Blog Archives

Gold’s Gains 15% In Inauguration Years Since 1974

- Gold’s average gains in inauguration years of 15% since 1974
- First year of new President frequently a time of increased uncertainties and risks
- Gold rose 30% in the 12 months after Obama inauguration
– Massive political uncertainty – President’s conflict with the CIA

- ‘Strong dollar policy’ to end as U.S. has $120 trillion plus debt
- Trump inherits Bush and Obama’s humongous debt

Gold performs well in inauguration years (see table) and has seen average gains of 15% in inaugural years since the 1970s.

Given the degree of uncertainty, divisiveness and conflict that Trump’s election has already created – both in America and internationally, it seems almost certain that the many risks as President Trump takes power will lead to higher gold prices.

Besides the myriad of risks today and arguable the most uncertain geo-political situation since World War II or the height of the Cold War, gold investors and buyers can look to Presidential history, as gold has recorded has average gains of 15% in inaugural years since 1974.

This may be due to the fact that the first year of many administrations is frequently a time of significant change and increased uncertainties and risks. Markets are concerned that the US presidential handover and advent of President Trump will lead to volatility and turmoil in 2017 which will likely impact risk assets such as stocks.

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Turkey, ‘Axis of Gold’ and the End of US Dollar Hegemony

Turkey, Gold and US Dollar Hegemony

Introduction
Buy Gold and Lira, Sell Dollars To End “Economic Sabotage” – PM of Turkey
Gold Imports to Turkey Surge 688% In December
‘Tough Turkey’ today
Affinity for gold to save the day?
Central bank gold demand
Personal accumulation
Country’s gold reserves
Turkey Iran gold conduit
Axis of Evil to Axis of Gold
Conclusion: Gold as an insurance policy

Introduction
With a ‘Hard Brexit’ looking more likely and Trump’s inauguration this week, 2017 is well and truly under way.

What we expect the year to hold is probably not even half of what it really will. But from what we know, the upcoming French and German elections, referendums, geopolitical crises, steps towards reverse globalisation and a third of global government debt yielding negative interest rates, governments are already prompting central banks and investors to turn to the one asset that has survived millennia of financial and monetary crises.

One that is highly liquid and convertible into other currencies – gold.

turkey-gold-imports
Whilst mining output remains relatively flat and we are at peak gold, Western central banks have stopped gold sales, large emerging market economies continue to increase their gold reserves. China, Russia (both top gold purchasers in 2016) and now Turkey, are the notable players.

Turkey’s President Recep Tayyip Erdogan reminded us of this when he called on his citizens to buy gold:

“Those who keep dollar or Euro currency under their mattresses should come and turn them into Liras or gold.”

This has been met by such support that, not only did Turkish gold imports surge 688% in December, to reach their highest monthly level in two years but, according to Reuters, “fervent supporters have offered free haircuts, fish and even tombstones to those who can prove they have done so.”

As a result, in December 2016 imports reached 36.7 tonnes, significantly more than the 4.65 tonnes seen in the same month in 2015. This accounted for more than one-third of the country’s annual imports of 106.2 tonnes, more than double 48.7 tonnes in 2015.

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Gold Up 5.5% YTD – Hard Brexit Cometh and Weaker Dollar Under Trump

GOLD PRICES UP 5.5% YTD – CONCERNS OF “CALAMITOUS SELF-HARM” TO EU FROM BREXIT AND TRUMP DOLLAR COMMENTS SUPPORT GOLD

Gold prices extended their run of gains to a seventh session and added another $12 to $1,215 an ounce yesterday. Gold prices have consolidated on those gains today and are now up 5.5% in dollar and sterling terms and 5% in euro terms year to date.

gold-prices-ireland-2017Gold in USD – 1 Year

Gold bullion has risen every day except one so far in 2017, building on the 8.1 percent gain in 2016. Investors are concerned about the huge uncertainty facing us from a ‘Hard Brexit’ and the potential for political and financial contagion in the EU as we head into the new year.

Although the pound bounced higher after recent sharp falls, the FTSE 100 fell 1.5% and suffered worst day since immediate aftermath of the EU referendum.


U.K. Prime Minister Theresa May confirmed the UK will have a “Hard Brexit” and will leave the European Union’s single market while seeking a new arrangement on the customs union.

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Bitcoin and Gold – Safe Havens?

Bitcoin and Gold – Outlook, Volatility and Safe Haven Diversification

- Recent performance of Bitcoin and Gold
– Price outlook
– Bitcoin, China and capital flight
– Exchanges of value?
- Can bitcoin rival gold as a safe haven?
- ‘Bitcoin vs Gold’ or ‘bitcoin and gold’?
- Importance of diversification
- Conclusion: A monetary and financial revolution?

Recent performance of bitcoin and gold

What does the recent volatility and surging price of bitcoin mean for the future of the crypto-currency and does its recent outperformance mean that it may supplant gold as a safe haven currency? Can bitcoin rival gold as a safe haven? Do bitcoin’s recent price gains herald gains for gold in 2017?

bitcoin

Bitcoin in USD – 1 Month via Coin Desk

2016 was a pivotal year for both the gold price and the price of bitcoin. In dollar terms, both made new gains that have not been since in the last four years. However, the fledgling digital currency greatly outperformed gold.

Gold climbed 8.6 per cent in dollars last year, outperforming both US Treasuries and the US Dollar itself. Despite ending its four year decline and gold being higher in all major currencies, sentiment in the media and among investors remains tepid towards gold as it had a poor second half to the year and failed to end the year above its July high of $1,366.

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Physical Gold Will ‘Trump’ Paper Gold

Physical Gold Market Will Trump Paper Gold

John Hathaway of Tocqueville Funds says the physical gold market will defeat the paper gold market leading to a much higher price for the monetary metal in the coming months and years in his Tocqueville Gold Strategy Investor Letter (Fourth Quarter 2016 Investor Letter):

Gold rose 8.5% for the year while gold-mining stocks (XAU – Philadelphia Gold and Silver Index stocks) rose 75%. On an annual basis, results were highly satisfactory. However, there was considerable drama beneath the surface that left precious metals investors in a state of anxiety by year-end. Precious metals and mining shares rose sharply through August, and then spent the rest of the year giving back much of the first-half gains. The second half downtrend accelerated into early December, following the unexpected victory by Trump and a hawkish statement after the December Federal Open Market Committee (FOMC) meeting.

The question of the hour is whether the 2016 gains were merely a countertrend rally following a four-and-a-half-year decline from all-time highs in 2011, or the beginning of a new leg in the secular bull market that began in 1999, during which gold rose from less than $300/oz. to $1900 in August 2011. We judge the weight of current sentiment, mainstream media opinion, and technical analysis to be extremely bearish, comparable to year-end 2015 just prior to the dramatic gains that followed. We believe that, based on prevailing negativity, the next big change in the gold price will be substantially higher. If so, the 2016 second-half correction will have established a durable higher low from the advance that began at year-end 2015, and would be the precursor to the continuation of the secular advance that began in 2000.

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Gold Lower Before Trump Presidency – Strong Gains Akin To After Obama Inauguration?

Gold prices have had a good start to 2017 and has made gains in the majority of currencies, building on the strong gains seen in 2016. So far in 2017, gold is 3.5% higher in dollars, 2.3% higher in euros and 4% higher in sterling.

gold-price-currenciesgold-annual-returns-obamaGold Annual Returns During First Four Years Of Obama Presidency – Goldprice.org

Increasing nerves regarding the Trump Presidency likely account for some of the gains. Although the fundamentals of the gold market remain strong even were Trump not becoming President of the United State of America.

A backdrop of financial repression and global currency debasement involving ultra loose monetary policies and near negative interest rates, a push for cashless society, a still massively indebted U.S. and global economy and still very fragile banking systems all bodes well for gold prices in the coming years – not too mention positive supply demand fundamental that is peak gold.

Trump is icing on the cake in this regard. While it is always best to fade short term noise about breaking news and the latest market developments, ignoring Trump in the White House as an investor is very much a case of trying to ignore a giant white elephant in a very small room.

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Gold Rises To $1,207 As Trump War With Intelligence Agencies Escalates

Gold has rallied to $1,207/oz today as stocks globally have weakened after the first press conference of incoming President Trump turned into a bit of a debacle.

gold-price-trump-jan-2017
Gold prices made further gains today amid reduced focus on the Fed and speculation regarding their potential rate hikes and more focus on the next four years of the Trump Presidency.

The dollar declined alongside US Treasury bond yields, although U.S. stock indices were supported yesterday and remained buoyant. Declines in Asian and European bourses today have seen U.S. futures decline this morning and the dollar has seen further losses pushing gold higher in all currencies.

Gold is likely to be supported and should rise due to the ongoing Trump versus the U.S. intelligence agencies saga which worsened yesterday amid vicious claim and counter claim. These included salacious allegations of lewd sexual acts by Trump while in Moscow and the allegation that the incoming President is being blackmailed and controlled by Russia.

There would appear to be a tussle for power and supremacy between more hawkish elements in the intelligence agencies and the incoming President. The extremely adversarial public disagreement between an incoming President with senior members of the FBI and the CIA is absolutely unprecedented.

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Was Prince A ‘Scrooge McDuck’, Crazy Gold Bug?

Gold Bars Worth $800,000 Owned By Prince

Prince, RIP, owned gold bars worth just over $800,000 according to the statement filed in a Minnesota court last Friday.

Source: Amazon.com

At the time of his death, Prince had taken delivery of and had in his possession 67 gold bars, 10 ounce gold bars, valued at $836,166.70. That’s according to an asset inventory compiled by Bremer Trust released by the Carver County District Court, as first reported by the Minneapolis Star Tribune.

The release inventory showed that the “Purple Rain” singer had no stocks, bonds, or other financial assets, but did have a substantial amount of land, property, cash and gold bars.

Besides the gold bars, Prince also had “about $110,000 in four bank accounts, unclaimed property, capital credits and cash” according to the Minneapolis Star Tribune.

He also had a dozen tracts of land in Carver and Hennepin, Minnesota that have an estimated total value of $25.4 million.

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Gold Price In GBP Up 4% On Brexit and UK Risks

Gold Price In GBP Rises 4% On Brexit and UK Economy Risks

- Pound fell 2% against gold yesterday after Theresa May created Brexit concerns 

- May’s ‘Hard Brexit’ denial does not calm markets growing fears

- Investors concerned about lack of government strategy and uncertainty

- UK Prime Minister bizarrely blames media and “those who print things” for sterling depreciation

- GBP gold builds on 31% gain in 2016 with 4% gain so far in 2017

gold-price-in-gbp-2017Gold in GBP – 1 Year and Timeline (GoldCore)

1. June 24: Brexit: Gold surged 20% in sterling to £1,015/oz in two days after UK votes to leave EU
2. August 4: Bank of England expands QE – launches latest massive money printing experiment
3. October 6: “Flash crash” — pound collapses 5% against gold in just over a minute
4. January 9: Pound falls another 2% against gold as UK PM fails to reassure markets


Gold rose to its highest in over one a month today as fears that the UK will have a ‘Hard Brexit’ with the EU led to safe-haven buying.

The pound fell sharply yesterday and gold in sterling terms rose from £954/oz to £973/oz after weekend comments from British Prime Minister Theresa May sparked concerns that Britain would drastically change trade, immigration and other relations with the EU after Brexit.

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2016 Past is 2017 Prologue

With us being just over a week into the New Year, we feel it worthwhile to look back just one last time at 2016. We believe that many of the themes and risks of 2016 continue in 2017 and that they are likely to impact markets in the coming months – especially the precious metal markets.

2016-review_outlook-2017Malcolm McDowell as Alex in A Clockwork Orange. Source: Wikimedia

We always enjoy new perspectives and every year we enjoy the witty, comprehensive and insightful analysis review of the year past by David Collum. His‘2016 Year In Review’ is in the same vein and was missed by many when it was released over the Christmas period.

Collum is a professor of Chemistry and Chemical Biology at Cornell University. In addition to his academic interests, he authors an annual review of the financial, economic and geopolitical year. The review is a must read and includes interesting information about the astute academic’s views on gold – he is “sanguine as ever holding large precious metal positions.”

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Gold Rises In All Currencies In 2016 – 9% In USD, 13% In EUR and 31.5% In GBP

– Gold gains in USD, GBP, EUR, CAD, AUD, NZD, JPY
– Gold gains in CNY, INR & most emerging market currencies

– Gold surges 31.5% in British pounds after Brexit shock
– Gold acted as hedge and safe haven in 2016 … for those who need safe haven
– Furthers signs of market having bottomed and bodes well for 2017
– What drivers will gold respond to in 2017?
–  EU elections and contagion risk, Geo-politics, terrorism, war and cyber war
–  Outlook for gold good during Trump Presidency (2017 to 2020)

gold-2016Click on to see enlarged table
Source: GoldPrice.org

Gold was the best performing currency in 2016, rising as it did in all major currencies. It again performed the function as a hedge against currency devaluation and this was seen particularly in sterling terms with gold rising 31.5% in British pounds after the Brexit shock.

gold-chart-2016Gold in USD in 2016

Gold prices closed 2016 at USD 1,159.10, EUR 1,098.36 and GBP 942.58 per ounce.
Gold prices closed 2015 at USD 1,062.25, EUR 974.32 and GBP 716.36 per ounce.
(Gold AM fixes on December 30th 2016 and December 31st 2015 respectively)

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Trump’s Tweets To Push Gold To $1,600/oz in 2017?

Trump’s Twitter Age Could See Gold Rise 13% In 2017

  • Gold price seen jumping 13% in 2017 after 9% gain in 2016, Bloomberg analyst survey shows
  • 140-character missives by President-elect means new paradigm
  • “140 characters of unfiltered Trump is likely to create tensions with America’s largest trading partners…”
  • Bloomberg Intelligence poll shows 42 percent of respondents predict gold will be the best-performing metal in 2017
  • Two Bloomberg respondents including GoldCore say gold to reach $1,600/oz
  • “Markets that are already shaken by the fallout from Brexit, the coming elections in Europe and indeed the increasing specter of cyber warfare could again see a safe-haven bid…”
  • Gold is not “irrational” today – politicians, policy markers and markets are
  • Gold that can inspect and take delivery of easily a vital hedge against massive irrationality in world of 2017

From Bloomberg:

“The Donald J. Trump era is marking a new age for gold as an investor safe haven.

While the precious metal has always been hoarded in times of trouble, a bevy of political and economic surprises in 2016 sparked a surge in buying that sent bullion to the first annual gain in four years. Prices may rally about 13 percent in 2017, according to a Bloomberg survey of 26 analysts.

Fueling the bullish outlook is the risk of chaos on multiple fronts: a possible trade war from America’s fraying relationship with China, the alleged Russian hack of U.S. political parties, the U.K.’s complicated exit from the European Union, and elections slated in France, Germany and the Netherlands that may see a rise of nationalist groups.

And then there are Trump’s frequent Twitter posts, in which the U.S. president-elect feuded with rivals and made declarations that unsettled allies even before he takes office Jan. 20.

“140 characters of unfiltered Trump is likely to create tensions with America’s largest trading partners,” Mark O’Byrne, a director at broker GoldCore Ltd, said by e-mail.

“Markets that are already shaken by the fallout from Brexit, the coming elections in Europe and indeed the increasing specter of cyber warfare could again see a safe-haven bid.”

Gold for immediate delivery is up 8.9 percent this year (2016) to $1,155.12 an ounce, halting a three-year slide. More than two thirds of the analysts and traders surveyed from Singapore to New York said they were bullish for 2017.

The median year-end forecast was $1,300, with the year’s peak seen at $1,350. Two, including O’Byrne, said the metal may reach $1,600.”

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