From Birch Gold Group
This week, Your News to Know brings you the latest news involving the gold market and the overall economy. Stories include: Why gold prices might be set for a rebound, Americans can’t afford to ignore gold, and gold exports to China soar in run-up to Lunar New Year.
Why gold prices might be set for a rebound
After posting the best year in the last several years, gold has recently come under pressure due to a bolstered stock market and stronger dollar. Yet according to a report by UBS, Americans are now scaling back their post-election optimism – uncertainty over Trump’s policies and the President’s comments on the dollar being too strong has recently sent the greenback stumbling to a six-month low.
While this has allowed gold to hit two-month highs, UBS has stated that there is still plenty of room for the metal to grow due to the dollar’s recent weakening. “We think this is warranted and see room for gold to extend upwards as markets digest uncertainty around U.S. fiscal policy. But gold has also recovered considerably and market uncertainty at this point could encourage investors to lock in whatever profits they can for now, especially as seasonal gold demand fades,” said UBS, explaining that gold has already recovered from a short-term perspective.
Many analysts agree that gold could bounce back to $1,300 in 2017 on the back of political uncertainty and Trump’s fiscal push on infrastructure. “Increased geopolitical risk or an increase in protectionism could just as easily lead to commodity supply disruption, sending prices higher in the near term despite negatively impacting commodity demand, too,” said Koen Straetmans, senior strategist at NN Investment Partners. “Over longer periods, correlation between broad commodity prices and policy uncertainty is low to slightly negative. Exceptions include precious metals with a more pronounced positive correlation, and a strong negative correlation with the energy segment.”
It’s too soon for Americans to ignore gold
According to the world’s largest asset management firm, inflation is coming a lot quicker than many market watchers think, and it could catch everyone by surprise. Russ Koesterich, portfolio manager for BlackRock’s global allocation team, wrote about the rise of inflation and what it means for gold.
“Like the proverbial frog that does not notice the rise in water temperature until it’s too late, investors seem to be experiencing a similarly stealthy rise in inflation,” wrote Koesterich.
BlackRock’s money manager noted that inflation last year rose to 2.1%, which was the first time it went above the Federal Reserve’s target of 2% since 2014. “Housing costs are now rising at the fastest pace in nearly a decade,” he added, while also listing medical costs, rising wages and consumer inflation expectations as the key culprits.
“[S]hould inflation expectations rise faster than nominal rates, gold is likely to continue to merit a place in most portfolios,” said Koesterich of the yellow metal, which has traditionally acted as the premier hedge against inflation.
Gold exports to China soar in run-up to the Lunar New Year
A recent report by Bloomberg notes that gold exports to China from both Switzerland and Hong Kong soared in the run-up to the Lunar New Year. Data from the Swiss Federal Customs Administration website shows that Swiss refiners exported more gold to the world’s top consumer in December than in any month since at least January 2014, supplying as much as 158 tons compared to 30.6 tons in November.
Hong Kong, the other major supplier of gold for mainland China, also sold 47 metric tons of gold to the nation in the same month, up from November’s 40.6 tons. These exports brought the full-year total of purchases to 444.2 tons, up from 288.1 tons in 2015.
Analysts stated that lower prices at the end of last year spurred pent-up demand while last week’s start of the Year of the Rooster, which is associated with the gifting of the precious metal, will continue to support it. “There’s been a tail-wind behind gold, and China’s just one of the directions from which it is blowing,” said Ken Hoffman, senior metals and mining analyst at Bloomberg Intelligence.
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I know very little about gold but something seems wrong here.All that tonnage going to China for gold gifts-there is a relatively small middle class in China so does that seem reasonable?
Middle class is much much bigger than in USA where the mongrel sodomite ex-president wiped out that class.
Even if the middle class is 10x what the US mid class is,isn’t that way more then they would need for gifting?
Assuming the #s are accurate,is this just analysts explaining something when they’re full of s or am I just full of it?
That was a huge increase.
China does not have the false assurances of SS, Medicaid / Medicare, welfare, EBT and so on. If you get sick in China, you have to pay for it; it you want to buy a chunk of land, generally you pay cash for it. The Chinese invented paper money, and know viscerally it can fail overnight, wiping out your savings; gold does not fail overnight, and always preserves some amount of purchasing power.
It is most likely far in excess of gifting because they know their politicians will always screw them; a regrettable number of Americans have yet to learn that lesson, and save in depreciating currency instead of real assets.
Also gold prices are rigged. Although gold is also massively under priced. Next question.
The fair value price of anything is what people who have it are willing to sell it for, and people who want it are willing to pay for it in return.
Gold bullion -not collector gold such as rare coins which are a different market- sells at the price people are willing to pay for it on the open market.
FWIW, most of the gold being traded is not made from gold, it is made from electrons residing somewhere in some exchanges computers.
If the price of gold truly reflected the inflation rampant in the currency, the price of gold (in currency) would be multiples of what it currently is. The government, through its agents such as JPMorgan and Goldman Sachs, artificially depresses the currency price of gold to keep the public from understanding how badly they are being screwed (in currency terms). They do this by offering to sell gold for low prices, offering commodity contracts at a low currency price (which is then used to set the “spot market” price). They do not intend to honor (deliver) gold at that price for more than a tiny percentage of the contracts; indeed, many commodity “contracts” are either “rolled over” or expire unfulfilled, since speculators can buy many contracts for a small amount in hopes of making a killing if the “price” of gold in currency terms rises or falls. Only a few commodity contracts actually deliver; and as a final insult, gold contracts typically have a clause that says, in effect: “At the option of the seller, if you choose to take delivery, the seller can settle the contract IN CURRENCY, at [insert index or spot price] on [insert day of settlement]”. So if the currency price of gold went down and you call for delivery of physical ounces of gold, they can CUT YOU A CHECK (denominated in the currency PRINTED FROM THIN AIR IN WASHINGTON) and call it good! How do you like them apples?
This scam / scheme / fraud is also run in silver and platinum, in the same way. Look up Ted Butler for excellent explanations of how he figured this out, who’s doing it and more detailed versions of how this works. All of it (precious metals central banking pricing schemes) is a fraud, and one day it will collapse; whether you can figure a path towards making a fortune by calling that day ahead of time, or whether “the markets [manipulations, in this case] can stay irrational longer than you can stay solvent” is unknown.
I walk the walk; I typically buy an ounce of gold a month, when I can afford it, and sell a little if I have to in order to pay expenses. During an eight-month dry spell last year, my reserves kept my household afloat as I slowly sold some back. I am now trying to get back as many ounces as I had before the dry spell, and the folks at the local coin shop know me.