on record, with winds clocked at over 185 mph. Our thoughts go out to everyone affected, and it’s definitely a bad one.  Hurricane Andrew hasn’t been talked about in a while, now the memories are flooding back. In gold price news: this highly-potent natural disaster could have a vast effect on the metal.

One side effect from last week’s Hurricane Harvey in Texas was this morning’s jobs report, where initial jobless claims rose by 62,000 to 298,000.  This makes sense as a lot of temporary workers and laborers simply don’t have a place to work right now.

Once insurance money starts flowing toward Texas, we would expect to see an influx of building trades-people. In years past, rebuilding drew a lot of talent toward affected areas.  Here in upstate NY, the big hurricanes in the mid-1990s drew quite a few roofers, carpenters and other home builders down south, and many stayed.  This led to a lack of supply in building talent, which drove up prices.  Yes, the usual economic forces still work just fine, even in modern times.

 Related: Did Goldman Sachs Contradict Themselves on Gold Prices?

Sometimes things don’t quite make sense though.  We’re seeing reports Thursday morning that Hurricane Irma is the cause for a rise in gold.  Your Gold Enthusiast isn’t buying that as the cause, as we’ve known about Irma for several days now and gold is basically going sideways.  Yes, it’s sideways at the top of the current trading range, but international prices haven’t broken out above 1350 – yet.

Gold prices are much more likely to rise due to South Korea’s claim that North Korea is readying another missile launch for Saturday.  A missile test would be much more likely to have an impact in gold price news.  International strife — or geopolitical instability if we keep with conventional terms — can directly impact currency values, which of course directly impacts the price of metals.

The one mostly-direct way Hurricane Harvey and Hurricane Irma can affect the price of gold is if the US government has to kick in a lot of relief money.  That increases the budget deficit, which decreases confidence in the dollar.  And that is the recipe for a continued decline in the currency, which is touching new annual lows Thursday morning.

In gold price news, the metal is now squarely up against the top of the 1300-1350 trading range, defying those who expected a pullback.  What we will watch for now is whether the Dollar will continue its drop.  If it does, we can expect gold to keep heading up.

Signed, The Gold Enthusiast

DISCLAIMER: No specific securities were mentioned in this article.  The author is long NUGT and JNUG, and may trade these at any time in the next 48 hours.

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About the author

Mike Hammer

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated from UC Berkeley with a business degree, then worked with Macy's in their operations arm. He left Macy's and spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined Waddell & Reed as a financial advisor, helping regular people understand their finances and meet their life goals.

Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where Mike worked first for a small manufacturing consulting company, then Cornell University. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach.

Since then, Mike has trained over 200 individuals, spoke at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"

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